Milwaukie passes light-rail agreement with TriMet

City to pay $1.35 million upfront, plus annual installments over a 19-year period

Milwaukie moved one major step closer to the construction of the light-rail line into Portland when its City Council unanimously passed an agreement with TriMet on Tuesday to pay Milwaukie's $5 million share of the project in installments over 19 years.

Milwaukie agreed in 2008 to pay this amount upfront upon TriMet's reaching an agreement with the federal government, which they did on May 22. But Milwaukie can not afford this without serious cuts to public services.

Instead, according to the agreement, Milwaukie will pay $1.35 million upfront in an initial $360,099 July 1 payment plus 'permit fees and charges,' and the remaining $3.65 million in annual installments over a 19-year period. Construction will proceed on the Orange Line project, which will connect Milwaukie to Southeast Portland and downtown.

The agreement also includes measures for local enhancements including the establishment of a quiet zone; improvements to sidewalks, Kellogg Bridge, and Main Street Station; and habitat improvements at Kellogg Lake and Crystal Creek.

The payment installments come with a 5 percent interest rate, which raises Milwaukie's total obligation to $7,358,575. This is 147 percent of the original $5 million. However, City Council hopes to pay this debt with a bond measure, which would bring a lower interest rate.

This will be brought to a referendum that will likely be held in May 2013, said Council President Greg Chaimov.

'I'm hopeful that our residents will in May see the benefits of passing a bond that will allow us to pay a much lower interest rate,' Chaimov said, estimating it would save the city 'hundreds of thousands of dollars.' While he allowed that 'in theory,' there is nothing to keep the city from indefinitely deferring its debt further and further into the future, he said Milwaukie is 'not that stupid.'

Council addresses concerns

Other options would be either to make dramatic cuts and pay all the money upfront, or to back out of the agreement. Opponents to the line have pointed to other intergovernmental agreements that have been ignored without recourse. Jim Sanders of Milwaukie said at Tuesday's meeting that the IGA was a 'politically driven agreement, and it can be politically undone.'

But Councilor Dave Hedges said this only happens when all parties to an IGA agree to it, which is not the case here. Thus, TriMet would have grounds to demand damage payments. The alternative to the agreement would be a settlement with TriMet in which Milwaukie would pay a substantial amount of money (though less than $5 million), and may not receive the benefits of a light-rail project.

Opponents argue the project would divert funds from other important public services. Hedges denied rumors that the city's public safety budget has already been cut.

Opponents also say the deal is unfair because TriMet will not be able to pay its share. Sanders says TriMet borrowed $60 million against future operating revenue for the project, but they operated at a loss last year.

Mayor Jeremy Ferguson recused himself from the 4-0 vote, citing a conflict of interest. He was previously employed by TriMet.

Along with Milwaukie's $5 million, Clackamas County will contribute $25 million to the project. Some other backers of the approximately $1.5 billion total cost of the project include the city of Portland, TriMet, Metro, the state of Oregon and the Federal Transit Administration.

Council passes budget

City Council also adopted the proposed budget for the 2012-14 biennium at its June 5 meeting.

The city's first biennium budget is intended to allow more time for long-term planning, program review, and evaluation. The Budget Committee plans to dig deeper into issues during the years they don't have to help craft the budget while still preserving the ability to offer annual updates on budget estimates and annual reports as requested by City Council.

Some of the key elements of the passed budget include moving away from the printed and mailed version of the city's monthly newsletter to a monthly utility-bill stuffer and online-only issue, making the initial two payments to TriMet for the light rail project, a reduction of 3.57 full-time-equivalent employees by not filling several current vacancies, and utility rate increases to provide necessary funding for planned capital improvement projects. With a forecast of declining revenues in the years to come, the budget also calls for a reduction on the operations budget, and spending down of reserves.

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