Thursday, January 31, 2008

A Follow-Up Article by Allan Bruckner Makes Excellent Points

The following article is by former Mayor of Bend Allan Bruckner. It is a follow-up to his June, 2007 article in the Bend Business Review. Unfortunately, this article no longer seems to be available online.

Ramifications and Consequences
By Allan Bruckner

August 15, 2007

Following publication of my article “The Bend Ultimatum: Juniper Ridge” in the Bend Business Review last June I have repeatedly been asked about the project. This presentation will relate some of the problems created by the flawed procedures, outlined in the article, used by the City of Bend.

It appears the council and staff completely overlooked the impact, and complications caused, by choosing to do a 1500 acre project. And it now appears that promoters of the project have vested so much of themselves in it that they cannot objectively consider any other points of view. All questions and criticisms are automatically rejected without discussion, kind of like the Bush White House. While presentations of site plans have been presented by consultants, the city has never openly debated the economics, policy directions or wisdom of the overall project.

THE BIG CHANGE - 500 v. 1500

The basis for almost all the questioning of the project was created by changing the project from a 500 acre industrial land development to a 1500 acre project with high end housing, and a town center or two, becoming the biggest component. The project was so changed after the RFQ of May 2005, at the October 19, 2005 developer selection date. Refusing to acknowledge this as a significant change, Councilor Jim Clinton defends the city by quoting one line in the RFQ that says, “the city desires to retain the same development team for all phases of Juniper Ridge.” Ignored is the first sentence on the first page, “solicit qualifications from development teams to develop approximately 504 acres of land,” and the first sentence on page 5 that says, “the property addressed in this RFQ includes approximately 504 acres recently brought into the Bend city limits and is referred to as Juniper Ridge Phase 1.” Also ignored is the fact that the two firms not selected addressed only the 504 acres, and the firm selected in his June 24, 2007 response to the RFQ said, “this RFQ is intended to be for phase 1.” The refusal to discuss this change and the reasons and justification for it does not lend confidence in the decision making process or the decision makers.

The firm selected was not a major regional firm, but just two individuals who formed an L.L.C., strictly to bid on the project. Their proposal was selected although awarding a 1500 acre project was never discussed in public. In fact, eight studies for the city of Bend, costing nearly a million dollars, were conducted in the year before the selection, all related to the 500 acre Phase 1, already brought into the UGB for industrial purposes. Regardless, signing an MOU for 1,500 acres has caused incredible consequences throughout the community.


One significant factor in electing the developer was his “providing a potential absorption rate for the entire 1500 acres in 15 years.” The other finalist “utilized predicted (land absorption) rate by ECONorthwest which was prepared for the city in 2004 as part of the Otak master planning effort.” The selected developer also proposed 100 acres, of Phase 1 added to the UGB for industrial uses, be sold for housing. The city accepted this even though it is in violation of both county and state requirements that Phase 1 be used for industrial purposes. This conflict has never been publicly addressed.

The selected developer’s original proposal showed 300 acres would be developed for industrial purposes in 15 years. This April in a huge but scarcely noticed change, the industrial needs component was changed from 20 acres per year to just 11 acres per year, and the time frame for total absorption was changed from 15 to 31 years. These two changes create a completely different project compared to the proposal selected in October 2005. The city is now giving control of its land to the two individuals for 31 years. Apparently the change has been accepted by the city with no justification and no questioning. This should be subject to extensive public discussion, as it has become a completely different project with inadequate industrial land.

The significance of the change in industrial land absorption is critical. In talking to eight persons extremely knowledgeable about industrial land (Deborah McMahon, Erich Schultz, James Lewis, Bruce Kemp, Dale VanValkenburg, Roger Lee, Louis Hoffman, Bill Smith), all agreed the minimum needed is 20 acres per year and it is likely that 40 acres are needed annually. If the mid point of 30 acres is assumed, then over 30 years the need approximates 900 acres. Adding 200 to be reserved for the university and 150 required for parks means there is not the large acreage the developer wants for housing.

The “bait and switch” for a huge housing development would not be possible, but for the newly changed unrealistic assumption on industrial land needs. The city, in its apparent blind enthusiasm for the project never questions this. Actually, after a developer presentation this spring, Mayor Bruce Abernathy did note, “It seems to me that by the time the university was constructed, employment sites would have filled up. It would seem to me we’d want the ability to attract businesses after the university arrived.” Excellent point. It has been completely ignored.

The state Department of Land Conservation and Development (DLCD) has also weighed in on the industrial land needs. In a letter to the city February 6, 2006 it noted the “need to maintain the city’s base industrial land inventory, per the 2004 periodic review” (the basis of the 500 acre annexation). On the same topic in a February 20, 2007 conversation, DLCD stated the MOU with the developer “has a lot of conflicts with state planning law”. Then in a July 11, 2007 letter to the city noting since Juniper Ridge is the only place for industrial uses “it is important that the land is still available for industrial uses when it comes time for development”. Obviously these points should have been addressed before committing over 500 acres to housing, and selling part of Phase 1 industrial land for housing.


The city, in its desire to move rapidly, has also allowed the developer to play fast and loose with another significant number – new jobs. Based on several consultant studies it was projected that Juniper Ridge would create 3,400 jobs in 20 years (on 500 acres of phase 1) and 8800 eventually. The developer’s proposal claimed 24,000 jobs in just 15 years. This city did not request any support for this, accepting that the job number reflects “the developer’s aspiration for higher employment density than was assumed in the concept plan”. This assertion should have been challenged, as it was a significant factor in the selection.

Then in their April 2007 update the developer’s numbers were reduced to 18,000 jobs in 31 years. That’s 1/3 fewer jobs in twice the time frame, but still twice what the city’s consultant projected. This decrease came despite increasing the anticipated jobs in education from 535 to 3000, for which no reason was given! This dramatic change should question the credibility of the numbers, but was never challenged by the city, apparently too eager to keep their deal going. There is no responsibility assigned for creating any jobs.


Another significant problem created by the city’s lack of thorough study and haste to develop the entire 1500 acres, relates to transportation. The city and developer have always proceeded on the basis that Highway 97 would provide the access for Juniper Ridge although the state Highway Department never assured them of such. And studies have always shown that the Cooley Road interchange with 97 was near capacity and not capable of increased use from a large scale development.

Nevertheless the developer’s consultant drafted, with concurrence from the city, master plans showing large residential developments and one or two town centers utilizing a new interchange further north on Hwy. 97. Apparently enthusiasm got ahead of communication, finally forcing the state to officially notify the city on July 17, 2007 that “transportation analyses should assume, for the 20 year horizon, that there is not a middle interchange serving Juniper Ridge”. One wonders how may hundreds of thousands of dollars were wasted on site planning because in the rush, proper transportation analysis was not undertaken first.

When the city finally realized that the project would not be served by Hwy. 97, they immediately said it would be served by Deschutes Market Road. To address this, the city is realigning its street planning priorities and likely its capital improvement program. Money was immediately diverted from the Brookswood study, a problem area for citizens now, to study future road needs for a potential development. The push for Juniper Ridge is unfortunately and unfairly drawing scarce resources from areas of the city needing immediate attention.


Another area where the claims of the proposal are questionable is that their “new urbanism” will reduce overall traffic. There is no supporting documentation regarding the effect of a community of 5 or 10 or ultimately 15,000 residents (depending on the time frame of 10 or 20 or 30 years) developed 3 to 5 miles from the center of a very attractive city of 75,000.

As a common sense observation, if a new 500 to 600 acres residential development takes place, (think Northwest Crossing), it is clear that most of the needs of the residents will not be met on site. Residents will regularly travel for medical appointments, for movies, for dinners, and for major shopping, as well as for jobs to established businesses. Clearly the further one is from these established services, the more travel that will occur.

The most recent claim of the developer (OTAK memo of April 11, 2007) shows more jobs being created than household residents. Obviously these jobs will be filled by other residents of Bend, and since Juniper Ridge is on the very extremity of town, these trips will likely be longer than average. Since not all the residents will be working in Juniper Ridge, longer than average trips to their jobs will also be required.

A study in 2003 in Jackson County, Oregon addressed a somewhat similar situation, in White City, near Medford. White City had a good employment base but the county felt a residential development was needed for the workers. As planned for Juniper Ridge, jobs in White City pay above average wages. The study concluded that many of these firms’ employees can afford to live throughout the region, and do. The conclusions, after three years was that “people relocating to White City … are driving more in general and their relocation to White City appears to increase commuting distances and times”.

In its letter to the city on July 17, 2007 the Oregon Department of Transportation summarized the situation by referencing the recent Bend Area Central Area Plan. ODOT stated, “It is important to recognize that focus on redevelopment of this area would provide the opportunity for relatively shorter trips to be accommodated by a variety of transportation nodes, while development of areas more distant from the core area and downtown will be more problematic to provide transportation infrastructure for.”


The biggest problem brought on by the precipitous change in the approach to Juniper Ridge concerns the UGB expansion. In the MOU the city promised, “The city will seek an expansion of the UGB to include all the property.” If the city had stayed with the plans to develop just Phase 1, this would not be a problem since it is already in the UGB. But now the city must get the additional area into the city, because failure to so, would negate the ability of the developer to proceed as planned. Indeed the city authorized the developer to hire consultants to develop a master plan that assumed inclusion into the UGB, although at the time of selecting the developer, the land was not even in the area being studied for inclusion in the UGB, or in the urban area reserve.

This removes impartiality and credibility on the boundary expansion study. Unless the staff decides to go against the council’s wishes, they must promote this parcel over others, since the amount of land to be included is strictly limited. Clearly the staff is following the council’s wishes.

However, before including an area into the expanded UGB, the city must legally study alternative areas with specific factors weighted. Most important are the existing urban area reserve designation, present zoning, transportation and sewers.

In brief, the UGB expansion requirement says that the first areas to be considered are in the urban area reserve. Juniper Ridge is not.

Present zoning is a major factor. EFU-zoned property is a very low priority. Juniper Ridge is EFU.

Transportation is also a major factor. Juniper Ridge is clearly a transportation disaster as previously discussed. It is essentially landlocked without major city expenditures.

Sewers are the other important factor. City policy is generally to promote gravity lines and discourage pump stations. The 1000 acre Phase 2 requires pumps (Phase 1 does not). It can be argued that in order for the sewer expansion to not be a negative factor due to cost, the city made another inappropriate boundary decision. To cut the sewer cost to Juniper Ridge, it accepted an offer from Newland Properties to include its properties in the UGB, in exchange for $10 million in funds for the sewer expansion. Again Newland Properties are outside the UGB study area, outside the Urban Area Reserve and is zoned EFU. All are negative factors for inclusion. Other property owners were not given the opportunity to “buy” their way in, only the one that would benefit Juniper Ridge.


The lack of coordination, and the decision to not involve others in these major
community decisions, has also offended other agencies. Including Juniper Ridge Phase 2 in the new UGB, of necessity, eliminated other areas that appeared logical to be included. For example, the Bend-LaPine School District based their long term school site search on information given them, by the city, regarding where the likely UGB expansion would occur. A city official sat on their site selection committee. A school bond issue was passed based on that information. One site has been purchased and two have been negotiated but not finalized. Selecting new sites and negotiating their purchase will be very costly for all Bend residents. One official said they were “stunned” when the new boundary proposal excluded all their selected sites.

Additionally most of the 1000 acres of Phase 2 are in the Redmond school district. The city’s announcement that it wants those residents’ children in the Bend schools was made without consulting either school district. It is presumptuous and an invasion of the prerogatives of the school districts. Changing district boundaries also involves complex tax considerations that have never been addressed. Clearly the whole issue should have been investigated and discussed before even considering a major residential development.

Bend Parks and Recreation District has major problems with the manner in which the Juniper Ridge plans have unfolded. The city plans exclude Juniper Ridge from the Parks District. In a June 2007 joint meeting of city councilors and the parks board, a city councilor stated, “This is a real quality development and the developer wants to control the quality of its parks development.” This means the District would not receive property taxes or SDC’s that fund pools, trails, ball fields, Pine Nursery, etc. Abiding by the developer’s wishes, the city made it clear that Juniper Ridge would not be annexed to the Park District.

Again in the rush to have a deal, the city may have overlooked a city ordinance: Bend Development Code 3.4.300 D. 2. states that “as a condition of approval the land owner of a proposed subdivision or partition of land lying within the Bend UGB, but outside the boundaries of the BMPRD, shall be required to sign an annexation agreement with the BMPRD”.

Central Oregon Irrigation District has a canal running the north-south length of Juniper Ridge, approximately 2¼ miles. Steve Johnson, manager of COID, wrote the city in November 2005 right after the 1500 acre decision, with a proposal to pipe the canal, enabling a generating plant at the north end. Although the city has promoted piping with other districts for water conservation, Johnson indicated he has never had an official reply from the city. In the meantime the developer’s consultant’s site plans have open water features, negating water conservation efforts and perhaps the generating facility. Apparently a city project is exempt from water conservation projects it is encouraging for others. And more planning money has been wasted.


Along with the inclusion of the 500 acre Phase 1 into the urban growth boundary for industrial purposes, and the numerous consultant studies previously referred to, the city of Bend on August 29, 2005 adopted an urban renewal district. The district was to help develop that 500 acres for “primarily industrial and ancillary commercial support uses”. The report minimized the impact of the urban renewal district by stating, “All properties in the area are within the city’s commercial and industrial zoning districts … therefore the increase in population and especially school age population within the area is not expected to be significant and should not result in easurable increases in the demand for municipal and social services.”

Apparently without considering this, less than two months later the selected developers accepted proposal included selling 100 acres of this industrial reserve for residential use. In the MOU it was increased to 200 acres. The county approval for adding the 500 acres to the UGB expressly stated that the city “may zone that portion of the property for industrial uses”. The conflicts with the urban renewal district and the county should have been publicly addressed before proceeding. It makes one wonder if anyone realized there were such conflicts, or if they didn’t care about such.


Only one firm has signed up to locate in the 500 acre industrial park that was annexed 2½ years ago. That firm is Les Schwab. The city agreed to sell the land at approximately half the market rate and exempt Schwab from any restrictive covenants, master plan requirements, and future local improvement district costs that may be imposed on the development.

Two of the conditions agreed to by the city and county in 2003 regarding the Juniper Ridge project are that the property be master planned before any development occur and that no building permit be issued before a final subdivision plat has been approved. Under terms of this agreement the city cannot sell the property to Schwab or issue building permits at this time. This is another procedural misstep that makes one question their ability to manage a substantial project.


The above are just some of the problems created by the sudden decision to develop the entire 1500 acres. While most of the objections have come from the business community, the problems affect the public at large, have major financial impacts on the city, and have significant negative impacts on other agencies. No time was allowed to thoroughly investigate these and other complex factors. Nor has the city addressed the impacts if the project is not successful. The city should have resolved these issues before any agreement was signed. Major lawsuits will be filed against the city.

As the OTAK Sustainability Study for Juniper Ridge of June 23, 2005 states, “Experience shows us that if community leaders don’t intellectually and emotionally own a project, it cannot be successfully implemented and maintained.” I believe the community does not have “ownership” in this project.

The only way to resolve the situation is for the city to withdraw its request that Phase 2 be added to the UGB, terminate the MOU and proceed with plans for Phase 1.

Allan Bruckner


NOTE: This did not have any copyright notice on it, so I took the liberty of copying and posting it here. Mr. Bruckner, if you object simply e-mail me and I will delete it. Or, if you do not object, and if you want to update it, I will be glad to post an updated version here as well.

Wednesday, January 30, 2008

JR Costs Making City's Financial Woes Worse

The City of Bend is coming under increasing financial pressure as the development bubble has burst in the residential sector, with the commercial sector soon to follow. The city made large budget adjustments in December to try to prepare for this coming reality, but it the Dec. 31, Budget Detail Report shows a worsening of the situation.

Many of the individual budget funds had fallen short throughout the current fiscal year, which began July 1, 2007. This trend accelerated in December. Some individual funds and their percentage shortfalls in revenue are:

-Building Fund: -14% for year-to-date, -49% in December alone.
-SDC Revenue Fund: -12%, -64%
-Planning Fund: -46%, -44%
-Affordable Housing Fund: -33%, -73%
-Tourism Fund: +10%, -42%
-LID Debt Service Fund: -36%, -38%
-LID Construction Fund: -105%, -105% (yes, you read that correctly--a fund that was budgeted to have $100,000 in it actually is $4,818 in the hole)
-Transportation Construction Fund: -70%, -37%
-Airport Fund: +1%, -20%
-Cemetery Fund: -33%, -36%
-Water Fund: -10%, -34%
-Intra-Governmental Services: -28%, -39%

Even the General Fund was hit hard in December, coming up 15% short in revenue after weathering the previous six months OK.

How does Juniper Ridge affect the budget?

The biggest issue is the current Knife Ridge (that company run by Councilor Mark Capell's cousin) contract for improvements for the new Les Schwab Headquarters and other related expenses.

From the BURA Juniper Ridge Construction Fund, page 21 of the Budget Detail:

Resources through 12/31/07 are $3,601,597, all of which came from the Les Schwab land purchase. LS finally paid in December, even though they had been building since September. Anticipated resources through June 30, 2008 are $9,487,403, with the future revenues coming from Long Term Debt Proceeds of $7,650,000; Transfers From Other Funds of $1,662,000; and Private Developer Contributions of $470,000.

These numbers bode ill. Think about it.

#1--We are going to go over $7.5 million farther into debt, which is being guaranteed with the full faith and credit of the City of Bend because BURA tax revenues are nowhere near enough to cover it, and we only received an "A" rating on this debt issue. It is being sold about now, which is not a good time to be issuing debt as we are in a worldwide credit crunch. The only good thing is that interest rates are historically low so we probably won't have to pay too much of a risk premium.

#2--We are taking over $1.6 million out of city coffers that are already severely extended. We are already cutting back on public safety, our transportation construction is already down 70%, and recent snows are going to take a substantial additional unbudgeted transfer of significant funds. Where are we going to steal another $1.6 million from without hurting services even further?

#3--Under the best of scenarios, there will be no further land sales until the 3rd quarter of 2008. My personal feeling is that will be pushed another six months or so. So exactly who is a half-million dollars going to come from? And where is it going to come from if not from a private developer?

Looking at the Expenditures in this fund, we see that we are already over budget 41% for Personal (Personnel?) Services and that Net Available Working Capital is currently negative by over a million dollars, at ($1,376,282).

We are committed to over $12 million on this project, and are budgeted for over $14 million for this fiscal year. As we watch the city's revenues continue to meltdown in the coming months, this albatross may become an anchor on Bend's finances.

That fateful, illegally noticed last-minute meeting, where by a bare majority our City Council approved a one-sided purchase agreement with Les Schwab, may come back to haunt those who voted "yes" in the next election.

Thursday, January 17, 2008

FLASH--Les Schwab Pays City

In response to my direct question about this issue, I was told by City Finance Director Sonia Andrews that Les Schwab had indeed paid the City of Bend for their Juniper Ridge land. My other questions quickly grew tiresome to the Council and I was told to contact Ms. Andrews directly for answers. I did learn that the City has received an A rating for the upcoming bond issuance.

One thing that puzzles me is a seeming discrepancy between the Budget Summary and the Detailed Budget. The Summary shows $3,846,000 in property sales, while the Detail shows $0. Both are dated 12/31/07. Some of the other figures don't match up, either, so I'll have to do a little comparision and see what's up. If it doesn't come out all hunky-dory, I'll ask Ms. Andrews about it.

On the conflict of interest issue, it was a bit of a joke. It only covered one issue, that of the rezoning of land near 15th and Bear Creek for a bus barn. All the councilor's stated they hadn't really talked about it with anyone or owned any land near there, kind of laughingly. I don't really know what the purpose was with that particular issue, as the rules apply on every issue.

I did get up and ask about this as well, as the staff member that presented it stated they had contacted everyone within a 100 feet, which seemed ridiculous. This is right across from Bear Creek Elementary, so it affects many more people that that. It is also a popular cycling route heading east towards Dodd's Road. And sure enough three neighborhood people were also there and expressed their opposition to putting the industrial traffic out onto Bear Creek Road. It seems to this thick-skulled soul that if they simply found a way to make the main access point exit onto 15th, north of the Bear Creek/15th roundabout, everybody would be much happier. As it is, it seems the city is intent on shoving it down the throats of the local populace, although the repeated opposition to this gave them pause and it is going to be studied some more.

Wednesday, January 16, 2008

Tonights CC Meeting--Some Questions In Advance

I plan on attending for several reasons, not the least of which is to hear this:
11. Statement of Procedural Rules by City Attorney and declaration of ex parte contacts and conflicts of interest.
I hope to hear something about Capell and Knife River, and if I do I may shelve the ethics complaint I have prepared. At least for now.

I will also present the following questionns about Les Schwab and Juniper Ridge, and about the impending $5 million bond issue:
1. Has the City received payment for the Les Schwab land?

2. If it hasn't, and considering the Sales And Purchase Agreement automatically terminated on Dec. 31, what is the current status of the sale?
3. What is the precedent for allowing such large-scale private construction upon un-purchased city land?

4. Considering the cities current financial woes, what rating is the city expecting for the upcoming offering? Will it be insured, at what additional cost?

5. Considering the currently high yields on municipal bonds, what is the interest rate range expected?

6. How will the debt service affect the city cash flow, and will this debt service come from the general fund?

I am very interested in hearing the answers to these questions.