The Philomath City Council came out of executive session at its July 13 meeting and approved a motion directing City Attorney Ashleigh Dougill and City Manager Chris Workman to complete an agreement and general release with an unnamed bank for properties currently or anticipated to be under foreclosure at 777, 781 and 785 South 16th St.
The motion itself offered no details on the nature of the city’s interest in the properties or the terms of the agreement. In a followup interview, Workman answered questions to provide some clarification to explain the situation to the public.
Workman said the agreement stems from six deferred system development charge liens the city placed on the properties when building permits were issued. Each lien is roughly $27,000, with accrued interest ranging from $4,000 to $10,000 depending on the lien’s age, Workman said.
The properties are in some phase of foreclosure by a bank, according to Workman, though he said the city has been dealing only with the bank’s attorney and as of Thursday, did not yet know the lender’s identity or what stage the foreclosure process was in.
Workman said the bank’s attorney initially asked the city to remove its second-position liens on the properties and the two sides eventually settled on reducing the accrued interest owed on those liens instead.
Under the agreement, the city will collect the full principal and interest on three of the six liens, and the full principal plus a combined $10,000 in accrued interest on the remaining three liens. In exchange, the city is giving up roughly $15,000 in accrued interest on that second set of liens.
Once the liens are paid and satisfied, the city will no longer hold foreclosure rights on the properties for nonpayment, Workman said.
The agreement also includes a general release protecting the city from future claims related to the properties, which Workman said is aimed primarily at heading off potential litigation over the legality of some of the SDC liens.
Workman said no further council action is required to finalize the agreement and he expects it to be signed by the end of the week.
