Milwaukie council debates state loan program amid lingering liability and capacity questions

Milwaukie councilors and city staff spent the meeting dissecting a state-sponsored loan program presented in the staff report (referred to in meeting materials as the Merle loan program), but took no formal action. Joseph, assistant city manager, and development staff reviewed how other Oregon cities have approached the program and outlined risks for a small city acting as the program’s sponsoring jurisdiction.

The discussion centered on three policy questions: who administers and monitors compliance, how the city would handle defaults and whether the state would provide underwriting or contingency support. “The state gave a fairly lawyerly answer — they wouldn’t say ‘the city won’t owe the money,’” Joseph said, describing recent conversations with OH(S/C)S and other jurisdictions.

Why it matters: the loan program can leverage larger pools of capital than Milwaukie’s existing CET (city) funds, but it also creates potentially long‑running contingent obligations. Councilors pressed staff for concrete answers about whether a default — for example, a project foreclosure during or after construction — would hurt the city’s credit rating. A councilor summed up the question directly: “If…