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CONTINUING LEGAL EDUCATION:Local Improvement Districts

Presenters:

Mike Kohlhoff, Wilsonville City Attorney

E. Shannon Johnson, Keizer City Attorney

Andrew Aebi, City of PortlandLocal Improvement District Administrator

May 15, 2015 – Sunriver, Oregon

What is a local improvement district?

Presented by Mike Kohlhoff, Wilsonville City Attorney

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Overview Materials for Reference• Statutory definitions, ORS 223.201• League of Oregon Cities’ 2013 LID Overview• Oregon City LID information sheet

Value that LIDs offer over private permit jobs• Comprehensive in lieu of piecemeal infrastructure• Assurance of performance via public project• Financing mechanism for benefiting properties

Which properties may be included?

Presented by Mike Kohlhoff, Wilsonville City Attorney

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Only properties receiving special and peculiar benefit per ORS 223.289• Example #1: Adjacent properties benefited by street

improvements• Example #2: Properties benefited in area by sanitary

sewer trunk line

Why is the LID financing mechanism needed?• Diseconomy of scale for single property owner• Local government does not have financial resources to

pay for all local improvements needed

How is the LID financed & bonds repaid?

Presented by Mike Kohlhoff, Wilsonville City Attorney

4

LID financing is generally through sale of bonds• Authority of Charter, ordinance or resolution; or• Bancroft Bonding Act (ORS 223.205 - 223.295)

Bonds are repaid by LID assessments on benefiting properties• Assessments can be paid in full or financed over time• Financing contracts incorporate interest and premium• Waiver of irregularities may be condition of financing

per ORS 223.215• Lien against benefited property is security for

repayment per ORS 223.393

What is LID assessment procedure?

Presented by Mike Kohlhoff, Wilsonville City Attorney

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ORS 223.389 guidance to local government• First determine if local improvement to be provided• Determine LID boundary• Provide estimated assessment, pending lien record• Provide opportunity to object or remonstrate• Build local improvements• Determine actual costs• Pending lien becomes an actual lien

Are there rights to appeal?• Writ of review under ORS 223.401 follows construction

of local improvements and imposition of actual lien

Shannon’s Outline

Presented by E. Shannon Wilson, Keizer City Attorney

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First item …• xxx• yyy• zzz

Second item …• xxx• yyy• zzz

Recommendations for local government

Presented by Andrew Aebi, City of Portland Local Improvement District Administrator 7

LIDs usually infrequent; identify staff to involve• City Attorney• City Engineer• Development review staff• Finance staff

Create or update City Code in advance of LID• State grants much flexibility to local governments …• .. but ensure due process per 5th & 14th Amendments• Timely notification very important• Require written findings to remonstrances, objections• Council must make finding of special benefit

Be flexible but be very prepared

Presented by Andrew Aebi, City of Portland Local Improvement District Administrator 8

LID process should be open and transparent• Don’t rush process; Council continuations are fine• Avoid writ of review by making property owners feel

that they have been heard• Great lawyering will not substitute for project controls

Project funding & assessment/funding formula• Document non-LID funding sources in ordinance• Proportionally apply non-LID funding to all properties• Who pays extra (over budget) or saves (under budget)?• Don’t allow assessments to be “shuffled” by property

owners; Council makes finding of special benefit

Special considerations on LIDs

Presented by Andrew Aebi, City of Portland Local Improvement District Administrator 9

Financial feasibility• Individual versus global valuation to assessment ratio• Portland generally uses Multnomah County RMVs• Exception basis to use appraisals for low V/A ratios• Inform Council of risk versus reward• Possible backfilling mechanism if low ratio unavoidable

Internal equity among properties in LID• Not just question of special benefit exceeding LID cost!• Is burden proportionately spread among properties?• Consider split rate formula in unusual circumstances• One size does not fit all; use discretion allowed!

Tell the LID solutions story on the record

Presented by Andrew Aebi, City of Portland Local Improvement District Administrator 10

Examples of LID special benefit in Portland• Stormwater management, eliminate property flooding• Eliminate gravel shoulder maintenance• Extend sanitary sewer• Underground utilities in areas zoned high density• Install traffic signal as condition of zone change• Properties made “shovel ready” for development• Improved firefighting response

LIDs key to economic development and neighborhood livability

Presented by Andrew Aebi, City of Portland Local Improvement District Administrator 11

7600 block of NE Alberta Street in diverse Cully neighborhood of Portland (before)

LIDs key to economic development and neighborhood livability

Presented by Andrew Aebi, City of Portland Local Improvement District Administrator 12

7700 block of NE Alberta Street in diverse Cully neighborhood of Portland (after)

LIDs key to economic development and neighborhood livability

Presented by Andrew Aebi, City of Portland Local Improvement District Administrator 13

NE 148th Avenue LID from 2003-04 to 2012-13• - Public investment: None; expiring urban renewal• + Assessed value: $27.7 million (+ 539%)• + Real market value: $48.7 million (+287%) • + Property tax increment: $582K in 2012-13

NW 13th Ave. Phase II LID from 2003-04 to 2013-13• - Public investment: $861K from urban renewal• + Assessed value: $74.1 million (+387%)• + Real market value: $178.0 million (+360%)• + Property tax increment: $1,666K in 2012-13