Of the Keizertimes

In theory, city leaders could enforce penalties of $8,413.71.

In normal cases, one might expect enforcement of penalties.

But in this particular case, not enforcing the penalties will mean bringing in more than $882,000.

Members of the Keizer City Council voted unanimously Monday night to forgo the $8,413.71 in penalties to collect $882,539.57 for the vacant hotel parcel in Keizer Station, situated between Panera Bread and the Target parking lot.

City Attorney Shannon Johnson brought up the topic at the end of Monday’s meeting.

“The hotel site, lot 21, has been in default for almost a year,” Johnson said. “With this possible sale, lawyers involved asked if the city would be interested in giving a discount (on the penalties) if they would pay it all at once. They are offering to pay the $880,000. They’re asking us to waive all or part of the interest due.”

Johnson said he discussed the issue with city manager Chris Eppley and finance director Susan Gahlsdorf.

“The three of us agreed that we would recommend to council that only the late penalties be waived,” Johnson said. “The reason is that the late penalties are additional money to the city that the city does not have to pay out. However, the bond interest costs and property taxes the city fronted to the county are hard costs that we must pay.”

Mayor Lore Christopher summed it up.

“The penalty is $8,400,” Christopher said. “So they’re willing to give us almost $900,000 if we waive that $8,400. I would like to hear any argument against waiving the $8,400 for the $882,000.”

Johnson said a Jan. 15 deadline was given to make the large payment. Council president Joe Egli made a motion to waive the late fees on the lot if payments were made in whole by that deadline.

Councilor Dennis Koho, however, wondered if that would be enough time.

“Is nine days realistic for a payment of this?” Koho asked.

Johnson said that was a decision for the council to make.

“I’m glad you brought it up,” he said. “We chose the January 15 date a month ago and they didn’t object. If you pushed it back a month, February 15 would still be before the next payment is due.”

Christopher agreed with Koho and suggested the deadline be pushed back a month.

“It behooves us to get the payment in full,” the mayor said.

According to paperwork filed with the county, Northwest National LLC granted the property to HTLKS LLC in October 2012. The two LLCs share the same Medford address. The HTLKS name was registered with the state in the same month.

The $882,539,57 is the payoff to the city of principal and interest, as well as property tax reimbursement under the Keizer Station Area A Local Improvement District for the lot.

Johnson noted “a full payoff will benefit the city because we will be able to pay down on the bonds and save substantial interest costs.”