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County-led urban renewal agency calls for mediation, but port says no thus far

Out at Port Westward, an urban renewal project in motion since 2001 has led to improvements in public infrastructure, but the development has come at a price.

Urban renewal projects allow local governments to siphon off property tax revenue headed to taxing districts and use that revenue to fund capital improvement projects. At Port Westward, loans for two projects — the water system and rail improvement — are still being paid off.

The Columbia County Development Agency, which oversees the urban renewal project and is run by the county commissioners, will have an estimated $6.7 million in its coffers when the fiscal year ends in June. The remaining balance on the loan for the water system at Port Westward is the same amount, $6.7 million. The rail loan adds another $2 million in debt.

The CCDA could pay off the water system loan, saving $2.4 million in interest payments that would accrue if the agency just makes its scheduled payments for the life of the loan.

But before the CCDA advances those payments, agency leaders want something from the Port of Columbia County: an agreement to use any future payments from water system users to reimburse taxing districts who lost money to the CCDA.

The loan to the port for the water system was made by the state, with the intention of having the port make loan payments with revenue from companies that would have to pay to use the water system. The CCDA agreed to cover those payments if the water system revenue was insufficient.

When the water system was built, the CCDA anticipated a number of companies would use the system, but none of those companies eventually did.

The CCDA's proposed budget for 2020-2021, which was released this month, states that the agency plans to fully repay both loans in the next fiscal year.

"These early loan payments, however, are contingent upon the Agency successfully negotiating a reimbursement agreement with the Port of Columbia County," the proposed budget states.

"Without such a reimbursement agreement in place, the Agency may decide through consultation with affected taxing districts that the most financially responsible course of action is to continue making future debt service payments as scheduled," the budget continued.

The county has argued that the revenue from the water system should go back to all the taxing districts that have lost funding to the urban renewal project, rather than just the port.

The port's Executive Director Doug Hayes said the port is under no obligation to negotiate with the county. As the agreement currently stands, revenue from the water system will go to the port once the loan is paid off.

If the county continues with standard annual payments, drawing out the loan, it would benefit the county and other taxing districts only if enough users start to use the water system. But if the port continues to refuse the CCDA's demands, the CCDA could spend millions on interest payments that won't go back to any local taxing districts.

"These are a lot of hypotheticals and 'ifs.' The clearer goal should just be to pay off the loan," Hayes said when asked about potential scenarios for the loan futures.

Over the years, the port and CCDA have clashed over details of the legal agreement between the two agencies at Port Westward. Both sides have repeatedly claimed the other side has not responded for months at a time or not provided necessary documentation.

The CCDA has claimed that the port is in default on the agencies' intergovernmental agreement, has not provided sufficient maintenance records for the water system and has not done its part to complete a trust deed.

At the end of March, the CCDA formally requested mediation with the port. Hayes said the port saw no reason to mediate.

In an April 29 letter sent with the port's annual report to the CCDA, Hayes wrote that the port had responded to all CCDA requests, but that "none of these efforts are ever good enough for the CCDA."

"By continuing to threaten default and provoke litigation between the parties, with no factual justification, the CCDA does a profound disservice to the citizens of Columbia County," Hayes wrote.

Port Commissioners Robert Keyser and Larry Ericksen, in an April 29 letter to the CCDA, called for the closure of the urban renewal project.

"There is no promise of any future revenue from water users, and the affected taxing districts need all the tax revenue they can get, now," they wrote. "To delay this would be irresponsible from a governing perspective. We urge you to pay off the debt as soon as possible and close out the plan."

Candidates for Columbia County Board of Commissioners responded to questions about the past, present and future of the CCDA. Right their answers here.

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