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Eugene Weekly : News : 5.27.10

Tax Diversion

Council passes urban renewal for LCC, cops

By Alan Pittman

The Eugene City Council voted 6-2 May 24 to continue to divert millions of dollars in taxes using urban renewal for at least nine more years.

Councilors Betty Taylor and George Brown voted against the tax diversion plan and Councilors Alan Zelenka, Andrea Ortiz, George Poling, Chris Pryor, Mike Clark and Jennifer Solomon voted for it. Mayor Kitty Piercy spoke in favor, but she only votes in a tie.

The same councilors voted 6-2 against referring the plan for voter approval. Two years ago, voters defeated a larger downtown urban renewal tax diversion plan 2-1.

The city’s current plan will divert a total of about $20 million from city, county and state schools property tax revenue through 2019, according to city documents. 

Councilor Zelenka argued urban renewal raises funds “without raising taxes, without hurting schools.”

But Councilor Taylor, a retired teacher, disagreed. “It does not come from nowhere,” she said of the revenue diversion. “It does hurt the schools statewide.” 

City documents show the city planning to use the diverted taxes to borrow money to give LCC an $8 million subsidy for a new downtown building and borrow money to increase Eugene Police Department spending about $5 million. The city also plans about $500,000 in improvements for the downtown Farmers’ Market. 

The city plans to spend about $1.2 million on “administration.” The rest of the money will go for interest and borrowing costs.

Brown and Taylor said they supported giving LCC $8 million for its project, but they said they wanted to fund LCC by ending urban renewal and using the city’s share of money diverted by the scheme for LCC rather than also diverting money from state school funding and the county. But Brown and Taylor’s proposal to immediately fund LCC by ending urban renewal was voted down earlier 6-2. 

LCC President Mary Spilde said after the May 24 meeting that she’s “pleased” with the vote. She said she had no position on how the city provided the funding for LCC. “It’s not our job to tell the city how they should fund the project,” she said. “That was their choice.”

Councilors Zelenka, Clark and City Manager Jon Ruiz argued that referring urban renewal for a November vote would interfere with LCC’s construction schedule. 

Ruiz said LCC wants to start building this fall or winter. “It would delay the project substantially.”

Spilde said “it’s more likely to be late winter or early spring” when construction on the building starts. But she said if the council had voted to refer urban renewal, “it definitely would have given our board pause.”

The city and developers have failed in at least three other attempts to fill the pit across from the library downtown. Spilde said she’s still raising money for the project and declined to say whether she’s 100 percent, or even 80 percent confident LCC will actually build something. 

But Spilde said LCC is “very committed” to the project. The additional fundraising is for the option of a larger building, she said. “It’s a matter of scale.”

Besides LCC, the city plans to spend the other big chunk of money on increased police spending. The police have said they will hire more officers to crack down on “behavior crime” by street people downtown. 

Funding the police through urban renewal insulates the money from the city’s normal budget process of weighing spending increases against budget deficits and other city needs. While increasing police spending dramatically with urban renewal, Ruiz has proposed a raft of unpopular budget cuts including closing Amazon pool for a month this summer and cutting library services, animal services, bike path maintenance and parkland acquisitions.

The city has not said what it will do when urban renewal funding for the police ends in nine years as stated in the plan. At that point the city could either have to lay off officers, cut other city services to fund the police positions, figure out how to continue urban renewal funding for police, or increase taxes. 

Opponents have argued that using urban renewal to increase the police budget is illegal. But the city argues that it has met legal requirements for capital spending by laundering the police money through a loan for a downtown parking garage. 

The city has also not come up with a plan for what it will do with LCC’s hulking old building downtown if it moves to the new site a block away.

Opponents have threatened to gather 8,000 or more signatures to refer the urban renewal plan to voters if the council won’t. “The majority of council will not vote to refer it because they think it may fail,” Brown said.

Piercy opposed a ballot vote. “We’ve had a thoroughly democratic process,” she said.

Taylor said urban renewal has failed to actually renew downtown with downtown property outside the area increasing in value faster than inside the district. After 42 years, the city still counts 38 “blighted” properties downtown in its urban renewal report, she noted. “It is not working.”

But regardless of how it’s paid for, there appeared to be broad agreement that the new LCC building will help downtown.

“If you tried to find the most perfect project downtown, you couldn’t find one better than this LCC energy center,” Piercy said.