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Eugene Weekly : Commentary : 2.18.10

 

Help LCC, Not URD

Urban renewal is a Byzantine scheme

by Bonny Bettman McCornack

Back in November 2007, the city of Eugene was forced by citizens to ask the voters, “Shall urban renewal plan be amended to increase the spending limit by $40 million and extend the plan’s ending date?” Eugene voters said, “Hell, no!” Some 32,000 cast ballots against the plan amendment while only 18,000 supported it.

That hasn’t stopped the city from trying to scam the taxpayers again. They are choreographing yet another Urban Renewal District (URD) plan amendment  for downtown to increase the spending limit and expand the geographic boundaries. A council majority of five can amend the plan any time in way for any amount — without asking voters. 

The urban renewal plan uses a Byzantine scheme to reallocate property taxes, taxes that pay for education and essential government services, by diverting a portion of that revenue to redevelop a 17-block area in downtown. 

The previous council, which renewed the UR plan to build the library, promised the community that the plan would fund only the library and would terminate when the library debt was retired. The library debt was paid in full in December 2009. It is a promise the city clearly does not honor.

This time, Eugene officials are using LCC and the proposed VA clinic as their poster children to coerce taxpayers into complacency so they can increase the URD spending limit and thereby keep the plan active instead of letting it expire. 

Replacing the LCC campus downtown is an extremely worthy project for a very deserving community asset. The city should do all it can to help LCC bridge its projected $8 million funding gap, but the city should not condition its help for LCC in order to leverage the continuation of the URD. 

The downsides to this scheme are too numerous to list. LCC is currently deprived of about $100,000 per year that goes to the URD. Ironically, the revenue diverted to the URD from LCC comes from operational budgets as well as from their recent $83 million bond (promised to be dedicated for preservation and maintenance of existing facilities only) and will be used for the new building. Money for operations is limited and irreplaceable due to Measures 47/50, whereas capital construction, for projects like the new campus, can be funded with bonds. Bonds don’t take money away from education and other essential government services. 

The city can, and should, help LCC. The city can use a capital bond or a revenue bond. Or the city can take the additional $850,000 per year that will be refunded to the general fund upon termination of the district and dedicate it to paying off a revenue bond for LCC. 

The city can use the money and resources it currently has available, including, but not limited to, the $22 million in the capital facilities reserve. The city can grant the Sears site and adjacent parking lot to LCC. The city can let LCC retain ownership of its current site, which will be a more valuable asset once the new campus is complete. 

The other major project city officials are using to justify the diversion of your tax dollars into the URD is the proposed VA clinic. Everyone supports the clinic, wherever the federal government decides to locate it. But the city isn’t a real player in this scenario. The federal government and its potential landlords, PeaceHealth, will be making that decision in their own time. Neither of those entities need the money more than the schools and public services that will be forced to hand it over to the URD every year, if the plan is amended. 

It is the VA clinic that would necessitate a URD boundary expansion. Remember that the city gains the power to condemn property within the URD’s boundaries. 

The city is addicted to UR as a funding mechanism because they can use the funds, without asking voters, for projects that do not have to compete for funding priority with essential services and education. The city takes a cut of the funds for every project and uses it to pad their budgets. Every year the UR accounts hemorrhage money for administrative costs, consultants, surveys and lawyers fees, etc. The 2010 budget shows that more than $500,000 was diverted to “administer” the downtown URD, not counting payments to lawyers and other miscellaneous.

Even without a project, as is the case with the city’s other URD, the Riverfront URD, money still flows into the district’s accounts every year, and the city spends abnormal amounts of it on administration. 

There is no cumulative total available for how much money has been diverted to “revitalize downtown” over the 42 year duration of the UR program. Since 1968, UR has been taking a cut of revenues from 4J, LCC, Lane ESD, Lane County’s general fund, city of Eugene’s general fund, bonds and levies. UR robs those services of revenue.

If the city terminates the URD, then at least $1.9 million per year will be refunded to the taxing districts, replenishing the budgets of schools and public services. Any newly approved bond or levy will increase the obligation to the URD from the taxing district for the duration of the plan-which-never-ends.

It does not take an economics expert to see that 42 years of using the “tool” of UR financing has been an unmitigated failure. Other parts of town like Oakway and Whiteaker, which are outside the URD boundary, are thriving without UR “investment” while the property within the URD boundary is — to say the least — unrevitalized, despite 42 years of cash infusion. 

At a recent council work session, Mayor Kitty Piercy opined that the community supports LCC and the VA clinic. She then added, “It’s really about what we are trying to accomplish; it’s not about the tools.” OK, yes, exactly. Therefore facilitating these worthy projects should not hinge on use of the “tool” of UR financing. The city should not tie the fate of LCC or the VA clinic to the controversial and destructive UR financing tool. The city should not exploit LCC’s community support so it can continue using the URD as its own special slush fund. The council should terminate the URD and use existing resources to facilitate the downtown projects.       

Bonny Bettman McCornack is a former longtime Eugene city councilor for Ward 1.