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Backed by mayor, businesses sue over Newport redevelopment

The Red Rock Square apartment building is currently under construction to the east of Newport Transit Station. Katie Nelson / RiverTown Multimedia 1 / 2
The former Knox Lumber site comprises about 11 acres of the 25-acre TIF (tax increment financing) district, and is the region being contested in the lawsuit. Forum News Service graphic 2 / 2

Business owners are suing the Washington County Community Development Agency over a redevelopment project in Newport.

Gale Libby, Libby Real Estate Holdings, LLC, and Mark Court, LLC, filed a lawsuit over the legality of a Newport TIF (tax increment financing) district in the Red Rock Crossing development.

The TIF district created by the CDA in December is located on the northern edge of Newport, bounded by Interstate 494, Highway 61, Maxwell Avenue and 21st Street.

The lawsuit claims the former Knox Lumber site — located north of the railroad spur and south of I-494 — was "improperly included" in the TIF district because the site was cleared before the CDA was involved in site redevelopment.

To create a redevelopment TIF district, state law requires an area to be 70 percent developed, with 50 percent of the buildings being substandard or in need of renovation. The substandard buildings must be distributed throughout the district.

If the Knox Lumber building were excluded, the CDA could not have included the area north of the railroad in the TIF district.

"This TIF financing district ... is illegal," Libby said. "They used false facts to push it through .... All the substandard buildings are on the south side of the tracks."

Libby owns Wilson Trucking, which is located in the TIF district. Libby said Mayor Dan Lund — who opposes the TIF district — spoke with him, and Libby decided to file the lawsuit.

"Somebody had to do it," he said.

Lund said he "shared his concerns" with many people in Newport, and found business owners willing to file.

"I don't think it would have been good for me to be a plaintiff," he said. "I think it's good that there were business owners willing to take it on."

Libby said he's opposed to the redevelopment in the area, especially adding residential buildings to a mostly industrial area.

"Everything around here is trucks ... and then they put in a residential, and I just don't quite understand it," he said. "What it really boils down to is they build these transit centers and then build residential around it so they'll have riders."

Bill Griffith, who is representing the plaintiffs with law firm Larkin, Hoffman, Daly and Lindgren, said "there's a willingness to settle out of court," but that it could go to trial. No court date has been set.

"The taxpayer lawsuit is the only mechanism for challenging TIF districts," he said. "The plaintiffs would have preferred to work things out with the CDA, but ... essentially time ran out."

The 180-day period to challenge a TIF district expired May 8.

Mark Court owner Gregory Stewart and the CDA declined to comment on the pending litigation.

Libby said there are two other Newport businesses supporting the lawsuit financially, but who did not want to be involved as public plaintiffs on the case.

Council actions

The CDA sent a letter written by Bill Hargis, chair of the Washington County Community Development Agency Board of Commissioners, to the Newport City Council April 26 asking if the council "shares Mayor Lund's concerns, and whether the City wishes to terminate the Joint Powers Agreement."

At the May 2 council meeting, council members decided they will hold a workshop to discuss the situation, and then hold a joint meeting with CDA representatives.

"We can't make any decisions in a workshop, but (it will be) to reach maybe an understanding about what the council thinks is in its best interest," Lund said.

Lund said he expects the joint meeting with the city council and the CDA to take place in June.

Hargis wrote in the letter that if the Joint Powers Agreement is terminated, the CDA would need to be reimbursed the $1.1 million that have been spent so far in the Newport TIF district. He also wrote that the rail authority "may also need to be reimbursed due to reliance" on the Joint Powers Agreement.

Lund said he is frustrated that the CDA has asked about terminating the agreement.

"(Often) their response is, 'Are you trying to terminate the Joint Powers Agreement?'" he said. "Only CDA brings it up ... It sounds to me they want to terminate."

The joint powers agreement does not automatically terminate if the lawsuit is settled or won by the plaintiffs, but the TIF district and its part in the agreement will be affected.