Former timber town in rural Oregon faces extreme debt

A series of cascading problems, including financial mismanagement, industry failures, and questionable city contracts, has pushed Lakeview, Oregon, into millions of dollars of debt it can’t pay off.

Like many former timber towns, Lakeview has struggled to rebound from the collapse of the logging mills that once powered its economy and helped the community survive in an isolated corner of Southern Oregon.

OPB reporter Bryce Dole joins us to explain how Lakeview got into this predicament and what residents are trying to do to get out of it.

Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.

Dave Miller: From the Gert Boyle Studio at OPB, this is Think Out Loud. I’m Dave Miller. Like many former timber towns, Lakeview in Southern Oregon has struggled to rebound from the collapse of the logging mills that once powered its economy and helped the community survive. Now, a series of cascading problems, including financial mismanagement, industry failures and bad bets, have pushed Lakeview into millions of dollars of debt that it can’t pay off.

A team of OPB journalists went to Lakeview to learn more about what happened and what options the town has going forward. I’m joined now by a member of that team. Bryce Dole is a political reporter at OPB. It’s great to have you back on the show.

Bryce Dole: It’s great to be here, Dave.

Miller: What led you and fellow OPB reporter Joni Auden Land to go to Lakeview?

Dole: Yeah, so like many big story ideas, this one started in a bar. I had been hearing that this region was facing some financial difficulties because there’s a natural gas pipeline that cut through Lake County that went bankrupt, and that caused government revenue to plummet. My colleague Joni has been reporting on some of the town’s water issues in the past and was hearing from locals about the town’s struggles too. We’d both been hearing that this town was now so broke that it was basically at risk of shutting down.

Joni and I were at a bar one night, and we realized we were both making calls on basically the same story, and we decided to team up. So we drove out to Lakeview for a week and we talked to as many people as we could to try and learn more.

Miller: What were you hearing?

Dole: For years, this town has been looking for ways to revive itself. It’s been looking for ways to fill in for the collapse of those logging mills that you just talked about, and as it’s tried to grow and change, it’s just been hit by one severe problem after another. Struggling with bad bets, mismanagement, failures of major industries.

I should note, this town is super remote. It’s about 100 miles from the nearest community. That community is Klamath Falls, which is pretty rural as it gets. And it’s kind of the region’s main hub for medical care, for public services, for shopping. And now, all of these problems are basically pushing it to the brink of insolvency. That could result in some really devastating cuts to critical services that are essential for people who live out there.

Miller: I want to go back a little bit. What did you hear about life in Lakeview before most of the timber mills closed?

Dole: By most accounts, this was a pretty prosperous timber town. It had seven logging mills at one point. There are all these old historical photos that we got to see showing packed parades, logging trucks, people gathering around the grand opening of a swimming pool, for instance. But in the 1980s, this industry started to crumble. And like many towns in Oregon, the economy buckled. During our reporting trip there, we talked to all sorts of people who have lived in this community their whole lives. They described what it was like to watch their friends, their fellow community members, families leave town, take their children out of the school district.

At one point, I was in town hall, people said I should talk to a woman named Georgia Getty. She’s a lifelong resident, her father was a millwright, and she came out of retirement to help the town manage its finances, one of many people who helped volunteer to help the town. And when I found her, she was basically in the back of town hall, hunched over a stack of records with like a magnifying glass, reviewing town records. And this is what she had to say:

Georgia Getty [recording]: And my kids, they really don’t have anything to do. When I grew up here, we had dances, we had bowling, we had a theater. We had places to go, things to do and people to see. And now, those fun things don’t exist anymore.

Dole: A lot of people in town over time, they went to work in the school district, they went to work at a local prison, they went to work at the hospital. But the town’s economy just hasn’t really recovered and the downtown is now just full of empty storefronts.

Miller: So then Lakeview, like a lot of rural Oregon communities, was faced with this question of, how do you reinvent yourself when money from logging or timber production declines? One bet in Lakeview was on a biomass refinery. What happened?

Dole: This was a major power plant project that most people around town just call Red Rock. It’s this massive industrial site on the south end of town. A lot of people thought that this was going to be the town’s next big economic driver and provide a ton of jobs. The project ultimately failed under hundreds of millions of dollars in debt, right around when that natural gas pipeline filed for bankruptcy. Taken together, all of this had some pretty major financial consequences. For example, the town took out loans to back this project by extending their water and sewage systems to it. When the project failed, the town didn’t really reap the benefits from it. So the town still owes about $2 million in loans for that infrastructure.

There is a new company that now owns the power plant and they’re planning to take on that debt, but that’s only just getting started.

Miller: One of the most expensive debacles stems from a contract the town signed with a company called Sustainability Partners. What was the pitch?

Dole: Basically, this was a big effort to upgrade the town’s water meters. The contract bought what are called smart water meters. They are basically meant to remotely track water use and they have a bunch of other features as well.

Miller: But what ended up happening?

Dole: Well, the town says it simply can’t afford the infrastructure, and that they can’t find evidence that the contract was even approved in a public meeting or received a formal bidding process, which that company disputes. We went to the local public works shop and saw one glaring example of this situation. Inside the shop, there are all these tall stacks of boxes that contain hundreds of thousands of dollars’ worth of pipes, valves and other hardware that are basically spilling out onto the floor, and the town isn’t planning on using this equipment. For a while now, Lakeview has stopped paying its monthly usage charge for this infrastructure. That charge is about $40,000 per month. And recently, the company sued Lakeview and other former town officials in federal court, basically to try and get some of that money back.

In reporting the story, we also learned that this company is under investigation for its contracts in Louisiana, and state officials there have accused the company of predatory lending. And I should note that in a statement to us, the company denied that its contracts were predatory. Their president said, “We stand behind the lawfulness of our agreements and the value of this project in Lakeview.”

Miller: So we’re talking here about some bad bets or bad luck, or a combination, but there have also been allegations of internal financial mismanagement by former town manager Michele Parry. She served from 2019 to 2024. What did you hear from former town officials and law enforcement about what she did?

Dole: A number of town officials placed the blame on the town’s current financial situation on former officials, including Michele Parry. They accused her of mismanaging the town’s money as it lost track of hundreds of thousands of dollars and its budget reserves plummeted. They also accused her of using her town-issued credit card on personal purchases. She denies all of that.

Her tenure came to an end when a former town official discovered that his signature was on reimbursement grants for a water treatment project. This is what he told police ... He went to the police and he said, “I never signed these records.” Former town officials basically also went to the police and said that they searched Parry’s computer, and they said that they found a file on it that said “signatures.” And on that file, it included the electronic signatures of a variety of town officials, including the former mayor.

We should note that many of those town officials who served under Michele Parry declined our interview requests, including most of the people who talked to the police. The Oregon Department of Justice launched their own investigation, but decided in January not to pursue charges against her.

Miller: What did Parry say about these allegations?

Dole: My colleague Joni reached her over the phone. She denied any wrongdoing. She placed the blame for the financial situation on her successors, and she said none of what they said was true and described the situation as a “witch hunt.”

Miller: One of the lines in your story that really stood out to me is this: “The full scope of Lakeview’s financial calamity is unclear even to current leaders.” How can that be?

Dole: Town leaders have been trying for a while now to get their arms around the situation. When we were there, they were searching through big boxes and stacks of records that were just like overflowing with papers in town hall. Their current manager, Stan Foster, told us that he simply couldn’t find documents sometimes reflecting basic financial information. Here’s what he said:

Stan Foster [recording]: And what I encountered were people that were pretty downtrodden, had been treated pretty poorly. We didn’t have enough personnel, but there was no likelihood we were going to have enough personnel. Beginning of every month, I found that there was another stack of debts that I wasn’t aware of.

Dole: So the town has made some steps recently to offload some of this debt, at least in the short term. But Foster acknowledges that they haven’t remotely resolved the situation yet.

Miller: But what is known? What have these financial problems already meant for the provision of public services?

Dole: I think it’s fair to say residents have borne the brunt of the consequences of this situation. Town government staffing, for example, has dropped from more than 30 people to less than 10. The town lost its local 911 dispatch center, which consolidated with one in Klamath Falls. There’s been this really rampant turnover and leadership, including back in March, a bunch of town councilors and the mayor all resigned. The town has raised water bills, they levied a public safety fee, and annexed new properties into the town to try and resolve some of this debt to generate new revenue.

And probably the town’s biggest issue, its water, is still not resolved. For a lot of residents who live there, this water issue is very well known, right? They live with it, their water comes out of the tap sometimes smelling terribly, it’s discolored sometimes, it smells like rotten eggs. This is clearly just one of the biggest, glaring unresolved issues there.

Miller: What have local residents been trying to do to save their own town?

Dole: This, to me, is the truly extraordinary part of this story. There’s been this widespread effort, ever since the town has fallen into this situation over the last year, maybe the last two years, to try and keep the town running. People have volunteered to help the town with everything from its finances – like Getty – to traveling into the mountains to find a new solution for its water supply. Some people raised money to run the swimming pool when the town couldn’t afford it. Other people raised money to build a skate park and provide kids a new place to hang out. One group – and I’m not joking here – they sold calendars with nearly naked photos of themselves to raise money to have the snow plowed off their roads. Here’s how Charley Tracy put it, she’s a former town councilor:

Charley Tracy [recording]: I think it shows our character, that everybody really wants the town to survive. You’ll always have the naysayers. But what it really has done is it’s brought out the people who really have a desire to be on the positive end of things, and making sure that the town does survive. I truly believe it will, I think it will turn around. But it’s not going to happen overnight.

Dole: So even though the people here have been through so much, a lot of people just don’t seem like they want to give up on this town. A lot of them want to bring new opportunities for young people to build their lives there and just keep Lakeview around for a long time.

Miller: There are obviously some Lakeview-specific pieces to this story that we talked about earlier, but how much of what happened or is happening in this one small Oregon town could happen in others?

Dole: I think this is certainly an extreme example of how financially strapped many communities in our state are. A lot of towns in Oregon are dealing with inflation and facing rising personnel costs, health care costs, dwindling property tax revenue. They’ve got old infrastructure. Lakeview is facing a lot of these challenges too. But what this town’s story shows, I think, is that many of these communities today, given these financial constraints, they could be just one wrong step away from a similar situation. And I think the question for us and for a lot of local leaders is whether we as a state are going to continue to watch these small towns decay, or if something else needs to be done to save them.

Miller: Bryce, thanks very much.

Dole: Thanks, Dave.

Miller: Bryce Dole is a member of OPB’s political reporting team.

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