The Hillsboro Herald regularly tracks the happenings at Hillsboro City Hall, at least to the best of our ability we do. It is hard to get information and answers from the current city structures, which move things through very quickly and with limited chances for citizen input. Tonight at 6 PM at the Civic Center, the Hillsboro Finance Committee will approve a massive spending package on a wide variety of City buildings and programs. Some lucky City staff will get nice increases in their salaries. The Fire Department is finally getting its new station in South Hillsboro. The Lodging Tax (Hotel/Motel/Air BNB) will be extended into the future and will need to fund $26 Million for the Hops Stadium and the Wingspan convention space. And the list goes on and on.
City Hall – Photo by Dirk Knudsen – Hillsboro Herald
Your Water bill (Utility Bill) is taking another big hit because Intel and Genentech are no longer contributing to maintaining our local roads. Buckle up, folks—you can look forward to years and years of this to continue unfettering how things have been going. Take a quick scan of the items on the agenda tonight. At the bottom is all the info for attending the meeting tonight in person or on Zoom.
The Sequoia Gallery Building (Terrace Plaza) is being leased to the FLIP Museum, a Children’s museum, and the City will sublease the space for them for $2,750 a year. Zurbrugg/McKinney owns the building. Read up here – This will be a fantastic addition to downtown for sure.
The Transportation Lodging Tax program is timing out in 2027. The City collects about 3% of all room tax revenues, now 13.5%. The new proposal removes the 2027 Sunset clause and adds all Air BnBs and any short-term housing in Hillsboro. Room taxes are going up over time. Hillsboro has already given the Hillsboro Hops $18,000,000, which needs to be paid back from the future revenues from these TLT Taxes. Vast amounts of money are also given to the Washington County Chamber. The City is also on the hook for $8,000,000 in payments for the Wing Span Convention Center on County property. Should the Council not approve this proposal, there will be no money to repay the loans taken out for these significant commitments. Currently, Hillsboro gains about $2,000,000 a year in TLT, so at the current pace, it will take 10-13 years to pay these commitments back. Read More Here –
Big Pay and Benefit Increases—I have read this a few times. The tone indicates an urgent need to increase pay for many of our City’s upper-level employees and then reclassify duties. These wage classifications are proposed to be retroactively approved to 11-1-24 .
Here is what City Manager Hammond wrote to the Finance Committee- “The reclassifications and wage adjustments in our recommendation involve a higher or different level and type of work, significant change in position responsibilities and/or an urgent business need of the department. The following reclassification and wage adjustment requests reflect an immediate need for implementation mid-biennium.”
Congrats to all the City emplyees about to get a nice bump in Salary and benefits during such a difficult economic time.
Porta-Potties get a $200,000 bump annually. Ron-Johns was bought by NW Portables- and use appears to have increased. The City Finance Committee is asking for a 40% increase. The Staff Report does not specifically outline additional use nor inflation as the cause; the contract is being extended and increases from $500,000 to $700,000 annually. But does something smell wrong with his increase? ;)
The So-Hi Fire Station will have a GMP—Guaranteed Maximum Price of $15,667,696. The total GMP for construction is not to exceed $15,667,696 unless previously authorized by the City of Hillsboro. Funding is anticipated to be a mixture of the Strategic Investment Plan (SIP), Water Fund, and Building Fund.
Walsh Construction highlighted the need to build the new 17th Avenue Yearound Houseless Shelter for $12,500,000. The total amount of the Guaranteed Maximum Price for Construction and Design Construction Administration is not to exceed $12,500,000 unless previously authorized by the City of Hillsboro. Funding is anticipated to be a mixture of ARPA, State, County, and possibly Federal funds. The cost is within the approved, adopted budget for FY23-24.
Hillsboro Community Foundation to land $240,000 for the next 3 years- https://hillsboro- Read More
That brings the recommendations to the City Council of over $50,000,000. A lot of dollars, no matter how you look at it. And once open, all of the physical assets will cost many times that to run, staff, and equip.
Last Issue- and it’s a biggie: YOUR WATER/Utility BILL IS GOING UP AGAIN, AND AGAIN –
The City has lost $2 million a year in income that it was using for road maintenance and repairs because Intel and Genentech are no longer paying into the SIP (Strategic Investment Program), where the money was being diverted from. That has left Hillsboro with a huge budget shortfall. At the same time, Inflation has jacked up prices for all that work. So, guess what? YOU are going to pay.
From the City Staff:
“Our current maintenance deferrals of just over $9 million will increase to over $24 million by2027if no additional funding is found. Even maintaining the prior years funding levels of $5.4million, which would require the addition of $1.9 million, is projected to double the backlog toover $18 million. Fully funding the program with the addition of $4.5 million will not result inthe decrease of deferrals until after 2027. The drastic increase in deferrals over the next 3 to 4 years is the result of significant miles of asphalt concrete roadways built early 1990’s and the100-year-old concrete residential streets north of downtown requiring expensive rehabilitative maintenance. The loss of SIP funding has left our historical PMP funding level short $1.9 million and $4.5million short of the funding necessary to reach our full needs. Currently, the OregonDepartment of Transportation (ODOT) is also experiencing a massive shortfall in transportationfunding. This comes at a time when the increase in electric and more fuel-efficient vehicles has reduced the amount of gas tax coming into the state. This has prompted a statewide conversation on potential modifications on how transportation maintenance is funded. Any proposed changes however would not be implemented for several years and given current shortfall, addressing their needs is likely to be the priority.
So, the money coming to the City through the SIP agreements ran out from Intel and Genentech. Now that money has dried up, they must find someone else to pay for our roads’ maintenance. So that shortfall is being put onto the Utility/Water bills going out to everyone in the City of Hillsboro, and you will be paying more. Going into tonight cost allocation tables and information were missing from the meeting packet. After emailing the City last night, the staff has now put a proposed rate increase document into the packet. Here is a look at what this newest, of several increases we have seen lately, will do to utility bills.
But the biggest concern may be who uses the roads and generates the most traffic and whether big employers like Intel and Genentech, who generate a massive percentage of the total traffic, are getting off easy. I think they are.
So what is an SIP, and how do these work?:
These companies were offered massive Property Tax reductions to entice those firms to come to Hillsboro and build.
During the agreement, Genentech only paid property taxes on its first $25M in value- the rest of the taxes were waived.
“Each year Genentech receives a SIP property tax exemption, it shall pay to County a Community Service Fee, as provided by ORS 285C.609 (4) (b)(B), equal to twenty-five percent (25%) of the property taxes exempted in each tax year, but not exceeding $500,000 in any one tax year.”
Genentech does not owe anything unless it receives a minimum of two million dollars ($2,000,000) in Business Energy Tax Credit.
Washington County shall apply a one million dollar ($1,000,000) credit against Genentech’s Additional Payment obligation.
The calculations create a situation where everything comes out in the wash. The company gets in and builds and pays very little property taxes. On the other hand, an agreed-upon amount of money is paid to the County in the form of about 25% of the tax they were allowed to exempt each year. The Tax credits and other County payments (CSF) are hard to calculate. This smoke and mirror formula brings considerable benefits to the companies, and the local government can argue that “we did pretty good” and that the payoff is in the long run.
Reporting on this isn’t easy—not because I do not understand it, but because neither the City nor the County has been able to provide individual analysis on the outcomes of each of the SIP Deals. This is ludicrous because it is all accounting, and every dime is on their systems. But that is a fight for another day!
The net effect is that you will pay more for your water/utility bill, as these proposed new fees are being charged to fix our roads. Companies will pay less now that the SIP agreements are no longer chipping in.
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The City of Hillsboro leadership denies the Hillsboro Herald access to Executive Sessions, which has been held almost every meeting lately. There is no record of what happens in those meetings, and media and journalists are allowed. The Herald has been denied access because their city attorneys stated that this is a blog site, not a news media source. This makes it convenient for them to hide what is being done and said from the Herald. We tell you, our readers, this to make you ponder their decision and why they have made it. Several attorneys from the State and National Levels offer to take this matter to court. We want to bring you the news- and the best of the news.
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Dirk Knudsen is a lifetime Hillsboro resident. He and his wife, children, grandchildren, and the extended family have served the Community for over 55 years. Read More About Dirk right here - https://hillsboroherald.com/about-us/about-dirk-knudsen/
OK, I was the only community member at this meeting tonight. Didn’t note anyone else online and I was THE only person that made a public comment. On the TUF fees: and even better the staff person stayed and talked to me and explained a lot more afterwards (she had added some already in her report). Very generous with her time (and also councilor Anthony Martin who talked to me about other questions I have had also) as this was a long meeting already. This TUF fee agenda item was informational only–it was Not approved–and as announced in the City Views–and here, it will be at the Nov 19 City Council meeting Public Hearing–then vote on Dec 5. Also, community members are encouraged to ask questions and give input on this meanwhile. I learned a lot from going to this meeting–more info was given than was in the meeting packet. First time at the Hillsboro Finance Committee. I was impressed that the members had clearly done their homework and asked good insightful questions–and gave some good feedback. I am going to say Dirk–this is overall a rather scathing report–and it would have been more accurate if you had come to the meeting (or checked with me as you knew I was going). Some of this isn’t accurate. I could have used your knowledge–some of this is new to me–like the SIPS–and you would have gotten more out of the explanations. You are correct about the Lodging Tax–figures to pay off the Hops–and the Many years before this is completed (I raised an eyebrow at this for sure). The Wingspan payoff has just been completed. The FLIP (children’s museum) is a sublease: to quote “the cost of the current and proposed lease is $2,750 per month plus utilities, or approximately $45,000 per year. The Lessor (The FLIP Museum) will reimburse the city on a monthly basis for the monthly lease as well as the utilities”. There was talk about the improvements done–sounded like the city provides a grant for this–also will be repaid. Overall sounds like FLIP will be paying — not the City. Only time City has to pay is in-between sub-leasers. Porta-potties: jump in cost was not covered. Salary increases–did state are comparable to the market. Most involve great increase in responsibilities. One Decreased. One I noted beforehand–cook and assistant–I don’t have confirmation on–but can only think of the Senior center lunches that would be paid by city. My husband volunteers there almost every day and I can attest to the huge job–and growing amount of people that are served here–I feel they well deserve the raise.
We will be checking on this – but I am quite certain the Lease is not $2,700 total. The underlying lease that was with Sequoia was for $5400 from what I was told over the years. I will confirm. Maybe the $350K the city put in is being offset by the reduced lease.
” the City will pay $2,750 of the rent for 5 years” That doesn’t appear to be the case. The city is subleasing to FLIP, per the narrative on the first page of that report: “The Lessor (The FLIP Museum) will reimburse the city on a monthly basis for the monthly lease as well as the utilities.”
The sublease agreement goes into further detail: “4. Rent. During the term, Sub-Lessee shall pay to Sub-Lessor, as rent, the sum of Two Thousand Seven Hundred and Fifty Dollars ($2750) per month, except for the first two months of the term (November – December, 2024), when the rent shall be Zero ($0). Rent payments shall he paid in advance, on or before the tenth of each month. Sub-Lessee shall also pay all monthly obligations of Sub-Lessor as set forth in the Original Lease, including utilities (estimated at $800 per month), and property taxes (if applicable).The Sub-Lessee will be responsible for any janitorial costs they incur when working with an outside organization to provide these services.”
What I want to know is how on earth the city got Gene to agree to $2750/mo for 7265 square feet. That’s insanely low. He’ll probably get a tax break on the property, but I can’t imagine it’ll make up that much of a difference between what he’s getting and market rate.
I am quite certain that FLIP got the same deal as Sequoia – The City is paying Gene $2,750 x 2 and the tenant though a sublease is paying 1/2. We looked at the space for two clients and that was the deal. I am sure you can call the City and confirm that- if you are right then this was a big change. Gene would lease for that amount. Let me know what you find out!
No need to ask- it’s $2,700, and all property taxes will be paid by the tenant. The $350K the city put in in 2006-07 is being recast over the years to even things up. It has been 16 years – so let’s call it about $2,200 dollars a month. Over 16 years, it gets the amount amortized out. That would be about $5K a month, and with the property taxes paid by the City/Tenant, that gets things about to what the building is worth. So, it all makes sense. I wish them all the best. The article was corrected earlier today. Thanks, Ward.
Well, now that I look at my notes, the City had the same deal with Sequoia, but the deal was that they were a Nonprofit, and that suspended all property taxes on most of the buildings for many years. The City lease holds the tenant or subtenant on the hook for paying the property taxes for the building. That incentivized the owners to make the City a deal on the space.
In 2017, the property taxes were $2,317 for the whole building. In 2018, they went to $8,000, and now they are about $9,400 a year. As it was explained to me, Sequoia Gallery lost its Nonprofit status in or around 2017. That meant that they had to pay the property taxes, and they fell way behind. When I tried to help them last year, the bill was like $30K for them to get square with the City. I do not know if they ever caught up; I don’t believe they did which means the City had to pay.
So if Gene is leasing that big portion of the building at $2,700, taxes or no taxes, that is pretty exceptional. That would mean something like 35 cents PSF per month. It would be a bargain at $1.25 PSF per month. Taxes or no Taxes, it would be interesting to know what the bottom line is. No matter- the FLIP Museum should be a very nice addition to the town and great for the kids!
Now I know – “Since opening in 2008, Sequoia had been a major part of that effort. In return for the city investing $350,000 to refurb the building, the owners agreed to charge affordable, below-market rent for a to-be-formed collective arts organization that would determine the artists’ rates, manage the individual studio agreements, and collect rent payment from the artists. “
Hocking hopes a group of artists will do just that, though none has stepped up so far. But whatever entity replaces Sequoia’s former organization, “what needs to happen is a structural change that takes into account some of those factors we’ve been experiencing,” like the nonprofit’s fluctuating membership and inherently unstable business model, Hocking says. “We need to find different ways of bringing in different income streams, broaden our membership. Really, the business should be able to support itself. There are always going to be impacts you couldn’t expect, like the pandemic, but the structure of the business over that many years should be able to weather those and sustain it.”
City arts officials remain hopeful that a new Sequoia will grow from the root planted more than a decade ago, and endure as long as the towering nearby trees surrounding the venerable courthouse that gave the defunct arts space its name.
“For the City, growing opportunities for artists and makers continues to be a priority for the revitalization of downtown,” says Harrington. “We want to continue to support a diverse creative community that incorporates learning and provides a space for artists to create work.”
OK, I was the only community member at this meeting tonight. Didn’t note anyone else online and I was THE only person that made a public comment.
On the TUF fees: and even better the staff person stayed and talked to me and explained a lot more afterwards (she had added some already in her report). Very generous with her time (and also councilor Anthony Martin who talked to me about other questions I have had also) as this was a long meeting already. This TUF fee agenda item was informational only–it was Not approved–and as announced in the City Views–and here, it will be at the Nov 19 City Council meeting Public Hearing–then vote on Dec 5. Also, community members are encouraged to ask questions and give input on this meanwhile.
I learned a lot from going to this meeting–more info was given than was in the meeting packet. First time at the Hillsboro Finance Committee. I was impressed that the members had clearly done their homework and asked good insightful questions–and gave some good feedback.
I am going to say Dirk–this is overall a rather scathing report–and it would have been more accurate if you had come to the meeting (or checked with me as you knew I was going). Some of this isn’t accurate. I could have used your knowledge–some of this is new to me–like the SIPS–and you would have gotten more out of the explanations. You are correct about the Lodging Tax–figures to pay off the Hops–and the Many years before this is completed (I raised an eyebrow at this for sure). The Wingspan payoff has just been completed.
The FLIP (children’s museum) is a sublease: to quote
“the cost of the current and proposed lease is $2,750 per month plus utilities, or approximately
$45,000 per year. The Lessor (The FLIP Museum) will reimburse the city on a monthly basis for
the monthly lease as well as the utilities”. There was talk about the improvements done–sounded like the city provides a grant for this–also will be repaid. Overall sounds like FLIP will be paying — not the City. Only time City has to pay is in-between sub-leasers.
Porta-potties: jump in cost was not covered.
Salary increases–did state are comparable to the market. Most involve great increase in responsibilities. One Decreased. One I noted beforehand–cook and assistant–I don’t have confirmation on–but can only think of the Senior center lunches that would be paid by city. My husband volunteers there almost every day and I can attest to the huge job–and growing amount of people that are served here–I feel they well deserve the raise.
We will be checking on this – but I am quite certain the Lease is not $2,700 total. The underlying lease that was with Sequoia was for $5400 from what I was told over the years. I will confirm. Maybe the $350K the city put in is being offset by the reduced lease.
” the City will pay $2,750 of the rent for 5 years”
That doesn’t appear to be the case. The city is subleasing to FLIP, per the narrative on the first page of that report: “The Lessor (The FLIP Museum) will reimburse the city on a monthly basis for the monthly lease as well as the utilities.”
The sublease agreement goes into further detail:
“4. Rent. During the term, Sub-Lessee shall pay to Sub-Lessor, as rent, the sum of Two Thousand Seven Hundred and Fifty Dollars ($2750) per month, except for the first two months of the term (November – December, 2024), when the rent shall be Zero ($0). Rent payments shall he paid in advance, on or before the tenth of each month. Sub-Lessee shall also pay all monthly obligations of Sub-Lessor as set forth in the Original Lease, including utilities (estimated at $800 per month), and property taxes (if applicable).The Sub-Lessee will be responsible for any janitorial costs they incur when working with an outside organization to provide these services.”
What I want to know is how on earth the city got Gene to agree to $2750/mo for 7265 square feet. That’s insanely low. He’ll probably get a tax break on the property, but I can’t imagine it’ll make up that much of a difference between what he’s getting and market rate.
I am quite certain that FLIP got the same deal as Sequoia – The City is paying Gene $2,750 x 2 and the tenant though a sublease is paying 1/2. We looked at the space for two clients and that was the deal. I am sure you can call the City and confirm that- if you are right then this was a big change. Gene would lease for that amount. Let me know what you find out!
I will be seeing both Karla and Gene tomorrow and will ask them and let you know what I find out.
Thanks
No need to ask- it’s $2,700, and all property taxes will be paid by the tenant. The $350K the city put in in 2006-07 is being recast over the years to even things up. It has been 16 years – so let’s call it about $2,200 dollars a month. Over 16 years, it gets the amount amortized out. That would be about $5K a month, and with the property taxes paid by the City/Tenant, that gets things about to what the building is worth. So, it all makes sense. I wish them all the best. The article was corrected earlier today. Thanks, Ward.
URAC Meeting?
Well, now that I look at my notes, the City had the same deal with Sequoia, but the deal was that they were a Nonprofit, and that suspended all property taxes on most of the buildings for many years. The City lease holds the tenant or subtenant on the hook for paying the property taxes for the building. That incentivized the owners to make the City a deal on the space.
In 2017, the property taxes were $2,317 for the whole building. In 2018, they went to $8,000, and now they are about $9,400 a year. As it was explained to me, Sequoia Gallery lost its Nonprofit status in or around 2017. That meant that they had to pay the property taxes, and they fell way behind. When I tried to help them last year, the bill was like $30K for them to get square with the City. I do not know if they ever caught up; I don’t believe they did which means the City had to pay.
So if Gene is leasing that big portion of the building at $2,700, taxes or no taxes, that is pretty exceptional. That would mean something like 35 cents PSF per month. It would be a bargain at $1.25 PSF per month. Taxes or no Taxes, it would be interesting to know what the bottom line is. No matter- the FLIP Museum should be a very nice addition to the town and great for the kids!
Now I know – “Since opening in 2008, Sequoia had been a major part of that effort. In return for the city investing $350,000 to refurb the building, the owners agreed to charge affordable, below-market rent for a to-be-formed collective arts organization that would determine the artists’ rates, manage the individual studio agreements, and collect rent payment from the artists. “
I got way sidetracked with other things! I do remember that “below-market” rent was mentioned during the report and that it would continue.
https://www.orartswatch.org/the-fall-of-hillsboros-sequoia-gallery-studios/#:~:text=March's%20First%20Tuesday%20was%20Sequoia's,organization's%20lease%20expires%20May%2031.
“As champions of the arts and downtown revitalization, we want the space to continue as a home for creativity and career opportunity and storefront activation,” says Antonini, who’s played a major role in downtown Hillsboro’s revival. Later this year, the city plans to issue a Request for Proposals, hoping someone or some group would step forward with a new vision for the Terrace Plaza Building space.
Hocking hopes a group of artists will do just that, though none has stepped up so far. But whatever entity replaces Sequoia’s former organization, “what needs to happen is a structural change that takes into account some of those factors we’ve been experiencing,” like the nonprofit’s fluctuating membership and inherently unstable business model, Hocking says. “We need to find different ways of bringing in different income streams, broaden our membership. Really, the business should be able to support itself. There are always going to be impacts you couldn’t expect, like the pandemic, but the structure of the business over that many years should be able to weather those and sustain it.”
City arts officials remain hopeful that a new Sequoia will grow from the root planted more than a decade ago, and endure as long as the towering nearby trees surrounding the venerable courthouse that gave the defunct arts space its name.
“For the City, growing opportunities for artists and makers continues to be a priority for the revitalization of downtown,” says Harrington. “We want to continue to support a diverse creative community that incorporates learning and provides a space for artists to create work.”