Extending the urban renewal district to pay off a developer’s outstanding bond debt will ultimately save the city’s financial future from draconian cuts, the city manager said Monday night.
The move would most likely mean the end of River Road Renaissance, the city’s business corridor improvement program that built sidewalks and helped finance facade improvements. The city may foreclose on the properties where bond payments are past due.
The Keizer City Council has yet to take action on the proposal. Formal votes cannot be taken at a work session. A joint meeting of the planning commission and the city’s urban renewal advisory committee will meet Nov. 9, and councilors will take up the matter again at their second formal meeting in November.
“The ultimate goal being to sell it as was intended by using it as security, and take the proceeds to pay down the debt … or reimburse the overlapping jurisdictions for the foregone urban renewal revenues,” City Manager Chris Eppley said.
Details of foreclosure won’t be discussed in open session, said City Attorney Shannon Johnson.
Extending the urban renewal district past its anticipated sunset date in 2012 affects taxing jurisdictions like fire districts, counties and others. School districts are reimbursed by the state for any lost funds. The city must get agreement from jurisdictions contributing a total of at least 75 percent of the revenue; any combination of school, fire and library districts, as well as Marion County, reaching that total will do.
Joe Van Meter, president of the Keizer Fire District Board, said he had told board members “don’t hold your breath” expecting the urban renewal district to end next year “because that’s kind of been our history.
“I certainly don’t think it’s the history we want,” Eppley said.
Developer Chuck Sides is more than a year behind on local improvement district payments, with past due payments totaling about $858,246 on land he owns or leases at the shopping development.
Sides was an original partner in creating Keizer Station; much of the development has since been sold to Costa Mesa, Calif.-based Donahue Schriber. He was not in attendance at a Keizer City Council work session Monday night to discuss the city’s options.
Mayor Lore Christopher said she “believes we owe it to (Sides) not to vilify him. … I’m not defending him, but I am saying I wholeheartedly believe he has tried everything to get this money.”
“Nobody forecast all this coming down,” added Councilor Jim Taylor. “He doesn’t want this to happen.”
The city is ultimately responsible for the debt because the Keizer City Council voted in 2008 to borrow $26.8 million in bonds to build infrastructure like streets and sewer at the shopping development. Landowners are then charged installments twice a year.
“They asked us to do it, and after doing an exhaustive analysis of their financial capacity and the value of the properties … it appeared as though it was a decent risk for the city to take to jump-start that development,” Eppley said.
While bondholders get regularly-paid interest installments, the principal is not due until a giant balloon payment in 2031. The city has yet to collect more than $24.3 million of that principal because it isn’t yet due.
“What we don’t want to have happen … is basically take a step back, do nothing and wait until 2031, and push off the problem to a future generation of city staff and city councilors,” Eppley said.
Eppley expects any extension to last between 18 months and two years.