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  • 26 Nov 2014

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Rising interest rates hit city's bond proposal

Milwaukie taxpayers might not save as much as originally predicted by voting for a bond measure to pay TriMet the remainder of the city’s financial obligation for the light-rail project.

Without a bond refinancing their debt, Milwaukians would pay more to the regional transit agency in the form of interest, although the potential savings amount is decreasing as the national economy improves.

City officials say the estimated savings dropping, from $850,000 to as low as $400,000, doesn’t affect the basic arguments in favor of the measure that the City Council is expected to refer to the county clerk by a March 21 deadline. In the meantime, rising interest rates might continue to whittle down the financial benefit of refinancing the $4 million debt.

“We’ve got to help people understand that it’s a variable,” said Milwaukie spokesman Grady Wheeler. “What’s been shown from our focus groups is that people will support the bond measure as long as there is some savings, and the bond proposal would still support the argument of

protecting our general fund. With that interest-savings number decreasing, that argument stands out as the strongest.”

Property taxpayers may choose in May to pay an additional $34 annually on the city’s average home. Milwaukie’s 5 percent interest rate to the regional transit agency will increase the city’s annual payments to $365,000 annually, but the current 4 percent interest rate would save taxpayer money over the course of a 20-year general obligation bond.

Milwaukie Finance Director Casey Camors is leading the city’s Budget Committee through a “close look” of the potential savings as citizen volunteers begin to develop the city’s fiscal-year proposals starting July 1. Milwaukie’s financial outlook could turn on whether a bond passes May 20, and Budget Committee members will begin meeting Jan. 29 to examine the city’s budget.

If the bond measure failed, the city would have to continue cutting basic services — such as police protection, library hours and park amenities — in order to keep paying off the loan from TriMet. Wheeler said that getting Milwaukie voters to understand potential consequences of the measure’s failure will be the city’s biggest hurdle.

“What we found from the phone survey is that most people would support the bond measure, and with just a little more information, people supported it stronger,” Wheeler said.

Milwaukie contracted with survey firm DHM for $12,000 before the interest rates went up, so voters were asked about a larger savings amount than currently predicted. Wheeler acknowledged that there are some Milwaukians who will never support anything related to light rail.

“There was a minority of people who won’t support it just because it’s for light-rail debt we’re already obligated to pay, but the measure wouldn’t be about light rail and whether or not it’s coming,” Wheeler said. “We need to do a better job helping people understand that this debt is part of a resolution and a contract that is bringing needed improvements to our city.”

Milwaukie citizens will see $13 million in investment from TriMet’s project that wouldn’t have happened if the city hadn’t agreed to contribute $5 million, Wheeler said. A new bicycle and pedestrian bridge now links Island Station neighborhood to downtown’s Main Street. Rebuilt intersections have brought brighter lighting, wider sidewalks, higher curbs and repainted crosswalks at Monroe, Adams and Harrison streets. Other investments that the project has made in Milwaukie include burying utility lines underground in parts of downtown, wildlife habitat restoration along adjoining creeks, and realignment of Lake Road for bicycle access.