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Saturday October 25th
2006 State of the City Address

STATE OF THE CITY 2006
REPORT TO THE STOCKHOLDERS

Oregon City: Take Another Look

As chair of the board of directors of Oregon City, Inc, I am pleased to present this annual report to you, our stockholders. Over the 12-month period just ended, I assure you that this corporation has produced a remarkable financial turnaround, although at great cost to our service sector. We’ve seen some solid economic performance results, and I predict that 2006 will bring you a good return on your investment with us. The economic indicators in this difficult market climate are that Oregon City, Inc. is building a good reputation for investment strength.

In fact, our ‘marketing division’ is proud to roll out our new corporate slogan. As you know, the State of Oregon is launching The Big Look, a much needed land use review. Metro has laid out: A New Look, a revisiting of the 2040 Growth Plan. Today we present: Oregon City: Take Another Look.

If you’ve thought of Oregon City as a suburban backwater, Take Another Look.

If you thought of Oregon City as a business dead end, Take Another Look.

If you’ve thought of Oregon City as a place that sacrificed the future for short term gain, Take Another Look.

Of course our #1 purpose is being accountable to you, our stockholders, so let’s first take another look at our financial performance. Our balance sheet.

You know from previous annual reports that our General Fund has not meet corporate or shareholder expectations, in fact was headed for $1.2 million in red ink. In May, our voters said NO to a ballot measure that would have annexed OC to our fire district. This strategy would have opened and staffed-up our never-used South End Fire Station, maintained library hours, put more police officers on the streets, improved parks maintenance, provided staff assistance to our neighborhood associations, and reserved funds to fix our cramped and outdated police facilities and city hall.

But when the shareholders speak, we listen. We went to Step #2 of our strategic plan: divesting the corporation of services that we could no longer support, i.e. we cut services! We downsized. Sadly, we did what we said we would do. Our library is currently open only 23 hours, operating solely with funds from Clackamas County. We have no Public Affairs staff to assist neighborhood associations. We found a private operator for Carnegie Center to retain its arts focus and community access, while running a for-profit business. South End Fire Station remains closed, meaning emergency response times have not improved.

As any responsible corporation would do, we went to work on the spending side. By refinancing our PERS liability through a pooled bond sale, we have saved the city $9.2 million over 23 years or about $400,000 annually. We got lucky and hit the interest rates just right. This will boost our General Fund by about $200,000 each year. David Wimmer, our Finance Director, orchestrated this complex and successful result.

We ended our Hilltop Urban Renewal district early, which may leave our Beavercreek Road project underfunded and with no reserve for a new civic center, but the closure will infuse the General Fund with about $275,000 annually, a nice dose of medicine.

Our hard-working and talented staff is helping to position our corporation for the future by securing some important grants:

1. $680,000 - FEMA disaster mitigation grant for much needed repairs to our over 90 year old concrete 10.5 million gallon water reservoir – giving it the ability to withstand earthquake damage. The Big Mountain View Reservoir will go off line when the little 2 million gallon Mountain View Reservoir #1 is finished. This covered reservoir will replace our old 1.5 million gallon uncovered reservoir. An historical note: the old reservoir was built about 1910 to serve Oregon City residents who had suffered disease by drinking from the Willamette River, water that contained untreated wastewater from the populated areas! How far we’ve come! This multi-million dollar project will assure safe and reliable drinking water storage and distribution for your grandchildrens’ children.

2. $330,000 - lottery funds to complete Jon Storm Park –the 1.5 ac entry above our new dock along the Willamette riverfront, with a plaza, interpretive area, river overlook, picnic shelter and parking lot.

3. $50,000 - lottery funds will give Rivercrest Park new acrylic basketball and tennis court playing surfaces and a modern interactive “spray park” pool. This will replace the last remaining wading pool in the city. Targeted for 2-12 year olds, this pool will enhance local opportunities for active recreation.

4. $23,500 - Two grants for overtime Traffic Safety enforcement: one for DUII enforcement; one for safety belt enforcement.

5. Thanks to Congresswoman Darlene Hooley, Senators Smith and Wyden, plus our regional partners, we have $1.8 million in federal funds to start solving the existing and future problems at the 1-205/ 213 interchange…our #1 transportation priority.

6. $800,000 - from Region 1’s state share of federal funds administered by Metro. In another tough competition for federal funding -- to complete our Amtrak Station in 2007 – adding the depot and 40 parking spaces.

So is Oregon City out of the woods? Let’s Take Another Look.

Since the change in management occurred 3 years ago, we have made distinctive progress in upgrading the corporation:I realize that you stockholders look carefully at the way we maintain the investments you’ve made over the years. So I am proud to announce that your corporate public works department completed slurry seal, reconstruction and overlay on 5.6 miles of city streets.

Singer Falls now sparkles after its clean-up. Have you ever contemplated the difficulty of getting equipment into this inaccessible place and transporting sediments from the Falls basins?

We christened our second vintage trolley this summer, acquired through Congestion Management Air Quality funds. This free trolley service ran 2 loops to link our historic sites, downtown businesses and hilltop business district. We hope to eventually add these energy efficient trolleys to our TriMet public transportation system in the city and to help alleviate parking downtown.

We also celebrated the 50th anniversary of our elevator, Oregon City’s vertical street – unique in the western hemisphere!

One of our corporate assets is the investment we’ve made along our waterfronts.

We highly value our rivers. That is why so much of the Clackamas and Willamette riverfronts are in public ownership, to protect them. In May, we dedicated the 320’ floating dock on the Willamette where the Belle of the Falls picked up passengers all summer for river tours and added to our growing tourism industry. We have formed the Oregon City Tourism Council to advocate for Historic Oregon City’s assets and administer funding to boost visitation to our city.

We will have Grand Opening of our first new developed park in 23 years this Spring! Already being enjoyed by the public, Wesley Lynn Park is 18.7 acres, serving residents in the park-deficient southern end of our city. Take Another Look at the 2 ball fields, 2 soccer fields, large playground, walking paths, and picnic areas. Worth waiting 23 years!

Art helps build communities and we have invested in arts and culture. Not only along 7th Street, but our City grants programs have shared in the success of our wonderful First City Arts Faire, ready for its 4th season in July. We also supported the new Oregon City Farmer’s Market, an amazing success in its first year. We just named the market organizers our Citizens of the Year, a well-deserved title.

But we have not solved all of the problems we inherited. Our challenge for 2006 is to resolve some of these issues:

1. By year’s end, we hope to determine the future of the South End Fire Station.. Should we change its purpose and use it for needed office space? Should it sit vacant another year? Should it be sold? Because we are a growing city, we know we will need to improve emergency medical services with growth. Metro predicts that we should expect 12,000 new residents within the city limits by 2030, just 24 years away. We’ve doubled our population since 1990. We’re 29,000 now, and projected to be 41,000 by 2030.

2. By year’s end, we hope to determine the future of library services in Oregon City. Our community deserves a good library. So we intend to add city funding to the county funding that now keeps the library open 4 days a week. We plan to add 5 more hours on April 1. This will enable us to be open two evenings a week and better serve students doing homework. But these library hours are not secure because we cannot count on the same level of funding from the county or our General Fund in the future. We await the recommendations of a comprehensive library study commissioned by Clackamas County. But in the meantime, should we ask our voters for library support in November? Currently, that is the only option we see for saving our library. Remember we are a growing city. Isn’t a library a big piece of livability?

3. Let’s take another look at Public Safety: As you know, Oregon City has struggled with traffic safety issues for more than 3 decades, usually ranking 1st, 2nd, or 3rd worst in injury and fatal accidents for all cities in Oregon over 10,000 population. But there is good news! We have fallen to 8th place and decreased our injury/fatal accident rate by 19%. Why? Chief Gordon Huiras, our director of public safety, believes that our road improvements coupled with enforcement, have positively impacted traffic movement and safety. This includes the redesign of Molalla Avenue in 2003, the Beavercreek/213 intersection in 2004, and 7th Street in 2005. But we cannot rest on our laurels, our injury/fatal accident rate is still 14% higher than the state average, and significantly higher than any other city in Clackamas County.

The scourge of Meth and crimes related to methamphetamine continue to climb.

With state control of pseudoephedrine, we have fewer cookers here, but the flow from Mexico is relentless. We have gang graffiti in the hilltop area. Mental health calls continue to increase. As you know, our underfunded and understaffed police department has not added officers in 8 years! But due to an increase in towing fees and overwhelming public demand, we will partner with OCSD to put an officer back in the high school this fall. This School Resource Officer will be a constant law enforcement presence that will provide a safer learning environment for our youth. So the next time you are towed – just consider it a donation to School Resource Officer program of the OC Police Department!

4. A growing corporation, such as ours, should be proud of its corporate headquarters. We are not. They are outdated, cramped, inefficient, and partly modular office trailers. As yet we have found no solution to the space issues in our police department and city hall, or for the upkeep of our swimming pool facility,

Now, finally, let’s get to the assets! If you thought that Oregon City was economically stagnant: Take Another Look. One of the most positive indicators of success is the dawning recognition by our community and the region that Oregon City is changing. Folks have gone from ‘Looking Away’ to ‘Taking Another Look.’

We have assembled a strong economic development team, led by Dave Leland, to help us with this multi-year effort. We’ve consolidated over 20 plans into one comprehensive economic development strategy. But the driver for all of it is our designation as a Regional Center in Metro’s 2040 Growth Plan. We believe that is our best opportunity for community transformation.

I’m bullish on Oregon City. Why? It’s the new hot spot. Let’s Take Another Look.

We are sitting on some of the hottest property in the region. It used to be called ‘wasteland,’‘unusable,’ ‘brownfields’-- but with diminishing available land in the metropolitan area and new construction technology, our landfill and gravel pit have become the focus of much attention. What other city has over 100 acres of undeveloped land just lying in wait beside an interstate freeway?

After a long period of stagnation, Main Street is beginning a revival. Many said it would die when the county left. The opposite is happening. The McCald building and one across the street were purchased by Funnelbox, a young creative group, rehabbing it for live-work space for film, graphic design, and other artistic and high tech pursuits. Redside Equities has erased the look of the former county administration offices with their beautiful remodel and they are started on the former Copeland Lumber site. Also on Main Street is a new day spa with a wine bar in the works.

But the most exciting news in the evolution of Oregon City Inc. are the new proposals on table. Proposals that have the potential to shape and define Oregon City in a new way. Let’s Take Another Look:

CLACKAMETTE COVE: As you’ve read in The Oregon City News and The Oregonian, the City is currently in a six-month due diligence period with Pacific Property Search to assess the feasibility of a $120 million mixed use development around Clackamette Cove. As proposed, this project would bring parks and public spaces to the 55 acres around the Cove, public improvements such as a riverfront esplanade, amphitheatre, small marina, water sports activities, and plaza for events. It would bring habitat improvements and the restoration of natural wetlands to a degraded area, the site of a former asphalt plant and gravel mining operation. This waterfront village would likely feature several types of housing, waterside restaurants, and offices. We encourage you to attend one of the public open houses to add your views to the definition of this potential signature development.

LANDFILL: The City is a partner with the Parker Family and Park Place Development in their efforts to site a major development on the landfill. We are pleased to announce that they have recently signed a Letter of Intent with CenterCal Properties and Fred Bruning, the developer of Bridgeport Village, to create a mixed use development that has the potential for tremendous retail and commercial opportunities in our north end. Our goal is that this area complement and connect to our historic downtown, while permitting the rest of our community to retain its small town feeling throughout our residential neighborhoods.

RESTAURANTS: On the top of any list of Oregon City Needs or Tourism Infrastructure is always: more restaurants! I am pleased to announce that we are attracting more interest from restaurateurs. Those coming to Oregon City will add variety and culinary excitement to our existing menu of fine dining establishments. Flambe’ is one of the newcomers now ready for business on Molalla Avenue.

7TH STREET: The most significant and important project of 2005 was the Extreme Makeover we gave 7th Street. Envisioned in 1996, this was a long and painful process for the merchants and commuters. But because the McLoughlin Neighborhood and local businesses were involved from the beginning, we have garnered universal praise for the improvements: the attention to art and history, the needed on-street parking, the environmentally friendly street lighting and tree grates, benches, and landscaping. The history of the corridor is told in 44 historical tiles embedded in the sidewalks, thanks to Dean Walch. The Celebrate 7th Street Fair in August was a huge success and brought hundreds to the street to celebrate. It’s another reason that folks are Taking Another Look.

We have invested in infrastructure – and the payback has been tremendous. Our 7th Street revitalization is already stimulating new development along the corridor, as it was created to do! Every $1 of public funding should generate $7-10 of private investment.

If we had not rebuilt 7th Street we would not be making the next two announcements.

(1) We have a good prospect for a destination restaurant along the 7th Street Corridor, one that may serve as a catalyst for other investment in this targeted redevelopment area.

(2) Later this week, our economic development team will be meeting with another development interest who has an option on the Oregon City Plumbing block. Although I cannot yet reveal any names, this investor has entered into a short due diligence period to determine interest in bringing redevelopment to that block and the surrounding property.

Much work remains and we cannot say for certain that all of these proposals will be successes, but for a city with the limited resource base we have, the interest we are attracting is gratifying indeed. But we are a city that wants success. Won’t you work with us to achieve it and sustain it?

This annual report to our stakeholders is by far the most positive we have ever delivered. For staying the course, courage, and commitment, I wish to thank our hard-working Board of Directors, my colleagues on the city commission.

This corporation is not just about projects, but about people, about building community. Our challenges for the future are to keep focused on community, on place-building.

Are we creating a better and more livable community?

Are we protecting our rivers and streams?

Do we have enough jobs close to housing, to reduce our dependence on the automobile? Are we protecting our existing neighborhoods?

Do we have enough parks, trails and recreation areas?

Can we maintain our uniqueness and livability as we grow?

Are you proud to live here?

This annual report is the one time all year that we have the luxury of taking a look backward. Normally, that is a poor corporate strategy for fear of getting where we are headed! But in looking back, I see that we’ve come a long long way in this community. All of us together. The county. The Chamber of Commerce. Nonprofits. The faith community. Metro. Neighboring cities. The school district and the community college.

There is indeed uncertainty in our world, our nation and our state. But the certainty I have is in community. We must continue to invest in our community, in our youth and in education. Here we build connections. Here we encourage innovation and creativity. We seek collaborative solutions. We don’t fear to cross boundaries. We seek to inspire and encourage new leadership … to sustain the progress we have made. We help and support each other.

That’s our town. Oregon City: Take Another Look. You’ll like what you see.