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As legal fees rack up, city officials call for more citizen input on urban-renewal plan

At last week's meeting, Oregon City officials approved a more than $40,000 payment to critics of urban-renewal financing (UR) whose initiative petition city officials had attempted to rescind midway through collecting signatures.

John WilliamsIn a 2016 ruling, a Clackamas County Circuit judge found that Oregon law intentionally prohibits "the potential waste of time and energy by participants in the initiative process were an election official able to rescind his or her determination," ordering the city to pay the petitioners' approximately $8,000 in legal fees. However, Oregon City officials took their case against this ruling to the Oregon Court of Appeals, which this month upheld the lower court's ruling. In the meantime, the city's and the petitioners' legal fees have been racking up.

In addition to paying the petitioners' legal fees, hundreds of thousands of dollars in taxpayer money has gone to Oregon City's fight against the petition in court. Oregon City's $40,747.50 settlement, signed by city officials on July 17, includes $30,747.50 in petitioners' attorney's fees (plus interest) and $10,000 to pay for a portion of petitioners' fees/costs in defending against the city's unsuccessful appeals.

Co-chief petitioner John Williams said he appreciated how the 2019 City Commission, with three new members since the 2018 election, seems more willing to work with UR critics.

"They seem willing to find a compromise and clear the air," Williams said. "The members of the commission have been very open in talking with me, and I appreciate that."

Oregon City officials said that they made a mistake in approving an anti-UR petition; rather than cease collecting signatures, the petitioners sued in 2016 to keep their right to put a measure on the November ballot that voters approved to limit the city's UR agency's functions to paying off its current debt and dissolving itself.

Although the latest appeal's court decision resolves the dispute over Oregon City's attempt to keep the measure off the ballot, the court still has to make a ruling on the constitutionality of the measure. In 2017, a lower court found that state law gives power to the Oregon City Commission, not to voters, to shut down the city's UR program.

Williams called on commissioners to listen to the will of voters, saying that UR should not be used for public, non-taxpaying projects, like Oregon City's construction of its city hall using UR in 2009. He said that before the pending Grand Ronde purchase of the Blue Heron site, there could have been a commercial interest needing help next to Willamette Falls, but it's clear that the property has increased significantly in value since the paper mill's original purchase out of bankruptcy court in 2014.

Williams said that UR should only be used to assist in financial commercial projects which have the possibility of rescuing taxable land values estimated to be undervalued. He said there have been "three strikes" in Oregon against any UR program being successful, including the federal government no longer providing two-thirds of the UR funding.

"It doesn't do any good to build a $10 million Taj Mahal, since there's no halo effort on neighboring properties that can only go up 3%, because of the property-tax limitations approved in the 1990s," Williams said. "Projects don't pencil out because of the first two strikes, so that's the third strike."

Calling for community involvement

Oregon City commissioners recently voted to develop more community involvement in development of UR plans, mentioning the creation of an additional board of citizens.

"While I know some of my colleagues don't support more process, one of the things that we did when I was working for Portland's UR agency was we had a UR advisory committee, which was made up of stakeholders in those particular districts, and we had people at large," Commissioner Denyse McGriff said.

City Commissioner Frank O'Donnell, chair of the city's UR commission, called out Williams directly, inviting the city's most vocal UR critic, to sit on a committee to advise the city on future UR plans.

"You would be a welcome participant, should you choose to do so," O'Donnell told Williams.

Commissioner Rachel Lyles Smith also said that she'd like more input from opponents of UR before future UR projects are approved.

"I'm interested in hearing from the people who voted no or voted against it what was their reason," she said. "I fully support some community engagement; I'm not sure how we go about that."

City Commissioner Rocky Smith, who was a vocal UR critic during his previous term on the commission, called the city-hall project a "huge mistake" and said that the City Commission has an obligation to represent the voters' views on UR projects.

"This response that we're legally right to do it is not enough," he said. "If we want to see any development on the river site, or even other sites, without the support of the public, I don't see those happening."

Mayor Dan Holladay made a motion to continue operating the downtown UR district to continue paying off debt and take care of administrative expenses, with the caveat that the city find "some way" to involve citizens at large. Oregon City will clear its UR debt by 2022 using its $2.9 million in annual UR debt service, according to City Finance Director Wyatt Parno.

Holladay said a successful UR "right to vote" campaign had nothing to do with average citizens' understanding of how UR works.

"There's no large opposition in Oregon City to the UR agency," he said.

Smith, who abstained from the unanimous vote on Holladay's motion, said he couldn't support the UR district continuing to spend money unless the appeals court rules in the city's favor on the constitutionality question over the UR petition. He said the voters of Oregon City had already told the city not to take out more UR debt.

"They voted, and they told us not to do this," Smith said.

Saying that the city could use UR more creatively, McGriff called UR a "valuable" tool and made clear that she doesn't support closing down the downtown UR district.

"We have an obligation to our community to use all of the tools at our disposal to help make this community better, and UR is one of the last best tools that is out there that jurisdictions can use to eliminate blight," she said.

City Manager Tony Konkol said that staff will develop possible community-involvement options for the UR commission to consider at a future work session.


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