A funding source critical to last year's Resort Street improvement project will be reviewed by a citizens committee after several property owners on that street expressed concerns about the issue during Tuesday night's City Council session.
At the heart of the matter are questions about how much the property owners should pay for burying power lines and other utilities during the Resort Street project. The city created a Local Improvement District (LID) to pay part of the bill to bury the utilities.
An LID is a funding system that provides for a group of property owners to share costs of infrastructure improvements.
The Resort Street LID money - $294,881 - constitutes about 43 percent of the $686,413 project.
The city disbursed $389,459.73 from the street fund toward the project.
After the project was approved, the city borrowed the $294,881 from the Anthony Silvers Trust Fund to ignite the venture, with the intention of recouping the money from property owners in the LID.
But three Resort Street property owners - Randy Daugherty, Rustin Smith and Tabor Clarke - testified during a public hearing regarding Ordinance No. 3329 at the council session and raised questions about the final LID assessment bill. Ordinance No. 3329 was designed to act as the mechanism to levy the assessments from property owners. At the time the LID was formed, the owners of 12.73 percent of the property frontage in the district objected to the plan - far below the percentage needed to block the LID.
Daugherty asked the Council to eliminate the LID completely - or refine the final assessment figure - while Smith said he felt the assessments were too high.
"I am here basically to oppose the assessment. I feel like it is an unfair burden. The reason I think it is unfair is because my property did not really receive that much benefit from underground power since my property already had underground power," Smith told the Council.
The testimony by the three city residents sparked a long and in-depth debate among councilors. In the end they decided to table Ordinance No. 3329 and reconvene a citizens board to review the entire LID project assessment issue.
The primary challenge appears to center on who pays for what, and how much. Previously the Council agreed to assess each property owner at a rate of $71.50 a foot of frontage, but Smith told the Council Tuesday night that figure was not set in stone.
"What I was promised was between 0 and, worst case, $25 dollars a foot," he said.
Some confusion regarding how much per square foot property owners were going to pay as part of the LID does appear to exist.
For example, in the minutes from a Sept. 25, 2012, City Council meeting Clarke indicated that reduced project costs could reduce the per linear foot assessment to around $41. Yet city officials said there was never any kind of major decision to re-evaluate the $71.50 a foot of frontage price tag.
"There was never any talk from city staff that it would be less than $70," City Manager Mike Kee said.
Clarke said Thursday there are a number of key issues that need clarification, and that's why he believes the Council's decision to resurrect the Resort Street Committee is a good one.
"I think it was a project that kind of morphed along the way. I think we are all struggling to find the right answers. We are dealing with some assumptions, some unknowns," he said.
One critical "unknown" seems to be the idea that state Jobs and Transportation (JTA) Grant funds - used for the Resort Street reconstruction project - could be, or would be, utilized for the utility burial venture and thus help reduce the total cost of the LID endeavor.
"Those JTA funds were lost. The property owners were certainly under the impression that as we were going through the process every opportunity to reduce the price of the LID would be pursued," Clarke said. "We feel strongly that wasn't necessarily the case."
But city officials said that the Oregon Department of Transportation later determined that the JTA funds could not be used for utility burial portion of the project because the city held franchise agreements with the utility firms directly impacted by the project.
"We knew going into the project that JTA funds were not going to pay for moving utilities," Kee said.
Clarke also said that administration fees - routine charges levied by the city to reimburse its overhead costs - linked to the LID is, in reality, profit.
"We look at this admin fee as additional dollars into the city general fund," Clarke said. "And we do believe that they are profitable dollars. Why should the city be able to profit from the project at the expense of the property owners? We are just looking at if there is a portion of that money that can be put toward the property owners."
City officials, though, contend that the administration fees are not profit. Also, officials asserted, there were no administration fees on the Utility LID. Moving Resort Street Project administration fees over to the Utility LID project would not work either.
"That would be a violation of the use of the (JTA) grant dollars," Baker City Finance Director Jeanie Dexter said.
Clarke conceded there remain a number of compelling questions that need to be answered. He said he is confident a proper compromise could be reached with the city regarding the LID assessment.
"We are entering into a section where I think we could solve this. I'm not trying to point fingers. Just trying to find an equitable solution. I think there is a willingness on both sides to finding that (a solution)," he said.
The lingering question, however, remains a simple one. If the city forgives all, or even a portion, of the established LID assessment, the city still must repay the $294,881 loan from the Anthony Silvers Trust.
If the money doesn't come from the LID, funds will have to be found somewhere else. That "somewhere else" could potentially be the city's general fund.
Clarke said there is not an urgency to make the payment on the Anthony Silvers Trust fund loan.
"It is not like the city has to write the check for that tomorrow," he said.
The city likely will repay the Silvers loan over 20 years, with interest. Property owners in the LID also have 20 years to pay their shares.