State of the City: Health of Hood River requires ‘world class planning’

Arthur Babitz presented his final State of the City Address to Hood River Rotary on July 17. It is edited slightly for space reasons.

Good afternoon.

On the same day I was elected to office, there was a massive flood. It deposited hundreds of thousands of cubic yards of material at the mouth of the Hood River, creating a large sandbar. As I reflect on it, the raging waters of our namesake river are not a bad metaphor for the past 8 years.

History is marked by long periods when little changes, punctuated by brief moments of major transformation. The last few years have been ones of transformation.

I took office with one overarching goal: to see the city’s finances restored to health, and to do so in a way that would stick— not simply filling the budgetary hole, but correcting the management and process shortcomings that dug the hole in the first place. I had no idea we would face the greatest economic disruption of a generation, nor did I understand that Hood River was in the midst of a transformation of its economy, nor did I understand the growing pains we would face as we approach 10,000 population.

As today’s “state of the city” address will be my last, my scope will be somewhat broad. I will briefly highlight the accomplishment of this year, then reflect on the past 8 years. I’ll end with my thoughts on what challenges we will face in future years.

The last year has been marked by several major accomplishments:

  • The State Street construction is almost over. It marks the completion of the downtown urban renewal project conceived almost 30 years ago, under construction for two decades, which has transformed our downtown;
  • With the completion of the final phase of our waterline project, we have closed the book on decades of deferred maintenance, and completed a five year long construction project;
  • With the final phase of the waterfront park we’ve completed five years of construction resulting from decades of aspiration.
  • In September, Standard and Poors upgraded our bond rating by three notches, citing our reformed management and fiscal practices. I’m not going to say this means we’ve completed our reforms, but this independent acknowledgement of our fiscal health and hygiene is a solid indicator of how far we’ve come.

In the past 8 years, we’ve been able to turn a deficit of over a million dollars in our operating funds into reserves of more than $8.5 million. We’ve restored balance, transparency and sustainability to the city’s finance. But instead of talking about abstract mathematical concepts and management theory, I’d like to explain what this means to our residents and visitors.

For decades the city’s drinking water supply line was literally decaying. Pipes installed in 1929 were worn thin and leaking, valves could not be operated for fear of rupturing pipes, and bridges were being held up by the pipeline instead of the other way around. This was the most tangible representation of our financial state. Not only were we not in the position to borrow money to replace it, for more than 15 years we didn’t even have the funds to repair a major failure. A bridge failure could have forced a multiyear moratorium in construction, water rationing, boil orders — all forces which could have snuffed out the economic transformation we’re now enjoying— before it got started.

But we chose a different path. We made the reforms that allowed us to finance the waterline, and with a lot of luck and TLC from our public works crews the ancient pipeline held on for 30 years beyond its expected life.

Now we have a new waterline and a refurbished reservoir. We have plenty of superb water available for the foreseeable future, and our economy was able to continue its growth without disruption.

Though we made some staff reductions as we weathered the recession … we’ve been able to maintain city services you all expect, without interruption.

So financial health is not abstract concept. Maintaining it will be hard work, requiring wisdom and effort by staff and careful oversight by future councils, but I believe we all understand that we cannot afford to make those mistakes again.

I started this speech telling you all the things I didn’t predict I would be facing, so it may be a bit presumptuous for me to end with my predictions for coming years. But perhaps I’ve learned a little in the past eight years.

We all know Hood River has a remarkably strong economy and is a great place to live. And I think we understand these to facts are closely linked.

People who can choose to live anywhere choose to live here . So what are the challenges we’ll face maintaining quality of life, so we continue to see this economic vitality?.’

Perhaps the greatest challenge we face is wisely acknowledging and reacting to the constraints we face to growth. We are surrounded by water, mountains, state regulated farmland, and federally regulated National Scenic Area. We can’t depend on continued growth fueling our economy.

We will need to wisely manage our constrained space through world class planning.

Our waterfront is a good example of this. We have seen conflict between industrial and recreational use, concern about how commercial uses interact with the industrial and recreational use, as well their effect on our downtown district.

While our fiscal health is strong, we are not immune to the challenges all public entities face— both with continued escalation of PERS obligations, and payroll growth outpacing growth in assessments. In 2000, fire services accounted for 32 percent of General Fund expenditures. Last year it accounted for 41 percent of General Fund expenditure. Fire services have been edging aside policing, planning, and parks throughout the past two decade.

Continued strong growth of tourism is intensifying our housing affordability and availability issues. Housing stock used as short term rentals means there is a real scarcity of long term rentals for year round residents.

Demand for second homes drives up home prices for our residents. The constraints on growth that I mentioned mean that we won’t be able to build our way out of this. This fall we will conduct a study to identify how our housing stock is actually being used, and I hope that will give us the information we need to make solid policy decisions so Hood River doesn’t become a city of the rich, where workers are bussed in. Failure to address this issue will have serious consequences for our economic health.

Which brings me to a final observation. For over a century Hood River’s economy has been dominated by agriculture, with a smattering of tourism to round it out. We now have a remarkably diverse economy with a strong industrial sector and we’re a regional center for healthcare. Yet most residents, if asked, would say we’re a tourist town. As we look to our future, we have to be sure we address our actual economy, not the one we imagine. Our future is bright, but our transforming economy demands changes in how we view policy.

Though I still have six month left in my term, I’d like to take the opportunity to tell you that it has been a tremendous honor to serve Hood River for the past eight years. It has been a period of vibrance and change. In government it can be difficult to accomplish anything, let alone to complete something. I feel privileged to have completed what I set out to do.

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