An urban renewal extension to cover the city of Keizer’s bond debt was approved on first reading by the city council Monday night.
The change will allow the urban renewal district to collect more than $5.7 million before reaching the new maximum indebtedness cap. Part of the plan includes defunding the city’s River Road Renaissance (RRR) program, created to revitalize the city’s urban core in a bid to help compete with Keizer Station.
The council’s vote was initially 5-1, with Councilor Joe Egli voting no. Councilor David McKane was absent. But he later agreed to change his vote to yes so that the council wouldn’t have to vote on the matter again. Ordinances require two votes if the first is not unanimous.
Egli said the proposal takes needed funds away from the RRR program. He also said councilors were straying from promises to let the district sunset this year.
“Urban renewal was meant for investing in our community, for growing and getting a return, and this will not do that,” Egli added.
Councilor Jim Taylor saw the vote as insurance for the city. He said that having a lump sum due in 2025 – when the principal is due on the bonds – would render the city insolvent.
The extension got more than the required approvals from neighboring agencies, including Marion County, Salem-Keizer School District, Salem-Keizer Transit and Keizer Fire District. Chemeketa Community College has yet to concur.
The plan allows 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 other taxing districts. It includes paying back the money other districts will forgo.
The move comes as an original Keizer Station co-developer has failed to make payments on a local improvement district (LID) city officials described as the largest in state history.
One resident testifying at Monday night’s meeting openly wondered if the city was giving a free ride to developer Chuck Sides, who hasn’t made a payment on the LID debt in nearly a year.
“He’s not off the hook,” said Mayor Lore Christopher. “This is step one so we can foreclose on that property, take it back and sell it. He will take a loss.”
Salem-Keizer School District will receive annual payments of approximately $33,000 for 10 years. Other jurisdictions will see repayment by 2022, with interest.
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 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.