By CRAIG MURPHY
Of the Keizertimes
State legislators have delayed approving legislation dealing with contentious parcels in Keizer Station, but that didn’t fully satisfy city leaders on Tuesday.
The House Committee on Rural Communities held a work session and accepted public testimony for several proposed pieces of legislation, including House Bill 4017. The bill was written specifically in relation to the Local Improvement District (LID) assessment on two parcels of land in Keizer Station owned by Timm and Linda Rawlins.
Linda Rawlins met with lawmakers last June and stated the LID assessment of $6 million was severely out of line with the property appraisal at the time of around $300,000.
This year, city leaders and attorneys on behalf of the city have been battling back, making public figures and timeline that paint a different picture. In addition to the pending legislation, the case is also in court.
During her State of the City address earlier in the day Tuesday, Keizer Mayor Lore Christopher said a summary judgement on the case is expected on March 7.
While the Rawlinses own the two properties in question, a third-party lessee, Northwest National LLC affiliated with developer Chuck Sides, had been making LID payments on behalf of the family, while also paying rent to the Rawlinses.
LID payments to the city stopped in 2010. After waiting three years, attorneys for the city began foreclosure proceedings last spring, since the city is having to make payments on the LID loan every six months.
As he did last June, Dave Hunnicutt from Oregonians for Action sat with Linda Rawlins on Tuesday.
“I’m an advocate for local control, but in this case there needs to be at least modest limits on cities,” Hunnicutt told committee members. “They have modest amounts of limits in California and Idaho. If two states that far apart (politically) can impose some limitations, there’s no reason Oregon can’t do the same thing.”
Linda Rawlins quickly broke down into tears during her brief remarks to legislators.
“All we want is a fair chance to develop our property,” she said. “We haven’t been able to do that with the huge assessment on our property. It’s been really hard on our family. I just hope you guys will help us develop that. We hope it’s a win-win for everybody. We hope the city receives future tax revenues. We want to be on the same side as the city. We just need some help from you.”
Rep. Kim Thatcher of Keizer, one of the committee members, directed a question at Rawlins.
“Is there any other way you can sit down with the city and work out something outside of this?” Thatcher asked.
“We’ve made many attempts to do it,” Rawlins replied. “We haven’t been able to work with the city. The city hasn’t been very helpful in meeting in the middle at all.”
City Attorney Shannon Johnson and City Manager Chris Eppley represented the city at the hearing.
“The Rawlinses signed and agreed on three contracts to pay the LID,” Johnson said. “We had been negotiating (last year). The city offered to foreclose on the piece (of property), but that was turned down. Believe me, this is nothing personal against the Rawlinses. We sympathize with them. That’s why we waited three years. But we have to pay these bonds, each six months more than $100,000.
“We can’t use any funds unless the money comes from the bonds,” Johnson added. “We don’t have any other choice. The interest costs are snowballing. Every six months we have to pay. The litigation is getting dragged out.”
Johnson said the LIDs were initiated in 2005, after years of planning. He emphasized the Rawlins properties were included in the improvements from the beginning and noted the family purchased the property for $139,500 in 1994.
“They signed a lease giving them $12,500 a month in rent for the first year, then $25,000 a month after the first year,” Johnson said. “We went forward in 2005. The improvement project was completed in 2008. They signed a deal to waive all objections to the LID. They waived their final rents. We don’t now for sure how much they received in rent, but we heard up to $2 million. They also had the LID paid on their behalf. Now, after receiving that benefit for nine years, they don’t like the deal now. They quit paying on the LID and we have no other choice but to foreclose.
“This was an investment for them,” Johnson added. “They bought it for $139,500 in 1994 and made $2 million on it. If (the legislation goes forward), the city would be out $6 million, they keep their $2 million plus the property. For the legislature to attempt to change rules in the fourth quarter like this is unconscionable. With a retroactive effort like this, how does someone pay their bonds? How do other bondholders look at this action later? Our proposal would be to drop this legislation.”
Johnson then took one more shot.
“It’s real easy to feel sorry for the Rawlinses when they come up here,” Johnson said. “But there’s 37,000 people who live in Keizer and they’re the ones that are going to be paying the tab.”
Eppley had a similar view.
“You have a case here where a real estate investment company made a purchase and had a 2,000 percent profit,” Eppley said. “After the proposal goes bad, they want the 37,000 citizens of Keizer to offer them a safety net or buyout. I am sympathetic to the Rawlinses. I wish there was a way to resolve this. But this has been dragged out. The citizens of Keizer are on the hook more and more each day. We can’t postpone this any longer.
“I ask you to turn away from this folly,” Eppley added. “The piece (of legislation) that’s left is incredibly silly. I can’t imagine we’re here to talk about this.”
Johnson said the LIDs on the Target and Lowe’s properties were capped at $1 million and $1.2 million, respectively.
Rep. Brian Clem asked if limiting the flexibility on LIDs would help in these types of situations.
“Cities have few tools to use to encourage economic development,” Eppley said. “The LID is basically it. On one hand I’m enticed by the concept, since in a way that would make it easier. On the other hand, I’m worried about limiting tools when we only have one tool.”
More discussion on the topic was expected to take place Thursday, Feb. 13, but the bill has been postponed.