A new water project co-funded by the city of Hermiston and Umatilla County could increase housing development in the northeast part of Hermiston and save taxpayers money on a future school bond.
The two entities have approved a memorandum of understanding to use approximately $4.6 million of payments in lieu of taxes from Lamb Weston to construct a new 1 million gallon water tower and distribution system in northeast Hermiston. Assistant city manager Mark Morgan said the new storage tank and system would increase the city’s water storage capacity beyond its current 18 hours’ worth, and would make future development in the northeast part of the city — including Theater Lane and Punkin Center — easier and less expensive.
“That area up there holds most of the developable land in the city of Hermiston,” he said.
Area employers, including Lamb Weston, have noted that Hermiston’s housing shortage has made it difficult for them to find a large enough workforce for their operations. Morgan also said that in 2015 the U.S. Census Bureau found that 53 percent of jobs inside Hermiston were filled by people living outside Hermiston, causing local businesses to lose out on those customers and the city to lose out on taxes.
“The housing issue has been studied to death, we know we need to do something about it,” Morgan said.
As the city has studied ways to boost housing development in the city, developers have said that the price of land in Hermiston has gone up so much that it is hard to turn a profit on new housing if any extra expenses come up. Morgan said in the northeast part of town developers have come up with expensive “piecemeal” solutions to the low water pressure issues, but those solutions won’t continue to work for many more developments. The new water project, the city and county hope, will decrease expenses for developers and could also decrease expenses for Hermiston School District, which hopes to pass a bond to build a new elementary school on Theater Lane.
Starting in 2020 and running for 15 years, Lamb Weston will pay $1 million per year split evenly between the county and city instead of property taxes on a $225 million expansion in Hermiston. The county has agreed to give its first $2 million to the city for the water project, which also meets county goals for housing and workforce development. The city will cover the rest of the costs and handle design and construction, using a bridge loan with 3.5 percent interest that will be paid off using the Lamb Weston payments, and hopes to also recoup some costs through an increased property tax base as more houses are built.
The project will include a million gallon water tank at the corner of Northeast 10th Street and East Punkin Center, plus 2.25 miles of water mains.
“If you need to paint (the water tower) you have permission to paint ‘We love Umatilla County’ on it,” commissioner George Murdock told the council.