Wednesday, March 19, 2008

Bend CC Spends $2.5M w/NO COMMENT

I just returned from the Bend City Council meeting. They all voted for the settlement with Juniper Ridge Partners, in an amount over $2.5 million dollars and giving JRP the right to purchase the first 50 acres of Juniper Ridge land, with absolutely no public comment or questioning or anything.

$2.5+ million dollars from Bend taxpayers without even a cursory debate. Whatever debate was held was in secret, in Executive Session. Not to be heard be the people actually paying this bill.

This is not only disgusting, but also may be illegal. The State Ethics Commission will weigh in on this.

How can you call yourself a responsible representative of the citizen's of Bend and sign off on this without any debate.

Absolutely no public debate.

Sunday, March 16, 2008

City's Hands Now Tied? Notes on JRP Termination Agreement and Exclusive Purchase Option

Reading over the agreements terminating the City's nascent Master Developer relationship with Ray Kuratek's and Jeff Holtzman's Juniper Ridge Partners, LLC, one thing stands out: they gain not only $2,515,000, but also an exclusive three-year option on the 50 acres surrounding the Les Schwab property. At a price to be set by up to three appraisals (one by a City appraiser, one by a JRP appraiser, and, if there is no agreement, a third by an appraiser chosen by the Deschutes County Judge) which will almost certainly come in at the same price as Les Schwab paid, $7/sq ft with no SDC's, since that is the only true comparable. And then JRP gets a 6% "finders fee" knocked off the appraised price.

The mechanics of the agreement are that the city will deliver an "Entitlability Notice" to JRP, which will then have a total of 105 days to exercise their option and close the transaction, and will then have an additional two years to begin development. JRP will be responsible for all infrastructure improvements, and must prove their financial capability for such work to purhcase the property. It is an all or nothing purchase--the 50 acres will not be broken down for partial purchase by JRP.

There don't seem to be any usage restrictions, as the zoning has not been changed for this property as it has on the Les Schwab parcel. Their is no requirement for using the land for employment purposes, and in fact it states:
City acknowledges that through this Agreement, JRP is purchasing excess City property and is developing the same for JRP's own purposes and pursuant to JRP's own development plans. This is not a contract by which JRP is constructing an improvement for, or to the specifications, the City or any other municipality or governmental entity.
How is the city planning to develop anything at JR without JRP? How is the city planning to make our $50+ million dollar investment, counting the Cooley/97 interchange, back? Are we going to get badly need jobs or more unneeded housing?

Another interesting thing is that both Juniper Ridge Partners LLC and Heather Kuratek are listed as contractors in the Termination Agreement and Release. There is absolutely no indication of actual amounts paid to any contractors by JRP, and there doesn't seem to be any accounting or audit requirement at all. Just the desire to pay them off and get out from under any potential lawsuit.

Another thing that isn't clear is when does the time clock start ticking with entities like Cooper Robertson on the city's dime? Does this agreement provide the taxpayers with Bend a master plan at a known cost or are we going to continue to pay Cooper Robertson and others going forward? Is the city going to be billed from now on rather than JRP? These questions are not answered in the agreements.

My biggest concern is that map shown in the Option and Purchase and Sale Agreement:

This is the first 50 acres to be developed, what the city is hoping to be able to develop with the additional $40 million investment in the Cooley/97 interchange and subsequent sign-off by ODOT. According to the Issue Summary, the city is hoping to have a funding source for the new interchange in the not too distant future:
We are beginning to communicate with investors who might assist us in funding the 97/Cooley mid-term intersection improvement project. We hope to find a funding solution by Fall 2008.
Of course, this is six months behind what we were told just a month or two ago, but in this economic climate it probably isn't that big of deal.

What's going to be the by far more important part of any such agreements is the precise number of trips allocated to Juniper Ridge. Garzini has to negotiate the full 3000 for divying up between potential funders and JR, without any going to existing and future housing infrastructure in the area, or developing even 50 acres is dead in the water. I've heard several rumors now that the main source of this funding is going to be Walmart, in conjunction with the development of their land on the NW corner of the intersection.

Even with this investment at Cooley/97, the city will not be able to develop any more than 50 acres without other vehicular access, which is another big question mark. Where and at what cost? Perhaps the council and staff will inform us of their plans regarding this issue soon.

This will be an fascinating week. Signing up for a $2.5+ million payoff at the same time you are hearing about cuts in vital city services has to be gut wrenching for any members of the council that truly have the interests of all of Bend's citizens in mind.

Sunday, March 9, 2008

Rumors of Bend Bulletin Real Estate Reporter's Demise Abound

One casualty of the turmoil in Bend may be David Fisher, who covered the real estate beat for the Bend Bulletin. From the Bend Economy Board there is an interesting thread fleshing out a rumor reported in the alternative weekly,the Source:
Interesting week in The Bulletin's business section.

First, The Source comes out with this blurb on Thursday ...

TV isn't the only one getting into the act. A little bird told us that a reporter across town, well known for his real estate coverage, walked out when editors insisted that he spin his latest story to emphasize the positive side of the housing slump.

Oh, well, what's one more fairy tale in makebelieveland?

That caused Bulletin Executive Editor John Costa to fan his line editors through the newsroom to assure everyone that said real estate reporter had really been fired for lying about being sick.

Which didn't play well with a lot of the staff, because this email had already made the rounds for a couple of days ...

Charlene: (Apparently meaning Sharlene Crabtree, the Bulletin's Human Resources Director) Here's my response to the March 4 Separation Notice:

I did not "lie about being sick." I took two days off after an article I wrote for the Feb. 26 paper was edited by my supervisor, Business Editor John Stearns, in such a way as to remove any facts or opinions that tended to disagree with a public speaker's rosy predictions for the local real estate industry. As I told him, my intent was to carefully consider why that particularly editing job, which I viewed as dishonest, upset me, and to calm down enough to rationally discuss the issue with him.

When I returned, I was not "questioned about the days off" -- I initiated a meeting with Mr. Stearns and told him, without prompting, that I had not been physically ill but needed two "mental health days," in my phrasing, to determine how I should best discuss my future with the paper with him in a calm, rational way, rather than forcing the issue when I was angry and confused.

I told him during that meeting on Feb. 28 that I felt that the editing job on my Feb. 26 story was part of a pattern of editing that included misleading headlines, sources being banned from my coverage, story ideas getting spiked, and odd pre-story cajolling, all of which seemed designed by the executive editor to generate more favorable coverage of the local real estate market than I have thought was best in the two years I have been assigned to cover it for the paper. I further told him that, although I believed that the articles I had written for the paper were as thorough and as accurate as I could make them, the utter hack job that was done on my Feb. 26 story had led me to conclude that the paper was not willing to cover the industry as honestly as it should, given that the housing market -- which is economically important to the paper -- is now in the midst of a steep downturn.

I asked to be shifted to another beat, including others that had been identified by the executive editor as important to the paper's overall coverage, such as the business of medicine, or the banking industry. I told him I felt that I would be allowed to cover those beats "straight," without what I perceived to be the editors' emotional desire to slant coverage of the real estate market.

He denied that the paper's editors intended to color the news and criticized me for taking the days off, rather than confronting him with my concerns immediately. I told him again that I felt that I needed the time to clarify my own thoughts before I attempted to have a discussion with him, but if he felt the days weren't covered by our sick leave or vacation policy, I would be happy to take them as unpaid time off.

Stearns told me on March 3 that he had discussed my request to change beats with the executive editor. I don't know what was discussed in that meeting, but I was fired the next day.

In conclusion, there was no violation of the ethics code. I was quite honest about my reasons for not coming to work for two days, and was, I suspect, fired for stating those reasons to my supervisor.

Thank you for allowing me the opportunity to respond.

According to a quick look at the edit trail in The Bulletin's computer system, apparently what set him off -- finally -- was an edit job on a story on Dana Bratton's pie-in-the-sky real estate "forecast" speech last Monday that scrubbed paraphrases from Bill Valentine and Brooks Resources honchos Kirk Schueler and Mike Hollern, all saying that they think the downturn is going to last a whole lot longer than the April 25 turnaround date that Bratton ladled out to the adoring real estate crowd at The Riverhouse.

That pesky stuff got axed on orders from Costa, who told his business editor to "stick to what was said at the meeting."

Out, too, went a section that pointed out that the ridiculous predictions that Bratton made last year of a quick RE turnaround also -- uh -- kinda failed to pan out.

Which left the good readers of Bend with the vision of Dana Bratton, grand real estate prognosticator, predicting that everything will be hunky-dory by May, contradicted only slightly by those notorious pessimists at the National Association of Realtors, who actually suggested that sales might not turn around until late this year.

Could it be an accident that all of this is happening a week after the Realtors and Builders announced their "Best Time in 20 Years to Buy a House" campaign? Complete with plans for a good, old-fashioned media blitz?

Journalism at its finest, and right here in River City.

A search on the Bulletin site shows Fisher has only couple of bylines since the Bratton story, while before he wrote something nearly every day. One of his last was "Sellers Offer Cold, Hard Cash To Get Homes Off The Market". Andrew Moore wrote the latest real estate story on Awbrey Butte's new homeowners association. So perhaps the pushback has really taken another step forward.

On a related note, I am now officially a stringer for the Bend Weekly, with a Press Pass on the way. My first article was posted here. Now I should be able to get into the Executive Sessions. I plan to offer a much more skeptical viewpoint then the other cheerleaders in town, and certailnly better than the crap in the Bulletin today titled "Juniper Ridge Q&A", which I would link to if it wasn't behind their paywall.

Plus there is that pesky little detail of the City Council making a $2.56M decision in Executive Session to pay off Juniper Ridge Partners. My biggest goal is to force greater transparency around this issue, and a major step forward in that process will occur this week. Stay tuned...

Monday, March 3, 2008

Wait, my math doesn't make sense

But I still don't get how we are going to finance the build-out.

My 4 AM math was wrong on the 50 acre sale, as one acre = 43,560 sq. ft. Then 50 acres equals 2,178,000 sq. ft., so:

50 acres at $10=$21,780,000

50 acres at $7=$15,246,000

To put these numbers in perspective, we are spending $13+ million getting roads and utilities to the Les Schwab parcel of only 20 acres, and that doesn't count the $37-40 million to be spent on the Hwy 97/Cooley upgrade where we hope to gain 3000 daily trips.

Also we need to note that while 50 acres will be the nominal amount added to the industrial UGB, taking out roads, parks, etc. will reduce that by 10% or more.

Sorry for the error, though. It's embarrassing.

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