Thursday, February 21, 2008

JR Financing Just Doesn't Make Sense

Big updates on Juniper Ridge tonight, some good, some curious. Short update now, as it's the middle of the night, with more to come.

The good: Les Schwab came through with a building that looks nice and, most important, creates jobs. Which is what JR is supposed to be all about. Open, natural light, pretty much as green as a building can be. Kudos to the architect and LS for making it happen. It's not a wart, which is a huge relief to everyone. The LS PR person promised to send me the latest rendering from their Powerpoint show tomorrow, which I'll post here. It is really very nice.

Now to the "curious": Could someone from the City please tell me just how we are going to finance this thing without going bankrupt? The sequencing just does not make sense to me. Let me try to sort this out better, as this was what was bothering me and it came together and woke me up just now.

City Finance Director Sonia Andrews gave an update on the JR financing, stating flat out that we don't have the money or the financing capability to even cover everything we are doing now for LS, and that some "hard choices" are going to have to be made if we don't make any land sales in the near future. And this doesn't include the $37-40 million for the Cooley Rd/Hwy 97 changes that need to be made. we need about $14M, and about half of the is going to have to come from a short term bank loan, which although it is going to be at a good rate (3%) it is going to have to be repaid, and the only source for repayment of it all is going to be next 50 acres in land sales at JR that will be made possible by the Cooley/97 upgrades if all goes as planned.

Ron Garzini passed around a letter he was proposing to send to local businesses to see if they were interested in purchasing trips to help fund the Cooley/97 changes, although there still seemed to be confusion over whether we had 3000 trips available or only 1500, according to ODOT. Ron was still negotiating with ODOT on this, as best I could decipher. It's a huge difference, one that could be a deal breaker in and of itself, so getting a clear answer on this is imperative.

But, even more incredulously, John Russell, Director of the Department of Economic Development, blithely stated that we would get enough from that 50 acres, which he seems to think will be an easy sale at $10 a square foot, to cover the shortfall for the improvements so far, i.e. to repay the $7+ million dollar line of credit from the bank, through a combination of cash from the sales and, I presume, bonds that the City will be able to sell once we have more taxes coming from that land. Mr. Russell stated that he expected to get $10 sq. ft. for the land.

And this is where my confusion began:

1) Les Schwab has set the comparable at $7 sq ft shovel ready, without SDCs, so unless Mr. Russell knows something I don't $10 a sq. ft. doesn't seem very realistic.

2) Even at $10, the proceeds are $21,780,000, while at $7 they are $15,246,000, leaving the issue of SDC's out of it for now. As an example of SDC amounts, LS was relieved of paying around $400K-$500K of them for their initial 120,000 sq. ft. building on 6 acres of their land.

3) This is where my head exploded--to have a chance in hell of getting $10, it is going to have to be shovel ready, like the LS land, with sewers, roads, etc. Which is going to cost millions of dollars. Which is going to have to be financed somehow, but the money from this next 50 acre sale is going to be used to pay off the bills for LS's 20 acres (not including the Cooley/97 bill) meaning it won't be available to pay for the infrastructure needed to make the 50 acres shovel ready in order to sell it.

Do you see what I'm getting at? Exactly. It just doesn't add up, let alone work out in the sequencing of financing and infrastructure improvements provided as the "plan" for getting out of this hole.

After the presentation I brought up the LS comparable and the infrastructure issue with Mr. Russell, and was simply and rudely dismissed as some kind of idiot. I followed him around and brought up the infrastructure issue again, and was simply told "No" when asking about if the City had plans to pay for it, and was again rudely dismissed and further ignored.

I must say that Mr. Russell is pretty damned rude to at least one of the citizens that are paying his salary.

So, I'll ask you again, Mr.John Russell, oh-so-much-smarter than myself Director of Economic Development, please tell us stupid tax-paying citizen's of Bend a couple of things, seeing as how you weren't willing to discuss them any further with me at the City Council meeting:

1) How is the City going to pay for the 50 acres of infrastructure needed to sell said 50 acres for the shovel ready price of $10 per sq. ft.

2) What company is going to pay $10 a sq. ft. plus SDCs when we sold Les Schwab property for $7 sq.ft. with no SDCs, and this is now the most direct comparable.

Because there are some real curious and not-feeling-real-prosperous-right-now Bend citizens that want to know.

You know the kind: they're the ones that pay your salary.

Wednesday, February 6, 2008

UPDATED--$2.56M To Dump Kuratek And Get Master Plan

Mayor Abernethy read a short statement about the decision the Council had made in Executive Session before the regular meeting to accept the offer of JR Partners and move on. The Council handed out a news release, which I will link to when it is posted on their website. It states that the City Council has accepted JR Partners offer and directed staff and management to implement the agreement. Mayor Abernethy stated afterwards that he hopes to have the agreement finalized in 7-10 days.

The key points are:

1) The City pays JR Partners $2.56 million.

2) JR Partners completes the Master Plan over the next three months, working with the City.

3) JR Partners hands over ownership of the Master Plan to the City.

4) The MOU is no longer in force and there is no longer a Master Developer relationship, specifically including Section 11.5 and it's prohibition of the City working with other parties for six months after the new UGB, including some JR land, is finalized and in force.

In interviews, Mayor Abernethy stated this would finally allow the City to move forward, both with JR and with the Cooley/97 interchange. One huge sticking point to the interchange issue is that ODOT may only allow an additional 1500 trips, not the 3000 expected, stating that it believes that 1500 would be needed for additional neighborhood development in any case. This would increase the cost of a trip to over $25,000, if indeed it provided enough leeway for much further development at all. The City wants to sell these trips to adjacent businesses to help pay for the interchange, and even 3000 doesn't provide a lot of leeway for both sales and JR development.

The Mayor also stated that informal discussion among the staff may lead to eomployment development being scaled up by 100 acres or so overall, and maybe more if we yell and scream loud enough at the public input meetings that will be held. The Mayor provided the following quote via e-mail:
"I believe that we will change the mix between light industrial and residential and informal discussion among staff is to recommend 100 acres additional employment land. The final amount will obviously be decided after we have had a chance to listen to the public. I will say that there is no interest on the part of the Council to return to any plan that has all 1,500 acres designated as industrial."

The Council still strongly believes in the neighborhood center concept (including a water feature) with employment to the west. This would put industry on the Hwy 97 side, both within and outside of JR, with a neighborhood center or two on the canal side, with room for a university as well. I told him that the huge jump in residential acreage in the Master Plan, which we obviously don't need with all the empty housing in the City since we have been so overbuilt in the recent past, was what people were upset about, that they wanted family-wage jobs, not housing, and we were going to yell and scream about it some more, which he seemed resigned to. The Council's concept is the overriding thing it seems.

I plan to keep pushing towards a further move towards the OTAK 2005 concept plan, as seen on page 50 of the May 2, 2007 update. This had only 8-10% housing, 150 acres max. Here is that page, showing the OTAK "2005 Concept", the original industrial concept, and the current Kuratek Concept:

When you review this plan, which set off such a row almost 10 months ago now, it is amazing how many pages are devoted to the different types of housing for land that was to be used for a public purpose, which everyone at the time thought referred to jobs. Someone needs to do a housing count, just how many are empty, how many have been on the market and not sold and are now rented, how many subdivisions have how many empty lots. I think the count within a mile of me, around Silverlake and Reed Market, is probaly north of a 100. And heading out Reed Market and along 15th or 27th you can see many, many more, in subdivisions planned, started, or almost finished. Of course, adding even more housing to this overabundance will tend to bring the median price back to 4X average household income, under $200,000, even quicker.

One just wishes the overall concept paid more attention too all that empty, soon to be foreclosed Siberian Tract Housing on the east side, which could house employees while providing worker access to JR without using 97. I always thought that JR was supposed to be a Silicon Valley type addition to the City as a whole rather than its own cute self-contained Light Industrial/R&D Celebration type of town. But the Mayor guaranteed that the public will get several chances to input it feelings, although there most likely would not be a Public Advisory Board as the County suggested in their January working meeting together. The County repeatedly emphasized the importance of listening to and acting in response to public input in this meeting.

Mayor Abernethy also said that the City will not get the invoices for the work but will or had received other documentation of costs, which I will continue to pursue although it is a moot point with the cancellation of the MOU, but at least we will get an idea of what it actually cost JR Partners. If one wants to place blame for this fiasco of an agreement, it would be good to start with the signatories: Andy Anderson for the City and John Russell, head of the Department of Economic Development, for Bend Urban Renewal Agency.

The Mayor stated that he believes that there were four good things to come out of the decision to settle(thus breaking my rule of the strenght of three's) and was starting to go through them with me when he was called back into the Council meeting. He updated and clarified some statements via e-mail, including enumerating these points as such:

"Positive aspects of settlement vs. under the current MOU and stalemate in negotiations:

1. It enables us to develop and have ownership of a master plan for Juniper Ridge within the next 90 days. This timeline was undetermined and out of our control and we would not have ownership of the master plan if we simply terminated negotiations.

2. Having a master plan in place enables us to move forward on planning for the first 300 acres of Juniper Ridge. As per the MOU, we could not negotiate with anyone other than JRP until 6 months after the UGB expansion. This had the effect of tying our hands even on the 500 acres that was already inside the UGB!

3. Having a master plan in place will enable us to determine the trips generated by various forms of development in Juniper Ridge. This will be critical in helping us determine cost allocations to help pay for the Hwy 97/Cooley Road improvements.

4. It enables us to move forward without fear of a lawsuit by JRP. This was a risk that the City faced."

Additionally, I spoke with Sonia, asking her specifically about property tax receipts. She said that so far it look like the deliquency rate is about the same as the last few years, only 6%, and that we would know for sure in 10-14 days when the Budget Detail for January is finished. She is going to send me a copy and then we will have a meeting talking about expected shortfalls and cutbacks. We may yet survice this slowdown, although it will take severe belt-tightening. The $2.56 million going out is not going to help, because even though it is in the "assumed" costs (as the Mayor pointed out repeatedly to the media) it was not in the committed costs until last night. It was more like a contingency fund in that it was budget but wouldn't be spent unless actually needed.

Since it looks like City revenues are going to be at least $20-25 million under budget, we are going to need every dollar we can get to maintain service levels while continuing construction at JR and things like the Reed Market corridor. If month over month revenue continues to fall, we could easily be $30+ million under budget, which would be ugly. I am awaiting the budget detail for January with great interest, both for comparision with the sharp downtrend in December as well as for comparision over Jan, 2007. It will give us a better picture of what to expect going forward.

Tuesday, February 5, 2008

City Council Should Follow Laws For Using Executive Sessions

“Information is the currency of democracy.” -- Thomas Jefferson

Our City Council could make giant strides in gaining citizen trust and support by following Oregon Open Government laws and properly noticing the secretive Executive Sessions it holds during virtually every City Council Meeting. It would achieve far more from this simple step than from any PR efforts it could make.

Instead, our Councilors hide behind a single line, seen in virtually all the City Council Meeting Agenda’s: “Executive Session pursuant to ORS 192.660 (2) (a through h)”. The minutes of a meeting states something like “Mayor Abernethy called a recess to Executive Session at 6:14 P.M. pursuant to ORS 192.660 (2) (a through h)”. Even during recent joint meeting with the Bend Metro Parks and Recreation Board there was evidently a need for secrecy, so the minutes reflect that “Mayor Abernethy called an Executive Session of both agencies pursuant to ORS 192.660 (2) (a through h) at 7:06 P.M.” A citizen may rightfully wonder what can and must be discussed in secret about our city’s parks. And Oregon law requires more than what our Council provides

Oregon‘s Public Meetings Law, first enacted in 1973, specifically allows Executive Sessions, where the public may be excluded except for media representatives, for certain items. These are the reasons as stated in ORS 192.660(2)(a through h):

(a) To consider the employment of a public officer, employee, staff member or individual agent.

(b) To consider the dismissal or disciplining of, or to hear complaints or charges brought against, a public officer, employee, staff member or individual agent who does not request an open hearing.

(c) To consider matters pertaining to the function of the medical staff of a public hospital licensed pursuant to ORS 441.015 to 441.063, 441.085, 441.087 and 441.990 (3) including, but not limited to, all clinical committees, executive, credentials, utilization review, peer review committees and all other matters relating to medical competency in the hospital.

(d) To conduct deliberations with persons designated by the governing body to carry on labor negotiations.

(e) To conduct deliberations with persons designated by the governing body to negotiate real property transactions.

(f) To consider information or records that are exempt by law from public inspection.

(g) To consider preliminary negotiations involving matters of trade or commerce in which the governing body is in competition with governing bodies in other states or nations.

(h) To consult with counsel concerning the legal rights and duties of a public body with regard to current litigation or litigation likely to be filed.

Oregon Open Meetings laws state that Executive Session notice requirements are the same as for all other meetings, which must include a list of principal subjects with enough specificity for citizens to recognize items of interest. In addition, Executive Session notices must include the specific statutory authority for each agenda item discussed in the executive session. This specific statutory authority must be also announced before going into an Executive Session.

Executive Sessions are allowed for only very limited purposes. Deschutes County Commission rarely holds Executive Sessions, while the Bend City Council holds them at virtually every meeting. Even on the subject of ORS 192.660(2)(e), the real estate exemption, the Oregon Attorney General long ago stated that:

A governing body may meet in executive session to "conduct deliberations with persons designated by the governing body to negotiate real property transactions." The apparent policy underlying this provision is to permit public bodies to protect their negotiating position in real estate transactions by keeping certain information confidential. This provision does not permit a governing body to discuss long-term space needs or general lease site selection policies in executive session.’

The Bend City Council seems to have gone far beyond these limitations, particularly in its deliberations around Juniper Ridge.

An example of a good notice of an Executive Session is this, from the Newberg City Council Work Session Agenda for October 17, 2005:


1. Executive Session pursuant to ORS 192.660(2)(d) relating to a real
property transaction – McKillip Property located at 8015 NW Hash Rd.

An example of a good record of an Executive Session in the Minutes of a meeting is this, from the Sherwood City Council Meeting of Dec. 11, 2001:


1. Executive Session #1 held pursuant to ORS 192.660 (1) (e) Real Property Transactions and ORS 192.660 (1) (h) Consult with Legal Counsel – Meinecke Road intersection - took place from 6:03 to 6:28 p.m.

2. Executive Session #2 held pursuant to ORS 192.660 (1) (i) Employee Evaluation. – the City Manager six-month review took place from 6:30 to 6:50 p.m.”

Complaints of Executive Session violations may be directed to the Oregon Government Ethics Commission, for review, investigation and possible imposition of civil penalties. Members of a governing body may be liable for attorney and court costs both as individuals or as members of group if found in willful violation of the Public Meetings Law. Judy Stiegler of Bend is the current chairperson of the Ethics Commission.

I have fully documented the use of Executive Sessions back to the Special Meeting resulting in the Les Schwab property sale on December 12, 2006. This includes documentation of Executive Sessions held after regular City Council meetings that were never noticed. I also received a copy of a December 8, 2006 e-mail from the City noticing the December, 12, 2006 Special Meeting after filing an open records request. Yet my contacts with the media representatives that attended said session and a review of the Bend Bulletin from December 8 to December 12 fail to show any record of this email.

The Bend City Council simply does not follow the Oregon Open Meetings law in its constant use of Executive Sessions. I urge the Council to at least conform with and preferably even go beyond the letter of the law, in the manner of the City Councils of our fellow Oregon cities Newberg and Sherwood. By doing so, the Council may win back the trust of its constituents in a much more fundamental way than any PR campaign could.

None of us want to take the next step of filing a complaint with the Ethics Commission.