WEB funding is on the local ballot
Lake Oswego voters will soon decide whether to fund the $20 million cost of the city's West End Building through property taxes, a move that would repay a costly short-term loan used to buy the building and replace it with a fixed rate, 20-year debt.
The proposal on the May 20 ballot would cost Lake Oswego property owners 35 cents per $1,000 of assessed property value, or $105 a year for an average Lake Oswego home, assessed at $300,000.The Lake Oswego City Council purchased the West End Building from Safeco Insurance in April 2006 using a temporary line of credit. Since then, city officials have funneled $1 million a year from the city's reserves to cover interest on the loan.
Officials had intended to quickly design a community center for the building, then sell bonds to pay for both the purchase and the renovation. But controversy surrounding the move slowed a subsequent plan to convert the building into a community center. Since then the city has paid $2 million in interest on the line of credit, drawing a $5.5 million reserve fund down to $4 million, even with other revenue coming in.
A proposal on the May 20 ballot would pay off the $20 million credit line with bonds, which property owners would repay over 20 years. The plan would direct an annual $800,000 to interest on the bonds and another $600,000 to pay down the debt.
A 'no' vote on the idea means Lake Oswego officials would keep paying the annual $1 million in interest on the temporary loan while decisions about how to use and pay for the West End Building are made.
City officials plan to launch talks to guide plans for the West End Building by June.
Meanwhile, elected officials say the time to plan how to pay for the building is now. But opponents to their proposal believe voters should reject approval of the bond measure until more is known about what the city will do with the West End Building and how much those plans will cost.
Lake Oswego City Councilor Donna Jordan said voters already decided to keep the building in an election in November 2007. The plan to refinance the property's purchase with bonds was made public then, she said, and following through with the sale of bonds only makes sense.
'The vote in November was clear that we had enough people in this community who really felt we should keep the building,' she said.
'We could continue to pay the way we are until we know more about what people want to use it for but we're always going to have to pay the $20 million,' said Jordan. 'I doubt there's going to be a better market.'
Mayor Judie Hammerstad, Jordan and the other five Lake Oswego City Councilors are advocating for a 'yes' vote on Ballot Measure 3-295, saying they can get a 3.88 percent interest rate over the 20-year life of loan if bonds are sold now. But opponents believe voters should reject the city council's idea. They say property owners shouldn't pay for the West End Building before they know what the city intends to do with it and what the total cost of those plans will be.
John Surrett led a group called Ask Lake Oswegans through the last election, strongly advocating for selling the West End Building and limiting the future purchasing power of the Lake Oswego City Council.
Surrett said voters shouldn't be asked now to buy the West End Building 'as is.' While the city eyes a myriad of uses for the building, which range from Parks and Recreation programs to a future police department and 9-1-1 call center, Surrett said too much about the real cost of owning the West End Building is unknown.
The city pays $25,000 a month for upkeep of the building and has spent roughly $167,000 planning for a community center there.
Surrett said untold millions potentially lie ahead. Without a complete financial picture, he said, voters could potentially buy the building now but later reject the cost of funding programs there. He worries the city could rack up needless expenses to maintain the building in a scenario where it is little used.
'What we're doing here is writing them a blank check. Everything that needs to be done improvement-wise with Safeco would have to be done through another bond measure or they'll go back to (spending) reserves,' said Surrett.
Other opponents like Kami Kehoe, a candidate for Clackamas County Commissioner (Position No. 5), echo Surrett's concerns about the building's uncertain future.
But supporters say rejecting the bond measure now could force reductions in other city services if officials must find other ways to pay for the building.
City officials say they will not sell the West End Building if the bond measure fails, based on voters' choice to keep the property in November.