Cash ready to flow to River District
PDC plans to issue $30 million in bonds
The Portland Development Commission, which froze salaries and cut spending last January because of a state Supreme Court decision that restricted its tax-increment financing, appears to have put its financial constraints behind it.
At least for now.
The city plans to issue more than $30 million in bonds in early 2003 for PDC projects in the River District.
The bond sale is a sure sign that the city is comfortable moving ahead with long-term funding and lines of credit for the redevelopment agency since the so-called Shilo decision curtailed its financing last December.
'The revenue impact of Shilo being forecast is not to be as bad as we initially thought it would,' said Eric Johansen, debt manager for the city's Office of Management and Finance. 'The projected decline in revenues we feared won't be as big as we feared they would.'
The high court ruled that the city had violated a property tax-limitation provision in the Oregon Constitution when it collected urban renewal funds for the PDC.
City finance leaders are now studying 2002-2003 assessed property values throughout the city to determine the amount of tax-increment financing that can be used in the 10 urban renewal areas. Based on that increased property value, a given amount of debt could be issued for an urban renewal district, Johansen said.
'It doesn't mean that's what we would do É we just want to know the given amount of capacity for borrowing,' Johansen said. 'It may be we do something after the River District next year. We want to get this one done and see how it is received by the market.'
The bonds Ñ the first for the River District Ñ probably would receive a lower rating because they would not be backed by special tax levies. In the past, urban renewal bonds have been backed by special levy. Because of the higher interest rate for the new bonds, it would cost the city more to service them.
Making its way back
The Shilo lawsuit, filed by Shilo Inns owner Mark Hemstreet, will still require the PDC to give back money it improperly raised through city property taxes. Last June, the Oregon Department of Revenue calculated a new interim rule for dividing property taxes that barely altered PDC's revenue.
On Feb. 5, the state tax court is expected to review a motion filed by Hemstreet attorney Gregory Byrne to expand the lawsuit to a class-action suit. If the judge grants the motion, the petition will be amended to grant refunds to taxpayers for the period from 1996 to 2000.
The agency has set aside $1.2 million to prepare for taxpayer refunds, although a worst-case scenario puts the amount as high as $30 million.
'The only question now is how much money PDC has to refund,' Byrne said.
The Shilo case isn't going to resolve the controversy over urban renewal spending, but it has brought the issue to the forefront, he said.
'It's a very political issue. From my own view, the problem with (tax-increment) financing is that it takes money from schools,' Byrne said. 'Schools are in more need of the money than urban renewal agencies.'
The PDC cut its proposed budget by 22 percent, to $211 million, after the Shilo decision was handed down last January. The commission delayed or reduced about 60 projects.
Executive Director Don Mazziotti said the PDC has just begun the process of meeting with stakeholders about next year's budget but expects the revenue levels to remain the same as this year.
'We have a full plate of projects to fund,' he said. 'We're hopeful the ones we have budgeted are completed.'
'It's hard to predict what next year's budget will be,' said Jim Raleigh, the commission's budget officer. 'The Shilo decision slowed down a lot of projects last year.'
Public input wanted
The PDC, whose fiscal year 2003-2004 budget won't be adopted until next June, has begun holding public forums about its proposed projects and programs. The next forum is scheduled for Nov. 16 at Mt. Hood Community College's Maywood Park campus, 10100 N.E. Prescott St.
PDC staff members also are meeting with neighborhood and business groups this month about redevelopment efforts.
The PDC is still spending the proceeds from a bond sale issued several years ago to benefit the Airport Way, Convention Center, Downtown Waterfront and South Park Blocks urban renewal areas, Raleigh said.
Mazziotti said that if the 2003 bond issue goes ahead, it's too early to say which River District projects will move forward.
The district stretches from Northwest 16th Avenue to the Willamette River down to the Broadway Bridge and up to Northeast Ninth Avenue. It had several projects on hold last year. The financial delays included the city's $1.2 million share of the Brewery Blocks redevelopment and $1.5 million for promotion of destination retail.