Letter: City housing plan doesn’t add up

Published 6:15 am Thursday, August 18, 2022

To the Editor:

Regarding the city’s plans to help pay for development costs for new home construction using a Business Oregon loan from the state (Blue Mountain Eagle, Aug. 10), according to my calculations, a $1,851,797 loan at 2.41% interest over 20 years costs $9,731 per month or $116,772 per year. Will the money set aside in the tax-increment financing program be sufficient to make those payments, especially in the initial years when new homes only exist on paper? Would anything be left over from the TIF revenue for other purposes?

Here’s another question — if most or all of the TIF revenue over the next 20 years goes to paying off this state loan, then the city will not gain much or any property tax revenue from this increase in housing over the next 20 years. Finally, after this $1.8 million state loan is paid off, the city, county, school and other taxing jurisdictions would see the benefits of increased property taxes from these new homes, which was the point. Just as important, is there a deadline for new home construction by the developers using these funds to ensure the city can pay off this state loan? What happens if they don’t build what has been planned? That happens a lot in the real world.

Furthermore, the city paying nearly 80 percent of Russ Young’s $940,000 development costs has the appearance of a sweetheart deal. There’s only 17 single-family homes lined up immediately, with hopes for 56 more in the future. Paying 53 percent of Mahogany Ridge Properties’ $1.4 million development costs also has the appearance of a sweetheart deal, with only 12 single- or multi-family units planned for the first phase. Lastly, the city will pay $300,000 of the development costs for Holmstrom Heights, which will be used for four new homes, working out to $75,000 per home. Is that also a sweetheart deal? In the real business world, the city would claim some type of return from the developers for its investment, not just give away money — even if it came from the state.

Richard Hanners

John Day