Citys six-month plan would cost too much
Having failed in May to obtain voter approval for financing the Safeco property purchase, the Lake Oswego City Council announced its work plan for the decision-making process on the future of the property. The six-month plan, which will cost taxpayers an additional $187,000 for outside consultants excluding the thousands of hours of work time incurred by numerous city employees, will culminate in a report in January with recommendations for the property.
The work plan includes an assessment of current city needs and properties, evaluation of possible uses of the property, both public and private, and ramifications of sale of all or a portion of the property.
The city acquired the property in July, 2006. A reasonable person would have expected that the assessment of city properties and evaluation of the future needs and uses of the property would have been completed before the city acquired the property in 2006. The third part of the plan, assessing the ramifications of selling all or a part of the property when the Parks and Recreation and the Sewer Interceptor departments are housed there, is more akin to deciding how to bandage oneself after a self-inflicted wound. City council made deliberate and conscious decisions when they placed these departments there at a cost of more than $250,000 knowing they could use the displacement argument in the future and knowing that the financing decision on the Safeco purchase was unsettled.
On the positive side, the plan does include a new appraisal for the property. Hopefully, it will be done by an independent, reputable appraisal firm. The valuation will be interesting given the current state of the economy and mortgage interest rates, and the mayor's assurances of the value of the property in December, 2006.
Responding to William Barbat's Citizen's View in the Lake Oswego Review that the city 'will lose millions of dollars in interest and development costs before we get to vote (on the retention and development of the site),' the mayor said 'As for your concern regarding the interest we are paying on the loan, … the interest paid is well below the increase in the property value of the Safeco site. I can assure you that, because of the desirability of that piece of property, it will never be a white elephant. In the event that it does not become a community center, the appreciation of the property will more than cover our costs of acquiring and financing.'
By the time of a sale, assuming it could be done in 2009, those costs will be at least $23.4 million-$20.7 million acquisition cost and $2.7 million estimated interest cost. I will be quite surprised if the new appraisal for this single-user facility is more than $18 million. According to the plan, the appraisal will be completed by Sept. 30.
This 'investment' was a poor one to begin with, but current city councilors still say it was a good investment and continues to be one. Knowledgeable investors realize that if you make a bad investment, you accept the mistake, and sell or dispose of it as quickly as possible so that more productive future decisions can be made. This city council is still mired in its original bad decision.
We can only hope a new council will soon come to the realization that there never will be a cost-effective, acceptable use for this property because of the price paid and that they will quickly bring the citizens' losses on this 'investment' to a deserved end.
Gordon Umaki is a resident of Lake Oswego.