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Ice Fountain Water District sues City

By RAELYNN RICARTE

News staff writer

April 26, 2006

Ice Fountain Water District has filed a lawsuit against city annexation of Willow Ponds subdivision to the south of May Drive.

Mark Beam, district manager, said the Hood River City Council has breached its contract with the special district. He said financial details should have been worked out between both agencies before the March 20 action was taken.

He said the city is creating a “fragmented patchwork” of annexed properties at the western edge of town. So, citizens are being forced to foot the bill for two sets of water lines instead of just one.

“We are not against annexation, we just want it to proceed in a responsible manner,” said Beam.

He said a letter written almost four months ago to Ice Fountain by City Manager Bob Francis acknowledged that incorporation of the 33-acre subdivision owned by Pasquale Barone was problematic. According to Beam, the Intergovernmental Agreement between the city and Ice Fountain requires that outstanding issues be resolved before an annexation proceeds.

The Jan. 3 letter sent by Francis to Beam concluded by saying, “I ask you and your board not to make any judgments about any future annexations based on the decision of the Willow Pond development. Whatever the outcome of this issue, I hope this will not put us back at square one and negatively affect the positive working relationship that we started last year.”

“His comments clearly show that, even before the decision was made, he was not comfortable with the outcome,” said Beam.

“I feel like the decision was made before they even sat down with us and I think that documentation backs it up.”

Beam said the city’s apparent disregard for the IGA makes it even more difficult to accept Francis’ later remark, “As long as we keep the lines of communication open I think we’ll do okay.”

He said Francis shut down communication when he recommended the city council proceed with the annexation.

Beam said similar IGAs to avoid a duplication of services were signed last year between the city and both West Side Fire District and Farmers Irrigation District. He said by violating the first annexation initiated since those contracts were put in place, the city has also eroded trust with these agencies.

Francis said the annexation made “good business sense.” He said if the council waited for a build-out of the residential property, the increased land values would make incorporation unaffordable.

He said the city had once provided sewer hookups to developments outside of the city limits with no requirement for annexation. However, the council changed its methodology when citizens then objected to being incorporated because of higher property taxes. And staffers found it difficult to collect on delinquent bills in areas outside of its domain.

“I wasn’t comfortable with it (Barone annexation) but it was either now or never. This is a policy decision and not a staff decision – we get our direction from council,” said Francis.

However, Beam said the staff Findings and Facts from March 20 acknowledged that a duplication of services was occurring in and around the subject area. And showed the IGA “didn’t mean anything” when an annexation decision was made – only the city’s own criteria was considered.

“The special districts have argued that the extension of city water to the subject property would not be rational or logical because it would create a patchwork of water systems in the area, which would be in violation of the city’s IGAs with the districts.

“As noted above, whether the extension is consistent with the city’s TSP (Transportation System Plan) and CFPS (Capital Facilities Plans) determines whether the extension is rational and logical, not whether the extension might create a patchwork,” stated that report.

The bottom line, said Beam, is the city might realize an immediate income gain from the annexation. But citizens would bear the long-term financial burden for the installation and maintenance of two separate sets of water lines.

The city estimated it would accrue about $52,859 more in annual revenue by annexing the Barone holdings. In addition, a one-time income of $205,859 would be generated by system development charges and water and sewer hookups. Officials also anticipate an increase of about $75,293 yearly from water service and franchise fees.

The city council wanted the property annexed by March 30 in order to get in on the tax roles by the start of the new fiscal year on July 1, 2006.

“I can understand when it deals with annexation where Ice Fountain is coming from. It takes customers and a revenue stream away from the district,” Francis said.

But Beam said the city proceeded without even knowing the final cost to purchase Ice Fountain’s infrastructure. The district estimates the expenditure will be $101,394.91 to buy out water lines and pay off a share of the 12-years remaining on a $3.8 million bond repayment.

Beam said the purpose of Ice Fountain’s IGA was to ensure that annexations took place in an orderly and cost-effective manner.

He said by reaching beyond developed properties to take in new parcels, the city is creating “infrastructure service islands.” Not only is that inefficient, said Beam, it is expensive.

On April 4, Beam wrote a letter to Francis concerning this same problem with another construction site along Country Club Road. He asked the city to purchase water lines to the Ladd Henderson development since it would isolate 10 Ice Fountain customers.

Francis said it is time for the city to stop being put into the “boxing ring” with special districts by initiating an annexation.

The city is now requiring developers to apply for incorporation when requesting sewer services – and pay the involved costs. Francis said the city then takes on the role of “middle man” to facilitate the process – instead of being in an adversarial position.

Beam contends the borders of the city should follow the natural growth progression. He said “cherry stem” annexations do not benefit citizens or the special districts that were created by taxpayers to provide an essential service.

“They still need, whether an annexation is developer-driven or not, to sit down and talk with us if we are the water providers and that is our territory,” said Beam.

He said it is unfortunate that discussion will now have to take place in front of a judge.

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