CC Minutes - 05/10/10 Work Session

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Speaking to the board's suggestion that the council seek its concurrence on its future decisions, Mr. Clark suggested that the council might ask to weigh in on some of the board's future decisions. He did not think the board's letter was useful, particularly in regard to the veiled threat it contained, but he believed the issues involved could be worked out. Mr. Clark asked City Manager Ruiz if staff had quantified the impact of tax increment financing on School District 4J. He observed that it would cost the district $100,000 if the City terminated down the district. City Manager Ruiz estimated that the district received an additional net $ 117,000. Mr. Clark noted concern on the part of some school board members about that subject, and asked that City Manager Ruiz forward the relevant information to the board. City Manager Ruiz agreed to do so. Mr. Brown questioned if the council should move forward with the proposal. He noted the testimony offered by former City Councilors Bonny Beaman McCornack and Paul Nicholson, who questioned the legality of the plan, as did he. He believed that the proposal violated Oregon Revised Statute (ORS) 457.450(2) and (3). He wanted to know when the City became aware that the debt was paid on all projects in the district, or when it knew it had sufficient funding to pay the debt. Financial Analysis Manager Sue Cutsogeorge did not recall when the specific calculation was done, but indicated that information was provided to legal counsel in March 2010. Mr. Brown asked when the City knew it had enough money, saying that once the City knew that, by statute, it was supposed to inform the County Tax Assessor of the fact and return any money left over to be returned to the affected taxing districts. That had not been done. Mr. Klein said the statute cited by Mr. Brown had been revised as of January 2010. It did not stipulate what happened when a City was in the middle of an urban renewal plan process that would provide for additional spending authority. He explained that the statute was crafted before there was a concept of maximum indebtedness and was later amended to include the concept. The council had subsequently decided the City would pay no more than $33 million. At some point in the last year the City received sufficient money to pay the maximum indebtedness, but the statute allowed the City still allowed the City to amend the maximum indebtedness amount to allow additional spending. The statute did not speak to whether the City must give notice to the Tax Assessor if it was in the middle of the process of amending the plan. Continuing, Mr. Klein said he had consulted with bond counsel regarding the application of the statute in this circumstance, and it was not clear. The statute had been amended to indicate that if the council did not amend the plan in the current fiscal year, it would alert the County that it had sufficient funding to pay the debt as part of the notice the City gave the County annually each July. The City would not be able to identify the exact amount in question until the Urban Renewal Agency (URA) records were audited after the end of the fiscal year. Mr. Klein said that some people believed that at the same time a city gave notice that it had reached the funding limit, not only did tax increment cease, the plan district terminated. The statute did not say that. The notification provision addressed tax increment, but the urban renewal agency had the authority to spend other funding, such as the Downtown Revitalization Loan Program. Even if tax increment creased, the plan continued. Mr. Klein said that if the City gave notice today it would still have authority to adopt the plan amendment as the plan remained in effect until it was terminated. He said the statute did not speak to the argument offered by opponents, and there were no court cases interpreting the statute. Mr. Brown disagreed with the conclusions reached by Mr. Klein. He found the statute "perfectly clear" and found no ambiguity in the statute. Mr. Zelenka said he specifically asked the City Manager Ruiz if the City was on good legal ground MINUTES—City Council May 10, 2010 Page 5 Work Session