Urban renewal funds may be used for City Hall construction

Acting as the city’s urban renewal agency, the Sisters City Council last week authorized the use of urban renewal borrowing power to help pay for a new city hall. The resolution adopted Thursday night allows the city to use up to $487,000 in urban renewal debt in paying the estimated total cost of $2.6 million, including land, design, site improvement and all other expenses.

There is no certainty that the urban renewal funds will be needed. That depends on the availability of other sources of money and how high the bids are when they come in during February, City Manager Eileen Stein said.

If the full $487,000 is used, it will represent about five percent of the total $9.9 million in borrowing authority contained in the city’s urban renewal plan. The city hall loan would come in the form of a note similar to, but technically not, a bond. Annual debt service would be about $39,900 a year, Stein said. That would be paid from the tax increment funds the city receives each year from property within the urban renewal district, which covers most of downtown.

The term “tax increment” refers to the fact that as property taxes increase each year in an urban renewal district, all receipts above the level that existed when the district was formed go into the urban renewal fund rather than being distributed to local governments. Created two years ago with a scheduled life span of 20 years, the Sisters urban renewal agency has about $160,000 of tax increment money in the bank and expects receipts of $94,000 for the current year, 2005-06.

The city council decided last month to borrow money to cover $1.4 million of overall city hall costs. The urban renewal borrowing, if employed, will form part of that total. Cash resources available for the project include $467,000 from the sale of the former Multnomah Building on Adams Avenue, which at one time was considered a potential new city hall, and $300,000 in a building reserve.

Although no one spoke against the financing plan in the public hearing portion of the meeting, Sisters landscaper Tim Clasen asked a pointed question: “How is a city hall part of urban renewal?”

Mayor Dave Elliott explained that it’s common around the state to use urban renewal funding for city halls and other public buildings. And the Sisters urban renewal plan specifically anticipates some urban renewal participation in a new “civic center,” which would include a city hall. He and Councilor Brad Boyd said construction of a new city hall will also make it possible to redevelop the site occupied by the current city hall at 150 N. Fir St.

The formal resolution making it possible to use urban renewal funds for a portion of city hall costs, an amendment to the urban renewal plan, was originally drafted to say:

“The development of a new city hall will benefit the area by increasing public patronage of the area for municipal business, to utilize meeting spaces within city hall, and to view such works of art, culture and history that may be exhibited within the new city hall. Because such benefits to the area are estimated to total 25 percent of the overall benefits of the new city hall, the plan includes as a project the payment of up to 25 percent of the total cost of the new city hall.”

Councilor Sharlene Weed noted that 25 percent of a projected cost of $2.6 million would be more than the $400,000 the council had informally discussed. Stein agreed and suggested that the council insert a cap of $487,000, which is the amount mentioned in the technical backup to the urban renewal plan. All three members present liked that idea and amended the resolution to say that the designated urban renewal contribution shall “not…exceed $487,000.”

The new city hall will contain about 9,000 square feet. It will form part of a triad of public buildings on the site of the former Sisters Middle School at the northwest corner of Highway 20 and Locust Street. The other two structures are a new public library, which is nearing completion, and new administrative offices for Sisters School District, occupying a remodeled structure that was built nearly 70 years ago as the city’s high school.

In one other action Thursday night, the council approved a resolution saying that, “Some space within the new city hall may be leased to 501c(3) organizations to provide social services to the citizens of the city and surrounding communities.”

Stein said this would make it possible to lease space to nonprofit groups if that becomes desirable, particularly in the early years when city functions won’t require all of the space in the building.