By JASON COX
Of the Keizertimes
The Keizer City Council could vote to extend the urban renewal district to pay down bond debt as soon as Monday, Nov. 21.
An alternative plan proposed by Councilor Joe Egli – which would use monies coming back to the urban renewal district after its expiration to pay down the debt – has gained little traction among fellow councilors. The Planning Commission and Keizer Urban Renewal Board (KURB) also signed off on the extension plan at a meeting last Wednesday, Nov. 9.
The proposal would strip all funding from the city’s River Road Renaissance project, which was implemented to ensure what is in effect Keizer’s Main Street from adverse effects resulting from Keizer Station’s development.
It would allow the urban renewal district to collect 35 percent of what it would have collected with a simple extension of the district, with 65 percent going to taxing districts like Marion County, Salem-Keizer School District, Keizer Fire District and others.
A group of these agencies making up at least 75 percent of the taxing base must consent. That means the Salem-Keizer School District, which would receive 35 percent of revenue from the expired urban renewal district, is a key player. Schools, however, are somewhat insulated in that the state shared school fund makes up the difference when urban renewal districts are formed.
So far, Willamette Education Service District and Marion Soil & Water Conservation District have signed on. The Keizer Fire District Board of Directors rejected the proposal, and Salem-Keizer School District has yet to vote. (See related stories.)
The proposal includes paying back the money other districts would forego, but the city won’t guarantee repayment from the general fund.
The move comes as an original Keizer Station co-developer has failed to make payments on a local improvement district (LID) city officials described last week as the largest in state history.
City councilors in 2008 opted to put the full faith and credit of the city behind Keizer Station’s developers with $26.8 million in bonds. The assessment was spread out over benefiting property owners within the shopping complex.
Some land owners, like Target, paid theirs immediately. Alan Roodhouse, an original partner in the development, continues to make regular, on-time payments. And much of the development was sold to Donahue Schriber, a Costa Mesa, Calif.–based shopping center development and operating firm which likewise continues to make payments.
But Chuck Sides, who partnered to start the development, has not made payments since January 2011. Assessments are sent out every February and August. On the five parcels owned or controlled by Sides, the August 2010 assessments are paid off on three of the five parcels. Partial payments were made were made on the other two. The city has gotten no payments on February or August 2011 billings as of this writing.
City officials have said there’s no outcome – other than Sides making his payments current – that would allow him to keep the land on which the assessments were levied. But at the same time they have repeatedly refused to discuss details of the foreclosure process.
State statutes governing local improvement districts appears to allow for foreclosure after one year of non-payment. This means only some of the parcels appear to be eligible for foreclosure, and one of them has virtually no value – in fact, the county doesn’t levy any taxes on it.
“That property has a number of power poles on it,” said Steve Miner, supervisor of the county’s commercial tax division. “It’s basically unusable land.”
But Sides wouldn’t be the only property owner to suffer consequences. Two of the five parcels are owned by the Rawlins family and their companies.
All parties involved have said Sides and the Rawlins family have a lease agreement whereby Sides is obligated to make payments on the LID.
‘Go it alone’ gets little love
Egli has made clear his objections to city staff’s plan. He has proposed taking some of the new money the city would receive when the urban renewal district expires and using it to pay down on the debt.
Susan Gahlsdorf, the city’s finance director, said going that route would cause layoffs in the next coming budget cycle in anticipation of future financial difficulties. And Egli’s plan would ultimately cost more in interest because principal payments would not be made at the same pace as the proposal preferred by most city councilors.
But to Egli, other taxing districts shouldn’t suffer financially due to a risk the city took on. He said it would prevent the county from hiring sheriff’s deputies, the fire district from taking on firefighters and the transit district from hiring a bus driver.
Gahlsdorf said taxing districts will benefit from additional taxing revenue as a result of Keizer Station, adding the city took on 100 percent of the risk while only receiving 14 percent of revenue.
Egli, a former Keizer Chamber of Commerce president, also decried that River Road Renaissance funds would be going back to Keizver Station.
“Now we are using River Road Renaissance funds to support the development that the funds were set up to help protect against,” Egli said.
Some other councilors feel allowing the city to take on all the burden is financially irresponsible.
“This is the responsible thing to do,” said Councilor Cathy Clark. “I want to make sure we ensure the solvency and longevity of our most vulnerable fund, and that’s our general fund.”
While hardly scientific (only 22 members replied), a Keizer Chamber of Commerce survey showed a majority of respondents disapproved of the plan.