I am in favor of paving, but not this proposal.
Otta Seal looks like a great solution as a paving material. I don't agree with 24' roads and perhaps other details but overall I support the plan to pave with Otta Seal.
On the other hand, I believe that the election now underway is not a valid Special Road District election, and the proposed assessments are not fair or legal.
First, the current voting is not a valid Special Road District election according to the county assessor's office and county counsel's office. Both indicated that the only election and financing options available to a Special Road District are a county-run levy election, a Local Improvement District (too expensive), or passing the hat among the owners. The Assessor's office told the Board and road committee the same thing.
The current election is not valid for several reasons. First, it excludes registered voters living in our District because they are not property owners. This is not allowed, all registered voters living in the District get to vote on a road improvement levy, and out of district voters are not allowed regardless of property ownership. This is not some minor statute section, it is embedded in the Oregon Constitution. This single issue nullifies this election.
Second, a lump sum tax levy is not permitted in a Special Road District, it must be pro rated per $1000 of property value just like all property taxes, including the Road District assessment we currently pay every year on our property tax bill.
Third, Special Road District levy elections must be run by the county, not by the Board through a private balloting company, as the county assessor has told the Board, Road Committee, and me.
This type of property owner election and lump sum assessment might be permitted IF we were a property owners' association. We are not a property owners' association, we are a county Special Road District, our operation and our Board is supervised by Deschutes County. I'm not speaking without some experience. For 5 or 6 years I was on the Board of a 400+ property owners' association, and was its president for several years. During that time our property owners' association finished paving the subdivision by owner-approved assessments. We also planned, passed, financed, and built a paved community bike path, again with owner-voted assessments. It worked fine. BUT PASRD IS NOT A PROPERTY OWNERS' ASSOCIATION and the Board does not have authority to impose the proposed assessment.
Those who live here pay for the roads. What about renters? Renters pay ALL the expenses of their rented homes, including property taxes and our road assessments. That's the whole point of rental properties, the renters pay all the owners' expenses. Anyone who tells you differently is uninformed or is not being straight with you. Renters in the District will help pay the bill for any paving through their rent. They should and would get to vote a in county levy election, but not here. It's a problem with this election that cannot be corrected afterwards, as was suggested by a Board member regarding the legality of the lump sum assessment part of the proposal.
The biggest problem with this proposal it that there are large, unaccounted for expenses that are not disclosed and accounted for in the current proposal. Under this proposal we would all have to pay for a trustee (legal office) to record these liens, manage the monthly collection from those who choose to pay over time. ( I believe this will be most owners.). Where in this proposal is the overhead cost of managing maybe a hundred or more escrow accounts? Who is going to do that? How much will it cost? So far the Board and Portland law firm have not responded to that question.
A bigger financial trap in this proposal are the costs to collect this assessment from non-paying owners. There are enough unanswered questions about the fairness and legality of this proposal that we should assume some number of owners will simply refuse to pay the lump sum and also refuse to sign the lien payment agreement. Let's assume only 10 owners out of 142 refuse to pay. The project would then be more than $50K+ short. Where would that money come from? If we would have to collect it from them, what would it cost to foreclose a a $5100 lien from each non-paying owner? I don't know for sure but I am sure it will be a lot more than $5000; $10,000-15000 might be a closer estimate. We might eventually recover it, and costs etc., but first we would first have pay up front for the litigation costs to do so. If only 10 owners refuse to pay, our District could easily be looking at out of pocket collection costs of $100,000 - $150,000 or more. Where would that money come from? We do not have that kind of money laying around. The Board and the law firm have so far not provided any answers to those questions and don't want to talk about it until after the election. We do not need to be in the escrow and collection business. This proposal is not thoroughly thought out, and it is a big financial trap for our District and another reason to vote no on this proposal.
I have been talking with the Board for over 6 months about theses questions, and for 6 months have urged them to get a legal opinion to protect our Special Road District from potential liability if they proceed with this plan. Finally, a day or two before the ballots were mailed they posted one on the website. Unfortunately there are a number of unanswered questions in that opinion, including those issues I mentioned above. At the last meeting The Board agreed to forward my questions to the Portland law firm, that was about 3 weeks ago now. (The Board is free to post my letter on the District web site, or if you email me at glennbrown27@gmail.com I'll send you a copy.) For two weeks I heard nothing. I finally contacted the Board last Monday. The Board had discussed it with the Portland law firm the week before but apparently instructed the law firm to NOT respond to my questions until AFTER the election. Why, what's the big secret? These are not all hard questions. Where has this law firm done this kind of financing with a Special Road District before? It doesn't take 3 weeks to say whether or not they've tried this financing scheme before and where. They don't want to say so I'm now assuming the answer is no, we'd be the first. We're entitled to know if this has ever been done before, and there no reason to keep the answer from us. These are serious problems that could bankrupt our District, and permanently poison the waters here for any paving. Yet for some reason the Board and the Board's law firm won't answer these questions until after the election. We cannot afford to be a test case for a big Portland law firm on a public finance question, it's a trap we should avoid.
I am also voting no because of the unfairness of the lump sum assessment, and the unfair economic benefit that it would bestow on the owners of the most expensive properties. The owner of that million dollar home will pay $5,000 and increase their property value by $50,000-100,000. Nice return on $5000. Not so much on the lowest valued properties who also are asked to pay the very same $5000. But the Board so far remains unpersuaded by that argument as well.
Glenn Brown
12-5-2020 Board Response to Glenn Forum Post
Panoramic Access Special Road District members -
First and foremost the Board has gone above and beyond to answer Glenn’s questions. Numerous communications from the Board to Glenn seem to have resulted only in more questions and objections. At Glenn’s request, the district was obliged to obtain two written legal opinions from Mersereau Shannon LLP, a law firm in Portland that specializes in these matters. BOTH opinions clearly state that the District is within its legal rights. The two opinions are posted on the District website.
Now to the Post by Glenn Brown:
Glenn’s statement (below) was refuted by the county
First, the current voting is not a valid Special Road District election according to the county assessor's office and county counsel's office. Both indicated that the only election and financing options available to a Special Road District are a county-run levy election, a Local Improvement District (too expensive), or passing the hat among the owners. The Assessor's office told the Board and road committee the same thing.
Email from Deschutes County To Glenn
From: John Laherty Sent: Tuesday, October 13, 2020 12:34 PM
Subject: Panoramic Access Special Road District election
Dear Mr. Brown:
As per our telephone conversation yesterday morning, I understand that you are a property owner in the Panoramic Access Special Road District (the “District”) and that the District is planning on holding an election to determine whether to assess the properties within the District for the cost of a major
road improvement project. This assessment would be for a fixed amount, i.e., the amount owed by all properties would be the same. You asked me whether the District could conduct this election as an “internal” election, or whether it had to be part of the County-wide election process.
As an initial matter, I need to make clear that I do not represent the District or you individually. Instead, I represent Deschutes County. For this reason, I am not permitted to give you legal advice. However, I can provide you with the County’s general position regarding the process. With that understanding, it is the County’s general position that a road district can conduct an internal election to impose a fixed amount assessment for road improvements, so long as the election is authorized by and conducted in accordance with the District’s governing documents (i.e., bylaws, etc.). If, however, a district intends to obtain road improvement funds through imposition of a property tax, an election would need to be conducted in accordance with the statutory referral process outlined in ORS 255. Again, this is only the County’s understanding of the process – it should not be considered legal advice, nor should you rely upon it in making decisions that affect your legal rights. If you are seeking
a legal opinion on the issue, I encourage you to retain an attorney of your choosing to assist you.
Email from Deschutes County In a separate email to board member Lee Lucas:
Lee: I am not aware of any County rules pertaining to the management or operations (including elections) of a special road district. Instead, it is my understanding that special road districts are governed by State law.
Thanks,
John Laherty, Senior Assistant Legal Counsel
Glenn’s statement on hidden costs
The biggest problem with this proposal it that there are large, unaccounted for expenses that are not disclosed and accounted for in the current proposal. Under this proposal we would all have to pay for a trustee (legal office) to record these liens, manage the monthly collection from those who choose to pay over time. ( I believe this will be most owners.). Where in this proposal is the overhead cost of
managing maybe a hundred or more escrow accounts? Who is going to do that? How much will it cost? So far the Board and Portland law firm have not responded to that question.
This clearly not the case Prior to the mailing of the ballots the Board mailed to all landowners, two documents explaining the details of the proposed project. These are posted on Web: SUMMARY OF ESTIMATED ASSESSMENT AND LIEN AMOUNT COSTS and SUPPLEMENTAL INFORMATION FOR PASRD BALLOT
In the “SUPPLEMENTAL INFORMATION FOR PASRD BALLOT “page 4 “SUMMARY OF ESTIMATED ASSESSMENT AND LIEN AMOUNT COSTS” clearly answers those questions of “not disclosed and accounted” cost. Please refer to those documents on the web for the details.
Glenn’s statement on instructing the law firm NOT to respond
The Board had discussed it with the Portland law firm the week before but apparently instructed the law firm to NOT respond to my questions until AFTER the election. Why, what's the big secret? These are not all hard questions. Where has this law firm done this kind of financing with a Special Road District before? It doesn't take 3 weeks to say whether or not they've tried this financing scheme
before and where. They don't want to say so I'm now assuming the answer is no, we'd be the first. We're entitled to know if this has ever been done before, and there no reason to keep the answer from us. These are serious problems that could bankrupt our District, and permanently poison the waters here for any paving. Yet for some reason the Board and the Board's law firm won't answer
these questions until after the election. We cannot afford to be a test case for a big Portland law firm on a public finance question; it's a trap we should avoid.
The board had a legal opinion at the time of Glenn Brown's request. But, Glenn wanted it in writing - which cost money that Glenn is concerned about spending. Glenn found the written opinion unsatisfactory and requested a second opinion, which was delivered this past week and posted on the website. Both opinions confirmed that PASRD has the authority under ORS 223 to do an assessment for local improvements.
There was never any instruction from the board to the legal advisor in Portland not to respond to Glenn's inquiries - the refusal to respond directly to Glenn is standard operating procedure for the law firm to avoid potential conflict of interest. And, the board certainly never requested a delay in the second opinion. If there was any delay it was caused by the fact that the board requested Glenn to put his concerns in writing so they could be communicated accurately to the legal advisor, and perhaps the Thanksgiving holiday contributed to the delay.
There has been no change in the legal advice received by the board since our first conversations with Glenn. The Portland law firm that Glenn is mischaracterizing as a "large firm" consists of two (2) attorneys that are recognized as preeminent specialists in the financing of capital improvement projects by local government entities in the state of Oregon.
Glenn’s statement on fairness to renters:
Those who live here pay for the roads. What about renters? Renters pay ALL the expenses of their rented homes, including property taxes and our road assessments. That's the whole point of rental properties; the renters pay all the owners' expenses. Anyone who tells you differently is uninformed or is not being straight with you. Renters in the District will help pay the bill for any paving through their rent. They should and would get to vote a in county levy election, but not here. It's a problem with this election that cannot be corrected afterwards, as was suggested by a Board member regarding the legality of the lump sum assessment part of the proposal.
There are 17 parcels of bare land - no renters there. Of the remaining 125 parcels with residences, 83 are owner occupied and most of the rest are vacation homes. There are probably fewer than 15 renter occupied residences in PASRD. The other residences that are not the primary residence of the
owners are vacation homes. It seems that if these owners are going to be asked to pay for paving, they should also be able to vote on it. There is a slogan from our nation’s history on this – no taxation without representation.
Glenn’s statement on costs:
The biggest problem with this proposal it that there are large, unaccounted for expenses that are not disclosed and accounted for in the current proposal. Under this proposal we would all have to pay for a trustee (legal office) to record these liens, manage the monthly collection from those who choose to pay over time. (I believe this will be most owners.). Where in this proposal is the overhead cost of managing maybe a hundred or more escrow accounts? Who is going to do
that? How much will it cost? So far the Board and Portland law firm have not responded to that question.
As noted above, all the costs identified by our SDAO financial consultant were listed in the supplemental information mailed to all property owners. The estimate for the trustee services was $1000 per year. The estimate for legal assistance was $25,000 in total. Compared to the estimated interest charge of $197,831, these numbers are not very large.
Glenn’s concern about foreclosure costs:
A bigger financial trap in this proposal are the costs to collect this assessment from non-paying owners. There are enough unanswered questions about the fairness and legality of this proposal that we should assume some number of owners will simply refuse to pay the lump sum and also refuse to sign the lien payment agreement. Let's assume only 10 owners out of 142 refuse to
pay. The project would then be more than $50K+ short. Where would that money come from? If we would have to collect it from them, what would it cost to foreclose a a $5100 lien from each non-paying owner? I don't know for sure but I am sure it will be a lot more than $5000; $10,000-15000 might be a closer estimate. We might eventually recover it, and costs etc., but first we would first have pay up front for the litigation costs to do so. If only 10 owners refuse to pay, our District could easily be looking at out of pocket collection costs of $100,000 - $150,000 or more. Where would that money come from? We do not have that kind of money laying around. The Board and the law firm have so far not provided any answers to those questions and don't want to talk about it until after the election. We do not need to be in the escrow and collection business. This proposal is not thoroughly thought out, and it is a big financial trap for our District
and another reason to vote no on this proposal.
Costs of collection have not been determined. Costs of litigation and collection of unpaid liens may be a serious potential problem. The board appreciates Glenn bringing this to our attention and we are looking into the matter.
Glenn’s unhappiness with the board responses:
I have been talking with the Board for over 6 months about these questions, and for 6 months have urged them to get a legal opinion to protect our Special Road District from potential liability if they proceed with this plan. Finally, a day or two before the ballots were mailed they posted one on the website. Unfortunately there are a number of unanswered questions in that opinion, including those issues I mentioned above. At the last meeting The Board agreed to forward my questions to the Portland law firm, that was about 3 weeks ago now. (The Board is free to post my letter on the District web site, or if you email me at glennbrown27@gmail.com I'll send you a copy.) For two weeks I heard nothing. I finally contacted the Board last Monday. The Board had discussed it with the Portland law firm the week before but apparently instructed the law firm to NOT respond to my questions until AFTER the election. Why, what's the big secret? These are not all hard questions. Where has this law firm done this kind of financing with a Special Road District before? It doesn't take 3 weeks to say whether or not they've tried this financing scheme before and where. They don't want to say so I'm now assuming the answer is no, we'd be the
first. We're entitled to know if this has ever been done before, and there no reason to keep the answer from us. These are serious problems that could bankrupt our District, and permanently poison the waters here for any paving. Yet for some reason the Board and the Board's law firm won't answer these questions until after the election. We cannot afford to be a test case for a big Portland law firm on a public finance question, it's a trap we should avoid.
The board had a legal opinion at the time of Glenn Brown's request. But, Glenn wanted it in writing. Glenn found the written opinion unsatisfactory and requested a second opinion, which was delivered this past week and posted on the website. Both opinions confirmed that PASRD has the authority under ORS 223 to do an assessment for local improvements.
We are not sure of exactly what questions have gone unanswered? The board would like Glenn to specify them and we will try to get the answers. Finally, we don’t want to leave the impression that we do not appreciate Glenn’s Questions. They have helped to sharpen our understanding of the assessment process and have identified a potential problem we had not previously considered. We just wish Glenn could be more constructive and less accusatory in his criticism.
Thank You
PASRD Board of Commissioners