Oregon City Council last Monday approved a 30-year Tax Increment Financing (TIF) agreement with BP-Husky Refining.
The joint agreement would exempt real property taxation of BP, and allow the city to finance infrastructure projects, including the relocation of Cedar Point Road to the south between Otter Creek and Wynn roads, estimated to cost between $10 million and $20 million, and improvements to the Amolsch-Driftmeyer Ditch, estimated to cost $5 million.
According to the agreement, taxes attributable to increased property values at BP would be set aside in a fund to finance public improvements within the boundaries of the TIF zone. So instead of BP paying taxes on increased property value, the money would go into a fund associated with the TIF that would help pay for the public improvements. There would be development agreements between the city and BP to proceed on the projects.
“The development agreement spells out how Oregon and BP will work together over time on the common projects - what are the things the city needs to do for the broader city interests, and what are the things that are just BP interests,” Administrator Mike Beazley said after the meeting. “And we divide those up and make sure we get it done right.”
The agreement also calls for BP to make The Oregon City Schools District whole so it would not lose out on tax revenue it would have received from BP if its property values increase.
Beazley said he made some changes to the agreement that gives a time limit on the agreement.
“We made a couple little changes,” he said. “We took a slightly different tack in terms of approach on some of the things we attempted to include in the development agreement. We added a clause that simply says that should we not reach a satisfactory development agreement with BP Husky by the end of 2011 - it’s kind of an escape clause – all bets are off. The TIF agreement ceases to be a binding agreement, and the city would not have obligations under it, nor would BP. We very much expect to have a development agreement.”
Beazley said he expected to meet on Wednesday with BP.
“We have a very common interest in proceeding on these projects,” said Beazley. “It ensures that we protect the city’s interests should we not come up with a satisfactory agreement as we go downstream. That’s the most significant change from the other agreement.”
“This is a win-win endeavor between the city and BP, and of course, the schools will be made whole, which is very important, especially in this day and age in terms of tax revenues,” said Councilman Jim Seaman.
BP-Husky in the last few years planned major investments in the refinery, including $400 million in equipment upgrades to improve efficiency and competitiveness, and a $2.5 billion upgrade to increase capacity and process crude from Alberta’s oil sands.
Also at the meeting, council approved the retirements of Police Chief Richard Stager and Lt. Brian Andrzejewski. Stager’s retirement becomes effective Jan. 28 and Andrzejewski’s retirement is effective on Jan. 21.
After the meeting, Beazley said the city will begin searching for a new police chief early next month.