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Scappoose may offer better financing to local improvement districts

Scappoose city councilors voted unanimously last week to tentatively approve an ordinance that allows the council to set interest rates for local improvement districts.

The ordinance will be up for adoption at the Monday, Nov. 3, city council meeting.

Local improvement districts are often formed to initiate infrastructure repairs or upgrades.

According to a staff report, the current 10 percent interest rate and 7 percent refinance rate is cost-prohibitive to projects.

“Those rates were established in the 1970s and do not reflect current economics,” the report states.

City Manager Larry Lehman said allowing councilors to determine interest rates on loans for improvement districts is a more practical approach.

LIDs can be initiated by property owners, with improvements to roads or construction of sidewalks, for example, being financed by property owners through the city.

“It could be property owners who want to get one going, or a group of homeowners on one street who want to put in sidewalks or make improvements to the road,” Lehman explained by phone Tuesday, Oct. 28. “The property owners then have the option of paying the cost or financing it through the city.”

Lehman said under the new ordinance, which received its first reading Monday, Oct. 20, the city could decide to charge district members the same interest rate it pays for the loan, making no profit, or tack on its own interest fees if it chooses. The ordinance would amends the city’s municipal code to stipulate interest rates will be established by the city council, but won’t exceed 10 percent. The change in policy would affect all new districts established after the ordinance takes effect, likely in December.

“Local improvement districts, in my mind, are almost always beneficial to the city,” Lehman told the council last week. “It really is a fantastic tool to do some major improvements.”

Council President Larry Meres recalled his prior attempts to start a LID and the pushback he received from neighbors.

“Years ago ... I wanted to do an LID on my street and I almost got hung for it,” Meres said.

Property owners in LIDs receive individual bills from the city, Lehman said.

The costs of improvements or repairs are tied to the related property in the district, not the property owner.

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