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Independence likely will seek bond

INDEPENDENCE -- The city of Independence will likelyask voters this spring for financial help staving off revenue shortages that, unchecked, could gut town services in the next few years.

December 05, 2012

INDEPENDENCE -- The city of Independence will likelyask voters this spring for financial help staving off revenue shortages that, unchecked, could gut town services in the next few years.

In fact, you may receive a phone call this week as part of a survey to gauge what residents see as the community's most important priorities.

"We'll be asking voters if they're willing to continue services (at the levels) we're providing now with an incremental property tax increase," said City Manager David Clyne. "Or, do we start making further cuts after we've already cut our staff by 20 percent in two years?"

On Nov. 27, the Independence City Council approved beginning the process of drafting a ballot measure for the May primary election for a $4.5 million general obligation bond.

David Clyne

David Clyne

Officials also asked for two 2013-14 budget scenarios by January -- one showing what services would look like if a bond passes and one if it fails.

The city has hired a polling firm, DRC Research, to conduct a scientific survey of citizens about the city's future, "what (respondents) want and are willing to invest in," Clyne said.

"We need a process that provides transparency and offers an opportunity for people to engage us," said Councilor Forrest Peck. "Those are two criteria that we need to make sure we include as we move forward."

An actual bond rate hasn't been set, though it will be in the realm of $1.35 per $1,000 of assessed value. The city will structure it, however, to take effect in 2014 when another bond expires.

That means the net effect of a rate increase from today would be about 25 cents per $1,000.

The city has wrestled with budget problems in earnest since 2010. It reduced its workforce by 20 percent. In November, it took out a $500,000 line of credit to avoid potential cash flow problems.

The beginning balance of Independence's general fund was $1.1 million in July and will dwindle to $800,000 by next summer.

"If we did nothing and only did minimal utility rate increases, we would probably be out of cash during the 2014-15 fiscal year," Clyne said.

The average monthly cost of operations in Independence is $538,000. A 2010 analysis showed the city could be running a deficit of more than $1 million by 2015-16 if no action is taken.

How did we get here?

Rich Foster of Cascadia Consulting, who's assisting with the bond campaign, said the predicament isn't because of any single city action, but "the convergence" of local decisions and state and national issues tied to the recession.

Reasons include:

* The down economy and a decrease in commercial and industrial property tax revenue.

* Flawed long-term estimates of strong urban renewal revenues that were made in 2004 and that have served as the basis for some city projects.

* The city has nearly $35 million in debt service owed on the Independence Civic Center, the library, water, storm and sewer improvements, and the Monmouth-Independence Network (MINET).

* The incomplete private development Independence Station is another issue -- "we are not receiving an estimated $200,000 to $300,000 in property taxes a year from the project," Clyne said.

Independence has frozen cost-of-living increases for most staff and raised utility rates last year. Unionized staff have agreed to little or no salary increases through 2015. Nonunion staff have gone with flat pay since 2010.

"We've cut whatever fat there was," Clyne said. "We're down to the bone at this point."

As budget woe causes go, the 38,000-square-foot civic center will be an easy target for criticism.

About $13.4 million is owed on the building. Yearly municipal bond payments on the complex are running at $622,000. Clyne said those payments will decrease in price over the bond's lifespan.

"We understand that perspective and criticism," Clyne said. "What we're asking is for citizens to look at 15 years of investments that have been made -- the majority of them have been home runs.

"The timing with the civic center was unfortunate," he continued. "But there are a lot of things in Independence that we enjoy now ... because of smart investments people have made.

"I think years from now, people will look at the civic center and say the same thing."

Have Concerns?

* A scientific survey regarding Independence's financial state and service priorities was to have begun this week, with pollsters contacting citizens by phone. Those with questions and concerns about the city's budget can also provide input to City Manager David Clyne by calling 503-838-1212 or sending an email to clyne.david@ci.independence.or.us.