Salem City officials asked to explain $749,000 giveaway. Waiting for answers...

Do Salem's Mayor, Mayor-elect, city councilors, and other officials care about Truth and Transparency? In a few weeks we'll find out. 

By January 6 I've asked them to explain -- in a simple, clear fashion -- why a $749,000 urban renewal grant was approved for the Park Front building on December 12. The applicant was T.J. Sullivan, a former city councilor and current vice-president of the Chamber of Commerce.

I asked city councilors to say why they were going to vote "Yay" or "Nay" on the $749,000 when I testified in opposition to this giveaway during the public comment period at the recent Urban Renewal Agency Board meeting (which is the City Council convening as another body).

After failing to get a cogent response from Salem's elected officials about why three-quarters of a million dollars is being handed out for what sure looks to be crony capitalism, and talking with some people knowledgeable about urban renewal who are as outraged about this action as I am, I decided that letting this go wasn't an option.

So today I sent the message below to the Powers That Be at City Hall.

I deeply believe that when officials give $750,000 to a private LLC (limited liability company) to help pay for an office building that was planned to be built without public money, but a bank wouldn't provide a construction loan without that additional equity, citizens deserve to get a full explanation of why taxpayer funds are being used for this purpose.

If you agree, tell the Mayor and City Council you want them to respond to my message: [email protected]

Here's my previous blog posts about this issue:

More crony capitalism in Salem: $750,000 for T.J. Sullivan's downtown building
Urban renewal crony capitalism is alive and well in Salem (may it die soon)

TO: Mayor Anna Peterson; City Manager Steve Powers; Urban Development Director Kristin Retherford; Councilors Chuck Bennett, Steve McCoid, Brad Nanke, Jim Lewis, Tom Andersen, Diana Dickey, Warren Bednarz

CC: Incoming city councilors Cara Kaser, Sally Cook, and Matt Ausec

FROM: Brian Hines

SUBJECT: Reasons needed for granting $749,000 of Urban Renewal funds to Park Front LLC

Along with other concerned citizens, I’m perplexed about why a $749,000 Urban Renewal grant was approved by the City Council, acting as the Salem Urban Renewal Agency Board, on December 12, 2016.

A careful review of the purposes of the downtown urban renewal district and T.J. Sullivan’s request for funds to assist in construction of the Park Front building has caused me to conclude that the $749,000 is an inappropriate use of public funds. 

Thus I am requesting that Mayor Peterson, City Manager Powers, Urban Development Director Retherford, and the city councilors who voted for (or against) the grant describe in a simple, clear, truthful, transparent fashion the reasons why this is (or isn’t) an appropriate use of Urban Renewal money,

This should be done before a check is written to the Park Front developers to assure that the public fully understands why their City officials are spending $749,000 of taxpayer money in this fashion.

At the December 12 Urban Renewal Agency Board meeting, Mr. Sullivan testified that he needed this grant in order to be able to obtain a Pioneer Trust Bank loan for the four story building he wants to construct. Sullivan admitted that he could build a smaller, less expensive building without the $749,000, but he wants the “full meal deal,” so to speak.

For this and other reasons, the $749,000 grant is not justified.

Urban Renewal funds are not supposed to be used as a subsidy to private developers for reasons unrelated to the basic purpose of Urban Renewal. As I noted during the public comment period at the December 12 meeting, the City of Salem web site page, Urban Renewal in Salem, says this is:

“To spur redevelopment where it might not otherwise occur without public investment."

However, as noted below, in this case redevelopment was going to occur without the $749,000 grant. So all this grant is doing is providing taxpayer funds to the Park Front developers so they can build a larger, more expensive building than Pioneer Trust Bank would allow under their lending terms absent the additional $749,000 of equity.

Further, the City’s Urban Renewal in Salem web page lists four activities that urban renewal agencies in Oregon may undertake. None of them applies to subsidizing construction of the Park Front building with a $749,000 grant.

“Urban renewal agencies do not provide general government services, but may make or carry out urban renewal plans which may include the following activities in support of projects in the plan:

• Acquisition of real property;

• Assistance in relocation of displaced persons;

• Installation, construction, or reconstruction of streets and utilities; and

• Repair, rehabilitation, or demolition of buildings.”

Here is a link to the staff report which recommends approval of the $749,000 grant request.

https://salem.legistar.com/LegislationDetail.aspx?ID=2899641&GUID=7CB1AD9C-0BD3-4C3C-A4F2-B631E921AD66

It contains seven criteria that the Park Front project supposedly meets. I disagree. Following are the criteria and my briefly-stated reasons for rejecting the assumption that the Park Front application complies with them.

Removal of blight. Developers of the old Boise Cascade property have already received a tax deferral for the South Block apartments and a separate $749,000 urban renewal grant for the Marquis rehabilitation center. This area is no longer blighted. The apartments are a success. The Park Front building is to be built on property bought from Marquis. Public funds have helped to de-blight the area. No further use of urban renewal funds is justified.

Leverage of Public Funds with Private investment. As noted in my testimony provided during the public comment period at the December 12 meeting, construction of the Park Front building was announced in March 2016. At that time there was no mention by Sullivan, or anyone else involved with the project, that construction was contingent on receiving urban renewal funds. 

Rather, a Statesman Journal story said:

“Construction for the $8.5 million building will begin on a portion of the North Block parcel of the Boise site in summer 2016 and be finished by May 2017, said TJ Sullivan, a co-owner of Huggins Insurance.”

So there is no leveraging of public funds with private investment. The private investment was committed to many months before Sullivan requested the $749,000 grant to enable him to construct a larger building than Pioneer Trust Bank was willing to give him a loan for.

Increased Property Value and Tax Increment. Again, increased property value was going to happen without taxpayer money. And I have not seen an analysis showing that the $749,000 will generate property taxes in excess of that amount over, say, the next 20 years, especially given that Sullivan has said that a smaller building could be constructed without the urban renewal grant. 

Connectivity between Riverfront Park and Downtown. I am not aware that this project will do anything to improve that connectivity. True, tenants of the Park Front building will be able to walk to Riverfront Park. But since no retail space or residential housing is planned for the building, there will be very little reason for anyone to visit Park Front unless they have business to undertake with a tenant of the building.

Job Creation. As noted before, construction of the building was announced months before the urban renewal grant was requested. Several floors of the building already have committed tenants. No evidence has been provided that a $749,000 grant will lead to any additional jobs. 

Streetscape Enhancements. Very few people will get a close-up view of the landscaping planned for the Park Front building. It will be built in what amounts to a downtown “island,” since few people will want to, or need to, cross busy Front Street to reach the building. Landscaping is a code requirement, so it is an automatic streetscape enhancement when completed.

Downtown Vibrancy. Park Front is an office building with no retail space or residential housing in an area of downtown that is difficult to get to. Park Front will contribute very little to downtown vibrancy.

I look forward to your replies regarding why granting $749,000 to the Park Front developers is a reasonable use of limited urban renewal funds. All replies will be shared verbatim with the public in the interest of truth and transparency. Please reply by January 6, 2017.

I reiterate my request that City officials not pay out any portion of the pending grant until vetting of the approval process is complete. It’s only right that the grant process be fully and transparently made known to Salem citizens.

Thus, (1) City Councilors need to clearly describe why they voted for or against the $749,000 urban renewal grant application, and (2) other City of Salem officials need to clearly describe why approval of this grant fits with the stated goals of the Urban Renewal Agency.

Sincerely, 

Brian Hines
10371 Lake Drive S.E.
Salem, Oregon

Comments

[HarryVanderpool]

Brian, If the check is to be written, I hope that they have and can explain a justification.
It just seems unthinkable that they would award funding willy-nilly.
Aside from all else, I want to express my sincere appreciation for your keeping an eye on the purse.
Between you locally and President Trump nationally; We're in very good hands fiscally these days it seems!
Thanks again, and keep up the good conservative fight!!
In this, I'm on your side, right on down the line!!

[Not Even Wrong]

Perhaps if the City were to condition the funds on establishment an overnight homeless warming station and soup line on that desperately needed 4th floor of Mr. Sullivan's piece of the pie, he may reconsider?

[HarryVanderpool]

Merry Christmas, fellow snarks!!