County mediates annexation dispute between Happy Valley, Milwaukie
by: raymond rendleman The Clackamas Town Center shopping mall bustles for the holiday shopping season by mid-morning this week and has the highest property tax value for cities vying to acquire the currently unincorporated land.

All that Providence Health wanted to do was annex into the city of Happy Valley, but the medical center in Clackamas ended up setting off a heated debate about the future of more than a dozen urban square miles in unincorporated Clackamas County.

Milwaukie pushed the issue to the forefront by calling foul after Providence requested the annexation earlier this year. The medical center on the west side of Interstate 205 would have literally given Happy Valley a toe hold across the line that Milwaukie had long understood to be its eventual territory.

With Milwaukie's borders still about a mile away, Providence couldn't have become part of Dogwood City's limits at this point even if it had wanted to. While Happy Valley has annexed thousands of acres during the past 20 years, Milwaukie has mostly acquired a smattering of residential lots to its northeast.

Providence did not return calls for comment on the issue, but Happy Valley City Manager Jason Tuck had some other guesses as to why the health system would choose Happy Valley.

Tuck cited 'a good continuing working relationship' between the city and Providence on a number of issues, including enhanced police services for another Providence facility at Sunnyside Road and 162nd Avenue, and on 70 acres of Providence land in Happy Valley's Rock Creek business district.

'They probably looked at the tax implications of annexing into both cities, and they saw that the rates were a bit lower in Happy Valley,' he said. 'And as far as us providing service for our tax rate, we have a dedicated levy for our police rate so it's not in competition, whereas other cities' police services are coming out of the general fund.'

Not only had Milwaukie struck a deal with Clackamas County as early as 1990 for its interest in the now highly valued commercial land, but the area is also set to provide a cash infusion for any controlling government. When it closes the urban renewal area at the Clackamas Town Center in 2013, Clackamas County is hoping to use the estimated $1.4 million to $1.8 million in extra funds annually to pay its obligation for a new light-rail line into downtown Milwaukie (See last week's story, 'County's $25M payment to TriMet looms').

Citing a 2002 financial analysis by Portland State University estimating a $5.7 million annual net increase in revenue combined with the county, annexing the Clackamas Town Center 'would be very beneficial for the city of Milwaukie,' said Teri Bankhead, assistant to Milwaukie City Manager Bill Monahan.

'We need to defend our area at least to make sure we have the areas that make financial sense for us so that we're not constantly strapped for cash,' said Milwaukie Mayor Jeremy Ferguson. 'My concern is that Happy Valley rushes across 1-205 and takes the Clackamas Town Center and all of the area that is positive value to the city and we're left with only the areas in between with a negative impact.'

There seemed to be a consensus on Milwaukie City Council, although it didn't take a formal vote in a study session discussion Nov. 29, that I-205 made the most sense as an eventual dividing line for the two cities. Clackamas County's growth management plans show Milwaukie with a small area covering Kaiser's Sunnyside Medical Center on the east side of I-205, but otherwise the two cities' areas of interest are currently separated by the highway.

Happy Valley, however, thinks it might be better equipped to take the Town Center, where a city would also have to deal with public housing projects and large tracts of residential land that lack access to sidewalks and sewer systems.

'The county has an agreement with Milwaukie that we don't necessarily agree with, and we want to look into modifying that to determine where the ultimate boundaries are,' Tuck said. 'There's a unique challenge there, because the county is faced with trying to provide urban services, and we think that the cities are a good option for getting people off septic tanks and other initiatives that are in the public interest.'

Urban services

Oregon law allows either city to annex the territory, provided it follows certain procedures such as holding public hearings and a vote by elected officials. Oregon City is an example of a municipality that also requires a ballot vote of all citizens to approve an annexation proposal.

Monahan opined that the long-term vision of Milwaukie was at stake and it was time to 'get busy' on the issue even though governmental employees were already strained by light rail and planning for a baseball stadium.

'We have great staff who can deliver great programs, and we can do that to greater areas-assuming that the 2005 analysis remains correct-we'd be able to get the revenues for that,' Monahan said.

Both cities see the annexation occurring over several decades.

'This is not an imminent annexation project-this is an urban planning project to see what makes sense for that urban level of service that is required,' Tuck said. 'In all of the meetings we've had with the county, the county says that they're having a hard time providing these urban services, so in my opinion these citizens going into their respective cities is beneficial.'

Patricia Holloway, chairwoman of the Southgate Planning Association, suspected Clackamas County's McLoughlin Area Plan and installing sewers in the Town Center area were intended in part to remove impediments to incorporation.

'They've been moving for a long time - Clackamas County really wants to get out of the business of providing services for the fairly urbanized areas,' Holloway said. 'The sentiment generally in the unincorporated area is that they don't want to be in the urban areas, because they have to pay higher city taxes and they wonder what they get for it.'

Mike McCallister, Clackamas County's planning director, declined to comment about the county perspective on urban unincorporated land. He wanted to make clear, however, that every acre in the county is covered by an urban growth management plan, so the plans don't necessarily indicate annexation plans; the county is simply required to notify the city of interest when permits come in.

Prior to an annexation hearing in June, Milwaukie asked Clackamas County to step in to mediate, and in August the Happy Valley City Council voted to put Providence's annexation on hold indefinitely. Since then, staff members of the various governmental agencies involved have been holding meetings that are closed to the public, and McCallister said there are no current plans for public input.

'We don't have a timeline or deadlines - we're just trying to move to conversation,' McCallister said.

Island annexation

The growth management of Milwaukie and Happy Valley shouldn't be confused with Happy Valley's work on a project to start annexing so-called 'islands,' parcels completely surrounded by the city.

Happy Valley Mayor Lori DeRemer doesn't believe that citizens that are urbanized should be getting a free ride. She says it's pretty much inevitable that such residents drive on Happy Valley's roads and receive the city's enhanced police services.

'I'm sure that's going to bring some consternation with some because they feel it's not an equitable system, but the fact is that they're not paying for the level of service they get,' DeRemer said.

This is not a revenue-generating project, the city argues, estimating it will take five years just to make back the amount of money it will have to spend on organizing the annexations. A letter went out last month to 141 affected property owners, about a Tuesday, Feb. 7, hearing at City Hall at 7 p.m.

'Council has taken the position that we have an annexation program in the works for a long time, and it's in the best position for the city to have all these parcels that are in no-man's-land come into the city,' DeRemer said.