The city of Keizer is trying to foreclose on two vacant lots near Keizer Station, a move that some legislators and property rights groups call the most egregious abuse of local improvement assessments in state history.
“I’m not shy about telling Keizer I think they’re misusing a state law,” said Rep. Brian Clem, chairman of the House Land Use Committee.
Property owners Timm and Linda Rawlins are more than $1.2 million behind on payments toward a $6 million assessment the city levied on their lots to help build infrastructure for the Keizer Station shopping center. Timm’s parents, Jerry and Doreen Rawlins, have a half interest in the property.
Back in 2005, when the levy was imposed, the Rawlinses, who live in Redmond, objected and filed a lawsuit against the city and an appeal to the state Land Use Board of Appeals.
“The property was only worth $300,000. They wanted to encumber it for $6 million,” Linda Rawlins said.
They dropped their lawsuit opposing the assessment and signed the assessment agreement, Linda Rawlins said, after Keizer Station Developer Chuck Sides offered to lease the property for 30 years through his company Northwest National, and make the assessment payments.
Sides stopped paying the assessments three years ago, and the unpaid amount has been racking up interest and penalties. The total owed is $6.7 million, according to a foreclosure complaint the city has filed in Marion County Circuit Court.The property is worth about $2.23 million, according to the Marion County Assessor.
In an interview, Sides said Keizer officials are balking at several solutions he has proposed. He declined to go into detail.
“I’m not going to get into that,” he said. “The city knows.”
In a written statement, Keizer city attorney E. Shannon Johnson said, “We do not agree with that statement.”
Keizer city officials declined to comment further.
In a letter to lawmakers last month, Johnson said the city is not a party to the contract between Sides and the Rawlins.
“The city is not without sympathy for the Rawlins’ situation; it is the main reason the city waited over two years before taking action,” Johnson wrote. “However, the city council has an obligation to its constituents to collect the assessments.”
Some legislators, though, think the city took advantage of the Rawlins when it imposed the assessment.
“The facts surrounding this matter are extremely troubling,” state Sen. Tim Knopp and Rep. Gene Whisnant wrote Keizer Mayor Lore Christopher in June.
Under state law, infrastructure projects that benefit private property can be funded by a local improvement district, where property owners are assessed for part or all of the cost of improvements.
Keizer divided an assessment of $29 million among 26 properties, based roughly on each property’s acreage. The Rawlins properties, with a total of 16.3 acres, were assessed $5,970,818.
However, anchor tenants Target, with 10.1 acres, and Lowe’s, with 12.3 acres, were assessed only $1 million and $1.2 million respectively.
That means the Rawlins properties each were assessed at $366,758 per acre; Target at $98,619 per acre; and Lowe’s at $97,959 per acre.
The Rawlinses properties remain undeveloped. They did not receive any infrastructure improvements in connection with the Keizer Station development.
“For these people to be caught up in it and be given an assessment five or six times that of Target and Lowe’s, and then still have no sidewalks, no streetlights, it just seems insane to me,” Clem said. “This is a disaster.”
Keizer attorney Johnson said he preferred not to comment on the reason those assessments were lower for Target and Lowe’s.
According to the minutes of the May 4, 2005 Keizer City Council meeting, “Alan Roodhouse, who was hired by the city as (manager)for the project, explained the concessions given to the two anchor stores, adding that because these retailers are highly discounted, their margin of profit is lower, making them unable to pay as much per square foot of building size in assessments as the smaller tenants.”
David Hunnicutt, president of the property-rights group Oregonians in Action, spoke at a legislative hearing on the matter in June.
“This case, as I told the Legislature, is the worst case of abuse of a local improvement district that I’ve ever seen,” Hunnicutt said in an interview.
“It’s a case where the Keizer City Council made a really bad bet, and used the Rawlins property as the investment,” Hunnicutt said. “Now that it’s turned out that their bet was bad, they’re demanding that the Rawlinses pay the cost.”
Clem said he wants to make sure a similar situation doesn’t happen again — in Keizer or elsewhere. His committee held a hearing on the matter June 20, and a workgroup is putting a bill together for the February session, he said.
“I’d like to see some changes to make sure if you’re forced to pay in, you’re actually getting some benefit,” Clem said.
For the Rawlinses, that can’t come soon enough. They bought the property in 1996 as a retirement investment.
“We’ll lose everything if they foreclose,” Linda Rawlins said. “The property pays for our subsistence. We’ll lose our home, our business, our retirement and our children’s inheritance.”
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