Critiquing Capital Improvements Reimbursement Resolution No. 2021-04

The following is a letter I wrote to City Council about a year ago explaining why I thought this resolution was a terrible idea. You can read the text of it at here.

Even though the Council must still approve any expenditure exceeding $100,000, this resolution codifies the potential for inappropriate, unmonitored spending. It legitimizes expenditures on projects that have NOT been fully approved by Council.

Notice that it specifies $16,800,000. That’s real money. The response I received from one councilor and a former city administrator was that “it’s always done that way”. My response is “that doesn’t make it right.”

Esteemed Councilors:

I am writing to urge you to vote to REJECT Resolution No. 2021-04, remand it to staff, and instruct that it be rewritten to conform legally to the terms of the City Charter, the Municipal Code, and ORS Chapter 294.

As written, it is basically a carte blanche approval to move forward with expenditures for engineering on ANY item in the CIP without Council approval.  It means that Public Works can proceed with preliminary work on any CIP project BEFORE the project has been approved.  This is supposedly justified because the CIP as a whole was approved by Council.  You will recall that there were serious reservations about that approval by several Councilors when it took place.

This is a usurpation of Council’s oversight of city spending and should NOT be approved as written.  Each item in the CIP MUST be approved before any funds are expended.

From the agenda item:

FISCAL IMPACTS The main fiscal impacts for approval of a reimbursement resolution include the opportunity for staff to move forward into the preliminary and final engineering phases for CIP projects and refine project costs.

From the resolution:

SECTION 1. The Issuer hereby states its intention and reasonably expects to reimburse Expenditures of the Project paid prior to the issuance of the Obligations with proceeds of the Obligations.

SECTION 2. The reasonably expected maximum principal amount of the Obligations is $16,800,000.

SECTION 6. The Finance Director of the Issuer is hereby authorized to make future declarations of intent to reimburse under Section 1.150-2 of the Federal Income Tax Regulations, on behalf of the Issuer and without further action by the City Council.

Thank you for your consideration.

Dean Silver