FAQ: NCPRD/Happy Valley Lawsuit

What is currently happening with Happy Valley parks?

In June, the City of Happy Valley passed a resolution to withdraw from NCPRD. As part of that process, a legal agreement must be reached for division of assets.

The City of Happy Valley has filed a lawsuit seeking a share of NCPRD’s assets that far exceeds what is outlined in state statute.

How does the City of Happy Valley’s desired settlement compare with NCPRD’s?

NCPRD is committed to a fair and equitable distribution of assets and is following state statutes governing such a division. The city is seeking an amount that far exceeds its equitable share. Agreeing to their demands is not fair to the other 100,000 residents of NCPRD that live outside Happy Valley.

As the city withdraws and starts its own parks department, NCPRD is willing to transfer the parks and property it owns in Happy Valley for due consideration as required under the statute. The value of this property is more than the amount the city is entitled to under the applicable statute.

This is because state statute calculates assessed value of the territory withdrawing. Under this formula, NCPRD assets within the city represent a greater share of the district-wide assets than does the city’s assessed value.

The city is seeking to obtain the land within its borders at less than fair market value – in some cases for zero dollars. NCPRD believes that most fair and reasonable basis for determining market value is to have it independently appraised.

What is the contract claim made by the city?

A: In addition to asking for its full share under the statute with assets at a discounted value, the city is also demanding ownership of all system development charges assessed by the District during the time the city was within NCPRD. This is based on a clause in an intergovernmental agreement (more fully discussed below) that stated that the city would charge its own SDCs and then turn them over to the District. However, this clause was never followed. In fact, the city stopped charging SDCs. This caused NCPRD to modify its capital plan to manage and plan for the impacts of growth on a broader basis than just the city limits.

This has been the practice of the parties for at least nine years. The District views this claims as excessive and unreasonable. The city wants to get its share of all assets, including SDCs, under the statute and then demands ownership of the SDCs on top.

What are System Development Charges?

SDCs are one-time fees assessed on new development to cover a portion of the costs of providing public facilities to address the impact of growth. In nearly all cases, SDCs must be combined with other funds. The SDCs in question were charged by NCPRD based on its ordinances and capital improvement plan.

What was the agreement between NCPRD and Happy Valley when the city joined the District?

The Intergovermental Agreement (IGA) and the long-term Capital Improvement Plan (CIP) developed when Happy Valley joined NCPRD prioritized four projects to be completed, when and if capital funding became available through 2030. The CIP assumed that two different general obligation bonds would be necessary to do several of the projects, in particular a community center.

Happy Valley is withdrawing from NCPRD halfway through the time period established in the capital improvement plan for accomplishing these projects, and has claimed that insufficient progress as a rationale. This does not withstand any reasonable scrutiny.

NCPRD is proud to have developed the city’s number one priority – the $18 million Hood View Park, and be well on its way to accomplishing the remaining priorities despite a slow real estate market that until recently, depressed SDC growth.

NCPRD took over trail right of way procurement after the city failed to do so, and offered to support turf fields at Happy Valley Park, a city-owned park, with the reasonable condition that all NCPRD residents have access to the fields, providing some level of control or ownership of the improvement constructed with NCPRD monies.

The city refused, and yet has pointed to the absence of fields as a rationale for withdrawal.

Overall, the NCPRD believes it has acted diligently and in good faith in meeting its obligations under the IGA, and is disappointed that the city is mischaracterizing these events to justify their actions.

How are NCPRD parks funded today?

The operation and maintenance of NCPRD parks is funded through a special $0.54 property tax dedicated to parks and recreation that is assessed to every resident of the NCPRD.

Those revenues cover only operating costs, it does not provide enough funding for capital projects.

The development of new parks is funded in part with SDCs, as governed by state statute and NCPRD ordinance.

How much money for new park development has been raised in Happy Valley since it’s been part of the NCPRD?

Development in Happy Valley has resulted in SDCs of $15.5 million since 2006, most of which has been collected in the last few years resulting from the rebound in the local real estate market.

SDC’s totaling $5.9 million were invested in Hood View Park, along with many millions of dollars from other sources including Clackamas County and Metro.

Additional SDC funds have gone toward a variety of Happy Valley area capital projects such as Mt. Talbert improvements and the recent acquisition of Hidden Falls Nature Park. The remaining unused SDCs from development in Happy Valley are held in a reserve fund for use on approved projects in “Zone 3” or the area of NCPRD that is east of I-205.

Why are there unused SDCs in a reserve fund?

 Investing in Hood View Park required all SDCs collected early in Happy Valley’s time with the NCPRD. When the real estate market rebounded, NCPRD began planning for additional projects from the city’s original priority list.

Two projects identified by city leaders as priorities  – more all-weather turf fields and the Scott Creek Trail project have required actions or approval that has not been granted by the city.

What determines how and where SDCs are spent?

SDCs are governed by ordinance and in most cases new parks can only be built with SDCs if there is a predetermined amount of matching funds, whether through grants, general funds or going out for a bond. SDCs collected within a zone (planning area) are spent within the same zone from which they were collected.

What will be the impact of Happy Valley’s withdrawal to other residents within NCPRD?

NCPRD prioritizes district residents, and provides its members with lower fees and early registration for programming. When the city ultimately withdraws, NCPRD will continue to provide the same quality of service, access to facilities and programs, and affordable in-district rates to Milwaukie and unincorporated north Clackamas County residents.

NCPRD would continue to operate as the second largest parks and recreation district in Oregon, with over 100,000 residents.

What is the state statue methodology for division of assets?

While not prescribed specifically, the statute directs to entities to consider overall assessed value of the City compared to the assessed value within NCPRD for a methodology for dividing assets. As of the latest information from the County Assessor, the assessed value of property in the City of Happy Valley is 18.58% of the assessed value of all property in NCPRD.

Happy Valley claims if they had not joined, they would be better off in terms of getting the priorities stated in the agreement with NCPRD. Is that true?

NCPRD has collected $15.5 million in park SDCs from development in Happy Valley. Those funds are accounted for in either park assets or funds on reserve for projects in the area. NCPRD’s SDC rate, charged to developers to support park development, is 30% higher than the rate that had been charged by the city. In addition, NCPRD has been collecting a multi-family and commercial development SDC.  If the city had not annexed into NCPRD, they would have collected an amount significantly less than $15.5 million, and may not have been enough to even cover the land acquisition of Hood View Park, let alone the other assets that have been constructed in or near the city.

What NCPRD parks are in Happy Valley?

 

NCPRD Owned Parkland in Happy Valley Acres
Vogel Property    13.94
Scott Creek Trail      0.2
Mt. Talbert (parcels)      0.3
Ashley Meadows Park      1.7
Hidden Falls    21.3
Southern Lites     3.7
Village Green     3.0
Ella Osterman   12.55
Eagle Landing GC   22.0
Total Acres   78.69