While I am against the continued depletion (now more than $2 million) of our property tax reserves for loan payments on the Safeco purchase, I am voting no on city ballot Measure 3-295, the so-called 'refinance' of the $20 million Safeco loan. Here's why:
We have all refinanced personal or investment properties when it was advantageous to do so. Part of that process usually includes a 'pro-forma' statement showing the benefits and costs of the replacement financing.
Why isn't there such a statement for the Lake Oswego property taxpayers in the 'explanation' of the ballot measure? This is a 'new' 20-year mortgage and lien against our personal residences. Many Lake Oswego residences are well above the $300,000 assessed valuation level and will generate many multiples of the $105 property tax increase - for 20 years and for a purpose we cannot know in advance of assuming the debt.
At a March 17 'special' Lake Oswego City Council meeting, representative Chip Pierce from Western Financial Group made a presentation in which he noted that current municipal bond market rates, then around the 4-5 percent range, were about the same as the credit line interest rate. After a brief discussion, the council decided not to provide this information to voters in the ballot's explanatory statement.
The explanatory statement mentions 'potential city uses' for Safeco, which could include the 9-1-1 dispatch center and the police department facilities. These 'essential functions' require the building to be of the highest level of structural design and integrity to withstand certain levels of seismic activity.
For many months members of the city council have suggested that the Safeco building, in its current condition, could be used for these functions.
However, at the Feb. 8 and 9 goals meetings sessions, Assistant City Manager David Donaldson announced that the building does not meet these stringent earthquake standards and that its location presents difficulty for reliable microwave transmissions for 9-1-1 dispatch services to Milwaukie and West Linn - cities that buy that service from us. Why does the explanatory statement for the $20 million bond say that the building could be used for essential functions without explaining that bringing the building up to code will require millions of dollars more spending? The explanatory statement should have disclosed this. For $20 million, we are getting an 'as is' building, not a building that is 'ready to go' for these or any other important services. The city has hired an architectural engineering firm to come up with a cost estimate for upgrades, but it doesn't appear the report will be ready before the vote.
Also mentioned in the explanatory statement is that some type of partnership with a private entity could be a possibility. The council has talked about leasing out over one half of the building (approximately 44,000 square feet) to a private party. Did you know that municipal bond interest rates increase whenever square footage of a publicly owned and financed building is used for private purposes? Was Safeco purchased by the council to be a rental building? Some city councilors have stated that it could be as long as 15 years before they decide how to use it. Where in the city goals does it say that the council is in the business of being a landlord? Or a property speculator, for that matter? All of this information is missing from the explanatory statement.
A 'pro-forma' statement, bond prospectus, discussion of uses and their attendant costs, etc., is always required and presented to the bond/lien holders and bond rating agencies. Why isn't such information provided to us 'borrowers?' For many taxpayers this could mean a sizeable increase in property taxes, in addition to a 20-year lien on their property.
For these reasons I am voting no on the bond request 3-295 and I hope that my fellow residents and taxpayers will thoughtfully consider these questions and concerns before they cast their votes as well.
John Surrett is a resident of Lake Oswego.