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Growing pains: Can Albany afford to grow, and what happens if it doesn't?
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Growing pains: Can Albany afford to grow, and what happens if it doesn't?

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When Ryan Spires was a child, the area was all empty fields.

Twenty years later, the field on Timber Ridge Road is no longer empty. It’s occupied by apartment buildings clustered together, squatting behind a roundabout that used to lead to nowhere.

Now cars go round and round, exiting further down Knox Butte Road to strings of houses and more apartment complexes, crosswalks and paved pathways. Or they funnel off down Timber Ridge Street, past apartments and half-erected structures bustling with construction and promising more housing in the near future.

Spires has watched the area grow over the last decade. And from her office in the Todd Construction trailer in the parking lot of the nearly completed Meadow Ridge Elementary School, for which she serves as project administrator, she’s watching the growth turn into sprawl.

The school was funded by a $159 million bond approved by voters in 2017, and when it’s done, it will already be close to capacity.

It’s an indicator that Albany is continuing to grow. So is the scramble to find affordable housing and the community meetings being held to aid in the search.

The increase in calls for emergency services, an uptick in traffic and all-around sense of growth support Portland State University’s estimate that the city’s population will reach more than 90,000 in the next 20 years.

But with an urban growth boundary dictating where development can happen, legislation from the state further mandating housing policy, a long-delayed long-range planning effort, and a coming budget crisis fueled by an increase in employee costs and a cap on property taxes, can Albany really afford to grow? And what happens if it doesn’t?

Paying the bills

Sharon Konopa has been the mayor of Albany since 2009, and she's been on the City Council since the late 1990s. This past summer, as the council readied to adopt a budget, she said it was the first time she had seen the chamber so full of concerned citizens, engaging in the process.

That budget — which will dictate city spending for the next two years — was adopted, but it came with cuts to nearly every city department including emergency services. Conservative estimates for the next budget cycle show an $11 million deficit.

In every subsequent discussion about the possibility of cutting additional city services and looking for ways to generate revenue, Konopa is quick to remind the much smaller audiences in the chamber: property taxes do not cover the cost of police and fire, let alone everything else.

It goes back, Konopa said, to the mid-1990s.

“I was on the budget committee at the time and we had these new subdivisions going in,” she said. “And some advocates were saying at the time that the increased population was a drain on services. More growth puts more demand on services.”

That was more than 20 years ago and the city is again on the verge of expanding.

During the last budget cycle, former Albany Fire Chief John Bradner told the council that calls for service had reached 10,500 in 2018. That number was up from the 3,000 calls a year he said the department handled 25 years earlier, when Albany’s population hovered around 35,000.

“If you add up the cost of fire and police and then look at property taxes, they don’t meet,” Konopa said. “Property taxes do not pay for emergency services and then we have all the other departments to pay for out of the general fund.”

The next time the city sets about balancing a budget, it will be about $11 million gap between revenue and costs. The dominating factor is the cost of employees. Public Employee Retirement System costs continue to rise, and the acronym PERS is tossed around city council meetings so often it’s difficult not to place the blame squarely on the system.

But according to City Manager Peter Troedsson, the budget issue is far more complicated. The retirees receiving the most money, he said, will die off and PERS will self-correct. But that won’t get municipalities out of the woods.

“Medical insurance costs will take the place of PERS,” he said.

And while employee wages are often a hotly debated topic among public circles during budget season, Troedsson said the city has to pay for services and the private sector is offering up to three times the salary for many of the same positions in the city’s employment.

“People, rightfully, ask us how the cost of government is going up and you look at PERS, health care and prevailing wages. If I were to hire an engineer, I’m competing with the private sector and that is tough, tough, tough right now. If you want a good workforce to help plan your city, it you want a strong workforce, you have to pay for it,” he said.

Paying for additional staff is tied to an increasing population but even if Albany were not to grow, the city would, likely, still face a shortfall.

“It’s a structural imbalance,” Troedsson said. “Measure 47 and 50 in the mid-90s had the effect of limiting growth of property tax to 3% a year but the cost of operations go up 5% a year. That’s an imbalance and it doesn’t take a genius to see those lines are not going to meet.”

So does adding more people to the city, who will ultimately pay property taxes, help generate more revenue? The answer, is complicated.

“More people and businesses coming in should create more revenue, right? Because even though it’s capped at 3%, it’s still more revenue,” Troedsson said. “And that’s great but there’s an incredible cost associated with preparing for that growth. Without funding to do that, we’re in a really tough spot. It limits the amount of housing available and what happens when a commodity is in demand? When there’s 10 apples and 12 people want them? The price goes up. There’s compounding and confounding issues at work here.”

Making room

In January, city staff will go before the council and introduce the opportunity to partner with a private organization to develop land in South Albany.

The Henshaw Farm property received its land use approval in 2014 and was planned to house 200 lots and possibly, commercial plans as well. Because of wetland and frontage issues, the development hasn’t moved forward.

“I think what we’ll see is more need to be talking about development partnerships or creative ways to get infrastructure out to where we want development to occur,” said Public Works Engineering and Community Development Director Jeff Blaine.

According to Blaine, the majority of projects coming through public works now have to deal with wetlands issues — often costing more money and time for developers.

That’s partly because development is restricted to the urban growth boundary, the result of land use laws from the 1970s.

“What it does is recognizes Oregonians value open spaces which is wonderful and to do that, they have set up UGB [urban growth boundary],” Troedsson said. “It’s wonderful until the state starts to grow at a rapid rate and you see a lot of pressure on the land inside the UGB. How do we address that? People are grappling with that because we can push the UGB out but that’s compromising the original intent. What it shows to me is we’re at a point where that pressure is forcing us to confront difficult decisions and they’re not binary decisions.”

According to Blaine, the process to expand the UGB is a long, expensive and complicated.

But the city isn’t there just yet. There’s still land to be developed within the UGB, but the inventory available without wetlands to contend with is shrinking. And with the passage of House Bill 2001, land for single-family homes could be compromised as well.

The law requires cities to allow middle housing — like duplexes, fourplexes and cottages — to be built on lots zoned for single-family homes. The bill was born of an attempt to create more affordable housing. But with the rules not quite set in stone, the city has questions about its implementation.

Konopa said she worries about the effect on neighborhoods and logistically, how infrastructure can meet the demand.

Operations Manager Chris Bailey said the city plans 20 years ahead when it constructs new facilities.

“New water and wastewater plants are designed with the long-term in mind,” Bailey said. “We can expand them so we don’t have to go out and build a new one.”

System facility plans are done every 15 years or so and the last one was completed in 2015. It means replacing old pipes that haven’t been touched in 50 years and other upgrades to the system.

But rate fees paid by customers do not cover operation and maintenance costs, and developers are responsible for putting in their own infrastructure in new developments, Bailey said.

However, as public works continues to plan for the future and replace parts of the system, infrastructure could already exist for new development.

“If Company X needs this much water, we ask, ‘Do we have the capacity?’” Bailey said. “If we’re doing our jobs right, we’ll be building in capacity for that as we go.”

For example, the city has already invested in larger pipes and so when a company pays system development charges, those funds do not have to go to installing a larger pipe, but can go back to the city to pay for other infrastructure needs.

The plan

It’s been more than a decade since the city looked at its long-range plan. The recession and lost staff were contributing factors. But in January, the issue was brought center stage again and the council approved economic development funding for three studies: a housing needs analysis, economic opportunities study and buildable lands inventory.

If the city were to petition the state to extend the UGB, the studies are vital to the application. In the meantime, they’ll give the city an opportunity to re-evaluate its plans for growth.

The buildable lands inventory, Blaine said, is exactly what it sounds like. How much land does the city have to develop and where is it located? The housing needs analysis and economic opportunities study, he said, look toward the future.

Both of those studies will provide recommendations for adjustment and could include zone changes, policy shifts, new programs and different incentives.

“For example,” Blaine said, “we might see there’s a shortage of multifamily housing and in that zone, we allow single family housing to be constructed and people are doing that instead. We might see a policy shift there.”

Public/private partnerships, like the proposal for the Henshaw farm property headed for the council, may also be part of a long-term plan.

To create a balanced budget, maintain services and keep up with growth, Troedsson said it’s an option.

“You can either cut back on the services you provide or you can generate more revenue,” he said. “Or there’s the third option of somehow turning to the private sector to address some of those issues.”

The issue those partnerships may not be able to solve? Police and fire funding, which will continue to see budget issues in the next biennium.

The council is currently debating on whether or not to institute a utility or street fee like many other cities throughout the state to generate additional revenue. City spending, staff said, is not entirely the same as budgeting for a household. Certain funds must be used for certain projects. Money for new lights inside an urban renewal district could not have been used to repair streets on the other side of town without breaking finance laws.

Konopa said she would not be in favor of a monthly fee higher than $10. The majority of the council, however, has asked that the question be put to the voters. If the voters reject the fee, the city would have little choice but to return to its list of cost cutting measures.

Those suggestions included repurposing the Carnegie Library downtown, closing the community pool, instituting a sugary drink tax, adding a fee to assisted living beds and several other options that would see services decrease and possibly add costs for residents who still required those services.

“You can really boil it down to that one word,” Troedsson said. “'Growing.' We’re growing and that’s a good thing. If you’re not growing, you’re dying. We’re growing, but it brings the pain with it.”

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