No reply at all
By Andy Gates - Argus Observer
Saturday, August 18, 2007 9:12 PM PDT
ONTARIO - After more than two weeks of review, Ontario’s highest paid employee is not offering answers to questions that could affect city coffers.
The unanswered questions concern two contentious tax mandates — utility capitalization fees, or UCFs, and system development charges, or SDCs.
“When we have the answers, the community will have the answers,” Ontario City Manager Scott Trainor said this week.
SDCs are levies designed to fund capital improvements constructed to accommodate growth, and they were at the center of a costly, 2006 lawsuit against the city.
The city was sued last year by two developers who said the municipality broke state laws when it implemented the tax.
The developers argued the city did not provide public hearings or proper notice, as required by law. The city eventually paid more than $25,000 in attorney fees to settle the suit, and it refunded SDC revenue and rescinded an SDC ordinance and resolution.
The decision to rescind the existing SDC ordinance turned out to be a potentially dire move, though, because it opened the possibility the city may be required to refund thousands of dollars to city water users.
That is because when the city repealed the SDC ordinance in question, it reverted back to a previous SDC mandate, which has a problematic title, repealing a water tax the city collects.
The water tax, or UCF, is charged to Ontario water users at a rate of 17 percent. The tax provides an annual revenue to Ontario of more than $440,000.
At least one elected councilmen and the mayor worried the city collected UCFs without an ordinance — without proper authority — and they said the city might need to reimburse water users.
No problem, though, the city’s attorney later asserted.
The problematic ordinance title could just be “disregarded” because nothing inside the ordinance — other than the title — repealed UCFs, Ontario City Attorney Larry Sullivan said.
The Ontario City Council recently accepted that opinion, passing a resolution that directed Trainor to continue collecting UCFs. However, the issue is far from over. Serious questions remain unanswered.
The City Council decided to give the public an opportunity to contest the council’s UCF/SDC decision and the resolution in Malheur County Circuit Court. That recent UCF resolution, however, is being revised by Sullivan, Trainor said Monday, and it will go back to the City Council. A road map and timeline to allow members of the public to contest the council’s decision regarding the SDC/UCF issue are not yet available.
“I think we will have a timeline once Larry (Sullivan) brings a revised resolution to the council. He will be able to describe the process better at that point,” Trainor said this week.
Two key questions regarding UCFs and the city’s coffers still linger.
UCFs and SDCs are connected
The first question evolves from the city’s March 30 settlement agreement with the developers who sued over SDCs.
Under the settlement agreement, the city agreed to refund and return SDC money collected.
That meant the city agreed to reimburse SDC revenue — about $43,854 — that was collected under that prior SDC ordinance.
But, UCFs were originally mandated in a 1997 SDC ordinance, and UCF revenue was earmarked to go into the city’s system development fund.
That scenario opens up the question: Might UCF revenue have to be returned to the public?
Trainor said he too is curious about that question, and Sullivan is investigating the matter.
“We have had the same questions and the attorney is currently reviewing them,” Trainor said.
Sullivan said he prefers Trainor handle questions from the media.
A second UCF question — regarding the current rate the city is using to collect the tax — also lingers.
The city is presently collecting UCFs at a rate of 17 percent on city water bills.
But the city never passed an ordinance setting that rate.
UCFs were originally set by ordinance at a rate of 27 percent. Then, the rate was lowered to 21 percent in May 2004 through another ordinance.
The current rate of 17 percent evolved during recent years without an ordinance following a water rate hike, when city staff were directed to keep UCF revenue constant, Ontario Public Works Director Steve Gaschler has said.
“Staff was directed by council to hold the UCF revenues constant as the water rate increase went into place in 2004 and 2005,” Gaschler said last month.
So, does the city need an ordinance to collect UCFs at a rate of 17 percent? If it does, what does the city need to do about the fact it has been collecting UCFs at that rate without an official ordinance? Trainor is not currently offering answers to the questions.
“I wish that these were easy questions, but the city continues to move forward in reviewing all of the SDC and UCF issues in order to make sure that we don’t get in a hurry and miss something,” Trainor said.
The City Council is slated to hold its next regular meeting at 7 p.m. Monday. at 7 p.m. in city hall.
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