Oregon City's $7M problem is easily fixed
If I told you the Oregon City Urban Renewal Agency has $7 million or more of the property tax dollars we all paid in a bank, just sitting there paying finance charges, would you believe me?
I do hereby solemnly swear — with my left hand on our State Constitution and ORS 457 and my right hand on our cherished Home Rule City Charter — it's true.
It's true as reported on the city's 2019 UR budget report. And it will be more when the UR Agency gets its next $2.5 million (approximate) cut from our property taxes. Property taxes pay for your safety (police and fire), for your parks and library, all other city services, and part of your county services.
Why does the UR Agency have $7 million idling in the bank? Good question! Oregon City has $7 million remaining debt created when the UR Agency paid for the new City Hall remodeling, which, by my interpretation of UR law and regulations, was illegal. The UR debt is $7,033,561.!!! Huh? Wait a second. Holy jumping Midas! There's $7 million in the bank, and we owe the bank $7 million? Why hasn't the Urban Renewal Agency paid off the debt and saved finance costs?
Are we saving the $7 million for a rainy day? According to my property tax bill, the rainy day is turning into a flood! What's the $7 million in the bank to be spent on? A sunny cabin at the beach for all employees? A snowy chalet in the mountains? A newer city hall to replace the not-very-old-but-they-say-too-small city hall? A parking garage in "historic" downtown?" If you choose any of the above you are wrong! Your answer does not win a decorated city paper weight! Or even a souvenir ball-point pen. If you said "pay debt!" you win a life time free pass to OC UR Commission meetings!
The Oregon State Constitution, Article IX, section (1c) says the $7 million "shall be used to pay any indebtedness incurred for redevelopment or urban renewal project." Just in case you are not a strict Constitutionalist (heaven forbid!), check Legislative instructions ORS 457.440(6b): "Any amounts received by the urban renewal agency... shall be paid into a special fund... and shall be used to pay the principal and interest on any indebtedness issued or incurred by the urban renewal agency to finance or refinance the urban renewal plan." And if you do not choose to follow the directions of the Legislature, try following the financing instruction in our own Oregon City Urban Renewal Downtown/North End plan to "pay off indebtedness" by 2012. According to the city's own document, "the principal source of revenue to carry out project activities will be annual tax increment revenues of the renewal agency that will be used to repay debt issued to fund projects."
Or how about following the advice found in the manual of "Best Practices" published by the Oregon Economic Development Association? The statewide promoter of urban renewal says, "Financing: It is important to remember that TIF revenues do not equal the dollars available for projects. TIF revenues are used to pay debt service on debt that pays for project costs." So, why would seven rational (unpaid) individuals not pay down a bank loan? Well, maybe we have seven misinformed public servants who think the urban renewal property taxes we pay are a cash flow from heaven to be used at their discretion. Maybe someone in the chain of command thinks there is a "perfect" $7 million project or investor on the horizon that will double property tax values in downtown. The dreamers are wrong again. The $7 million accumulated using tax increment financing (TIF) by urban renewal regulations, etc., must be used to pay debt, no exceptions. Or maybe it is "once bitten, twice shy?"
In 2009 a Pied Piper city manager convinced a willing UR Agency to convert a medical clinic into a new city hall spending $12 million to be repaid using the UR tax scheme (TIF). Poof! Like magic, they converted a tax paying medical office building into a non-tax paying government center! And that's the reverse of what urban renewal its all about. The goal is to increase taxable property values!
The UR Agency has been using the TIF money to make "payments" for the last 10 years, but still owes more than half of the original. Again the $7 million question. Why doesn't the Oregon City Urban Renewal Agency eliminate its bank debt? The payoff money is in the bank, and urban renewal rules say the only thing you can legally do with it is pay debt.
What's going on at City Hall? At one meeting of the UR Commission there was talk of "educating the public" as to what urban renewal was all about. The first education plan should be a study course for the commissioners about where the millions of tax dollars came from (our pockets) and how they can be legally spent. Simply put, read and follow the instructions that come with the package.
John Williams is a resident of Oregon City.
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