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How much do annexations cost Oregon City?

Are residential “annexations” a profit or a loss for taxpayers in Oregon City? The Oregon Home Builders Association came to town the week before Halloween saying “growth pays for itself.” Serious investigators are saying the opposite. Which is it, a “trick” or “treat?” Homebuilding growth may cost more than projected income and create more “losses” through degraded urban services.

Try a computer search on “cost of residential annexation” and you’ll find reports of many cities and towns in the US looking for answers. Many say citizens need better information. Taxpayers need to be more skeptical.

Did OHBA make its case? Remarks on the front page of the Oct. 30 edition of the OC News, attributed to Oregon City Commissioners Mumm and Pauli, reveal how easy it is for elected officials to engage in self-deception about annexations and growth.

Mumm ridiculed “citizens” for rejecting recent past annexation attempts, saying citizens should not “fear” traffic generated by future annexations. She added voters should be more afraid of an “empty Main Street.” Pauli chimed in saying people (voters) made a mistake in not annexing prime homebuilding sites. Both apparently accept the financial calculation of the Home Builders.

Our leaders should be skeptical when listening to a pied piper like the Oregon Home Builders Association, especially when it comes to city money. For many years the OHBA has promoted home building as the answer to city financing problems. It’s their job to help contractor/developers members make money by offering the treat without revealing the trick.

OHBA executive Nielsen glibly spouts about reports saying millions in revenue awaits cities building houses. The gullible will praise him. The skeptic will pause. Honest appraisal may not show residential growth “pays for itself.”

Many students and “experts” in city financing will tell you just the opposite.

It’s taxable property values on industrial and commercial development that give a city a balanced budget, not residential property taxes.

The tax income from industrial/commercial could be as much as three times the cost of services provided by the city. A city with only houses within its limits would go broke, or suffer limited amenities.

States, counties and cities seek industry with a passion. Officials offer tax breaks and other perks to industry to locate in Oregon. Higher taxable property value created by industry pays the bills. When the auto industry left Detroit it went into the red and eventual bankruptcy.

What about Oregon City? The population has doubled in the last 25 years from 15,000 to 30,000. City limits have expanded to meet the needs of added residential units. More people, more streets, more parks, more water users, more sewers, along with more tax income.

Did we gain enough new income to pay the additional costs? The answer seems obvious. Streets are crumbling, (a new utility fee was imposed by a City Commission to solve a multi-million dollar problem), and we are told water pipes are plugging up. Public works officials say we need many more millions for pipe repair and replacements to keep the water flowing. Your water rates may go up soon.

Tri-Cities sewer district has expanded treatment plants to handle the additional waste flow. Sewer rates will go up.

Oregon City parks suffer from lack of maintenance. A million dollars’ worth I’m told, and park officials talk about another “fee” to catch up.

To meet budget problems, OC moved its city fire protection service to a fire district at a higher rate to citizens.

The police department has grown to be 40 percent of the city operating budget. Homes are a target for crime. In Oregon City illegal entry is our leading problem, and OC police will soon have a special traffic team, according to City Manager David Frasher, as traffic clogs many streets in OC.

New homes bring need for new traffic control with lights and road improvement. Rebuilding Molalla Avenue and the Highway 213/Beavercreek Road corner was the direct result of new traffic, and the millions spent were not recouped from new homebuilder charges. Nor were the millions of federal and state dollars spent at the junction of Washington Street and Highway 213.

Doubling our population in a quarter century requires expansion of Oregon City Public Library services. A vote on spending $10 million or more is projected be on the May ballot.

Is Main Street any better off after doubling the population? No, the continuing cry for more “financial help” for downtown tells us Main Street may be worse off than it was in the 1970s and ‘80s, even after 30 years of spending millions of tax dollars in subsidies, building facades, street reconstruction and free trolley rides.

Who pays for growth in Oregon City? Every property taxpayer, every renter, and every utility-bill payer pays. It’s certainly not the absentee homebuilders using out-of-town labor and disappearing into the night with their profit.

If Metro wants Oregon City to share population growth, its leaders need to find a way to move some of the industrial growth of Washington and Multnomah counties to Oregon City. Or at least find a way to share the wealth.

At the very least, Oregon City taxpayers should demand proponents produce an impartial financial report detailing the cost and potential income from any annexation. Let’s find out what the real “trick” is before we accept the “treat.”

Oregon City resident John F. Williams is one of the city’s former mayors.



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