Oregon City commissioners voted unanimously on Aug. 19 to use urban-renewal funds to pay off the city's remaining debt and save more than $500,000 in taxpayer money on interest payments.
In recognition of how the national economy under COVID-19 has increased the cost of its urban-renewal debt, Oregon City will finally head in the direction of following the will of most city voters who authorized a citizen-initiated charter amendment in 2016. However, a Clackamas County judge ruled in 2017 that state law gives power to the Oregon City Commission, not to voters, to shut down the city's urban-renewal program.
Oregon City's move to pay off its debt falls short of the 2016 vote's request to close down the urban-renewal district completely. While they are not shutting down the district at this time, Oregon City officials will hold another hearing in September to change the city budget and pay off the debt by Dec. 1.
In paying off the debt, Oregon City's Finance Director Wyatt Parno said the risk to the city was low of losing out on a great project, giving the example of Intel offering to solve all of the city's problems through a development proposal. In ending the urban-renewal program, Parno said the city will address remaining debt that has interest payments now significantly higher than interest earnings on invested reserves.
"If you pay off the debt today, you'll save over $500,000, about $510,000, and anytime you could borrow from the city if anyone came in and you needed access to those funds," Parno said.
Commissioner Frank O'Donnell, chair of the group overseeing the urban-renewal program, pointed out that the city will still accumulate about $3 million annually from the urban-renewal district that could be used toward development projects.
"Why not pay ourselves rather than pay a higher rate to an outside banking industry?" O'Donnell asked. "To me it's basic household management: If I owed $10,000 on my car at 4% (interest) and had money earning nothing, I'd pay it off."
Mayor Dan Holladay said the current urban-renewal politics are forcing "a long community discussion" before any development projects could take place using tax-increment funds.
"I'm not terribly worried about having the money to do a project in this three-year period," Holladay said.
Over the coming year, Oregon City's Urban Renewal Commission has pledged to engage a wide range of citizens in planning what should happen next with the program. On Aug. 5, the agency voted 4-2 (with O'Donnell and Commissioner Rocky Smith voting no) to engage Leland Consulting in a $82,911 contract to facilitate a public process for the community to learn about urban renewal and provide input about whether it should be used as a development strategy moving forward.
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