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Eugene Weekly : City-Zen Journal : 5.20.10




Urban Renewal

City breaks law on tax diversion

By Bonny Bettman McCornack

City officials are busily getting their ducks in a row so they can cram through another amendment to the Downtown Urban Renewal District (DTURD) on May 24 — making it the oldest Urban Renewal District (URD) in Oregon. That will be 52 years of diverting taxes into a 17 block area of downtown. City officials have created an ongoing crisis downtown so they can justify an ongoing bailout — of which they take a hefty cut, of course.

It’s time to remove DTURD from artificial life support. Instead, the Kitty for Entitled Eugene and her yes-people are out and about spinning rhetoric of mythical proportions. They claim that URD’s reduction to the state school fund does not hurt students; they wring their hands and exhort that helping LCC replace its existing downtown campus (serving the same number of students) will cause extreme reductions in cherished city services — unless they have URD financing. They mendaciously advertise that the city’s latest plan amendment will transform downtown into an urban pipe-dream, while cynically scapegoating the ruination of downtown by blaming it on the 32,000 voters who killed the last DTURD scheme.

Apparently the truth has taken a holiday in Eugene, and so has the law.

Our lawmakers are lawbreakers. The city’s DTURD is in violation of state law and has been for over a year. 

ORS 457.450 (1)(2) requires the city to notify the Lane County tax assessor when there are “sufficient deposits” in the urban renewal fund to pay off the indebtedness. City budgets and memos document that there were “sufficient deposits” in June 2009 (and likely in ’08) to pay the obligations of the URD and still have more than $3 million dollars in Tax Increment funds left over after exhausting the authorized spending limit. Under those circumstances, state law requires the city to notify the Lane County tax assessor, who in turn was required to cease collecting Tax Increment Funds and refund any extra money to the overlapping taxing jurisdictions (LCC, 4J, Lane ESD, both Lane County and Eugene’s general funds and bonds) thus letting the DTURD expire.

Several legal minds have come to the same conclusion, including Lane County’s attorney, who said, “the city had enough money in the district to pay off the debt as of June 30, 2009, and did not contact the assessor, nor did they turn over the excess to the assessor/treasurer as required by statute.” 

I guess that didn’t jive with the city’s plans. I guess ignoring state law is a perk of office.

The law unequivocally mandates that when the district has sufficient deposits, they shall notify the tax assessor because the state did not intend districts to keep skimming money off tax revenues beyond the spending authority of the plan. The law exists to prohibit the very behavior Eugene officials engaged in — collecting more money than they were authorized to spend. By ignoring the law, the city could keep skimming revenue and eventually accrue $3 million in excess tax revenue in the fund. City officials are banking that approval of the May 24 DTURD amendment will provide immunity from enforcement. 

State law enables the city to run the URD and authorizes the city to remove revenue from the five overlapping taxing jurisdictions. No state agency monitors, enforces, or audits the 85 urban renewal districts in the state, even though they collectively drain $61 million a year from the state school fund. 

It would be an act of good faith for the city to step up and do the right thing: Notify the assessor, stop skimming tax revenue and give back the extra money they pilfered. I wouldn’t hold my breath waiting for that to happen. And herein lies the tragedy: Taxpayers have scant recourse, except civil litigation, to compel their own government to obey the law. Civil litigation is extremely costly and there are very few firms interested in an adversarial relationship with the city. City officials have access to unlimited taxpayer dollars to fund gangs of lawyers. It isn’t fair, or particularly democratic, but when the city breaks the law, then it’s left to average citizens to bear costs of making government accountable. That makes it easy to break the law, because hardly anyone will know and nothing can be done. 

According to Sophocles, “Nobody has a more sacred obligation to obey the law than those who make the law.” Good government and socioeconomic stability require that people respect and follow the law, and that they, in turn, can trust their government to do the same. This whole sordid fiasco further corrodes citizens’ trust in government. But, because the city holds all the cards and has all the power, they apparently don’t care. They want the DTURD money, and nothing, not even the law, will stop them.

Bonny Bettman McCornack is a former Eugene city councilor.