Jeb Bladine: Take blindfolds off RB Rubber project planning
Let’s acknowledge up front that community development under Oregon’s urban renewal law is complex and confusing. But that doesn’t justify the city of McMinnville’s long-delayed and inadequate responses to questions about the proposal for development of the RB Rubber property.
First, a quick urban renewal (UR) primer:
Cities or counties decide, based on assessment of “blight,” that specific geographic areas qualify for UR development. UR plans establish a “debt limit” for projects, which is $30 million in McMinnville’s 2013 plan. Payback of debt, plus interest, comes from “tax increment financing” (TIF) — property taxes going to local governments are frozen upon creation of the district, and increased or new taxes on properties in the district are paid to the UR district.
The idea is, spark new developments paying property taxes sufficient to finance UR debt, then retain those new taxes for local governments when the UR plan ends. To that end, McMinnville’s UR district borrowed $4.25 million from the city’s wastewater fund to purchase the RB Rubber property, intending to resell the property to an approved developer and pay off that loan.
In April, the News-Register spent almost four weeks pleading with city officials for answers to questions about UR and the RB Rubber project. Here are summaries:
Q. Is interest paid on the RB Rubber loan — and other UR debt — paid by TIF outside the $30 million debt limit?
A. The city cannot answer that question without engaging specialty counsel … “We do not feel comfortable incurring that cost at this time.”
Q. Has purchase of the RB Rubber property used $4.25 million of the $30 million UR debt limit, and can funds received in resale of the property re-establish that portion of UR debt limit?
A. “The Urban Renewal Board has not yet taken action on whether to enter into negotiations with the recommended developer … and thus speaking about any property transaction terms would be premature.”
In other words — just how it struck us — “We don’t know how urban renewal works, and if we did, we wouldn’t tell you right now.”
Being naturally curious and seeing red flags from government stonewalling, we sought our own counsel from one of Oregon’s most knowledgeable experts on UR. Here are the answers we received, passed along in hopes of helping our citizen leaders in their upcoming deliberations.
Interest incurred by UR debt is, indeed, paid back by TIF beyond the debt limit. That means TIF will continue longer in diverting property taxes from local government budgets. TIF will cover the current $20,000 monthly interest on the RB Rubber loan, and will pay all future principal/interest on that loan or as refinanced.
The UR Agency’s purchase of the RB Rubber property has, indeed, reduced McMinnville’s UR debt limit by $4.25 million. Any funds from resale of the property can be used to repay the loan or, if appropriately handled, to pay for other UR projects, but the UR debt limit has been irrevocably reduced.
There’s definitely more to come on this story.
Jeb Bladine can be reached at jbladine@newsregister.com or 503-687-1223.
Comments
B
Well that's enough information to give one a headache. Is this really "stonewalling" on the part of council or is really not having an understanding of the situation? I suspect the latter.
sbagwell
Jeb's reference is to difficulty prying information out of the paid staff, not the elected council.
Steve
Bigfootlives
Who’s in charge of this? Does the mayor and council have direct supervision of paid staff? That’s a weak excuse and you know that.
I wish there was some front end digging by SOMEONE at the NR prior to the city getting involved with this mess. You know, the 4th estate theory and the press’ responsibility to be the public’s watchdog over government.
Steve, you and I commented back and forth when this plan was hatched, the employees of Ultimate RB hadn’t even gotten their last check. You gave your ringing endorsement then, how does that represent the public in any fair way?
Investigative journalism and sticking up for the public sells papers, I don’t get the disconnect. Jeb’s post is a little too late given the editorial board’s original consent
Jeb Bladine
Bigfootlives ... Just to add to the comments:
Answering one question: The City Council has direct supervision over the City Manager, who then has a combination of direct/indirect supervision over city staff.
For 12 years (since creation of the UR District) it has been the city's intent to see the Alpine District developed -- in great measure because new buildings in that area would produce more "tax increment financing" to fund the primary UR focus of core downtown McMinnville.
Acquiring the Ultimate RB property was long considered one key to that development. The citizen committee recommending that acquisition intended that the property be acquired and "flipped" to a developer. It apparently was not understood by the citizen group or even, perhaps, by city staff, that the property purchase would irrevocably use up $4.35 million of the UR District's debt limit, even if the property were resold.
Then, instead of a quick flip, the project was expanded to include a long process of vetting developers while paying about $20,000 in monthly loan interest. It was only very recently that the citizen committee learned of the prospective developer's request for free land and many other concessions as conditions to a feasible project.
What seemed a good move in 2023 has evolved into a controversial, continuing process that will have more opportunities for public input and city council considerations. Every major step of that process has been and will continue to be reported by the newspaper.