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HomeMy WebLinkAboutCC Minutes - 01/28/08 Work Session M I N U T E S Eugene City Council Work Session McNutt Room – City Hall 777 Pearl Street—Eugene, Oregon January 28, 2008 5:30 p.m. COUNCILORS PRESENT: Andrea Ortiz, Chris Pryor, Betty Taylor, Bonny Bettman, George Poling, Mike Clark, Jennifer Solomon, Alan Zelenka. Her Honor Mayor Kitty Piercy called the meeting of the Eugene City Council to order. She announced changes to the sequence of items on the agenda and cancellation of the public forum during the regular meeting due to weather conditions. A. WORK SESSION: GloryBee Foods Enterprise Zone Boundary Amendment Request City Manager Angel Jones introduced Denny Braud, Planning and Development Department, to present the item. Mr. Braud said that GloryBee Foods, a local company located in Eugene for over 30 years, was requesting consideration of a boundary amendment to the West Eugene Enterprise Zone that would expand the boundary to include a recently acquired 60-acre parcel. He said the company had grown rapidly and its current operations were scattered among five different facilities. He said the proposed new facility would be a $15 million investment with over 100,000 square feet designed to be a very energy efficient and sustain- able building. He said GloryBee planned to build on 20 of the 60 acres and wanted to subdivide the remaining property in order to create a sustainable business park that would require tenants to meet specific sustainable building design standards. He said subdivision and sale of lots was critical to financing the cost of the new facility. Mr. Braud distributed an aerial photograph of the parcel showing its location immediately adjacent to the existing enterprise zone boundary. He said it was zoned I-2, Light and Medium Industrial and noted that the parcel was inside the previous enterprise zone boundary but was removed when the zone was reconfigured in 2005. He said the parcel was outside of the city limits but within the urban growth boundary (UGB) and included in the Industrial Corridor Community Organization area, which through an agreement with the City allowed development of property within the corridor without annexation. He said the Lane County Board of Commissioners in September 2007 unanimously approved expansion of the enterprise zone boundary to include the parcel. He said the expansion would also need to be approved by the City Council as a joint sponsor of the enterprise zone in order to submit a request to the State for approval. He emphasized that the recommendation was to approve the boundary amendment and direct the City Manager to submit the amendment to the State only after GloryBee's project had progressed to a point of some certainty as reflected in approval for a subdivision of the property and submission of a building permit application for the new facility. MINUTES—Eugene City Council January 28, 2008 Page 1 Work Session Mr. Poling asked why the request was just now coming before the council when it was approved by the County Board of Commissioners last September. Mr. Braud replied that the matter was not time sensitive, as construction was not anticipated until 2009. Mr. Poling asked for clarification of the consequences if a business failed to meet enterprise zone require- ments. Mr. Braud said there were two levels of requirements: the basic State criteria that every company had to meet and local public benefit criteria established by the City and County. He said failure to meet those requirements would result in repayment of part of the tax exemption through a public benefit contribution. Mr. Poling commended GloryBee as exactly the type of company the City wished to encourage. He said it was a locally owned and operated business that had expanded to the limits of its current capacity. He said the increase in enterprise zone acreage would be nominal and the City should support the request from a local, sustainable business that wanted to establish a business park to encourage other sustainable businesses. Ms. Bettman said whether or not GloryBee was a good company was not the question before the council. She saw the proposal as "green washing" a real estate transaction. She said GloryBee needed to increase its profit in order to make the expansion profitable and that was not what the enterprise zone was for. She said focusing the public subsidy on redevelopment of brownfield sites was the one community benefit built into the enterprise zone application and greenfield sites were specifically excluded. She questioned why development of industrial land would be subsidized if there was such a shortage of it. Ms. Bettman opined that GloryBee had purchased far more property than it needed and was banking on being able to bring it into the enterprise zone so its value would be increased when the subdivided portion was sold. She said there was no way for the council to encode or enforce the green standards, as the agreements would be between GloryBee and the businesses that purchased lots. She said when the taxes were foregone by the City every other taxpayer had to make up the shortfall. Mr. Pryor remarked that brownfields and greenfields were one dimension of the enterprise zone discussion; creation of jobs was another dimension. He said GloryBee had shined over the years in increasing employment and could take advantage of the enterprise zone to continue to add jobs to the community. He said GloryBee was exactly the type of company the enterprise zone was designed to benefit and most businesses required some type of assistance to expand. He felt the request was reasonable and consistent with the purpose of the enterprise zone. Mr. Clark stated that he would support the request, as it would increase family-wage jobs in Eugene, which was the purpose of the enterprise zone. He said this was a perfect opportunity for the council to demon- strate a commitment to grow locally owned companies and increase local family-wage jobs to support a more vibrant, sustainable local economy. He hoped the council would support keeping GloryBee in Eugene. He said a false scarcity of land had been created, which drove up prices and made transactions like GloryBee was proposing necessary in order for a project to be financially feasible. Ms. Taylor asked what wages GloryBee paid. Mr. Braud said he did not have a wage scale, but GloryBee provided employees with a full benefit package and the entry-level wage was above minimum wage. Ms. Taylor asked why the council needed to make a decision at this point if construction was not planned until 2009. Mr. Braud responded that the company was going through a rigorous planning and design MINUTES—Eugene City Council January 28, 2008 Page 2 Work Session process that was expensive and wanted some certainty regarding availability of the enterprise zone given the overall cost of the project. Ms. Taylor asked if all the businesses in the sustainable business park would qualify for tax exemptions. Mr. Braud said they would qualify only if they met State and local enterprise zone criteria. He noted that any qualifying investments would come onto the tax rolls after three years. Ms. Taylor stated she was opposed to enterprise zones as there were other ways to help local businesses regardless of where they were located. She said this enterprise zone expansion could pave the way for future expansions and she would not support the request. Ms. Taylor asked if GloryBee was likely to go elsewhere if the request was not approved. Mr. Braud said he could not speculate on that, but the opportunity presented by the enterprise zone would help the company move the project forward and would raise the marketability of the subdivision. He said the tax exemption would also help maintain the sustainable components, which added cost to the project. Ms. Taylor asked if there were ways other than the enterprise zone that could be used to assist the company if it was to the City's advantage. Mr. Braud replied that there was a small business lending program, but the scope of the project was large enough that it was unlikely the program could meet all of the company's needs. Mr. Zelenka asked why the parcel was removed from the original enterprise zone. Mr. Braud said it was removed because of a desire to focus the boundary on redevelopment, infill development and brownfield development. Mr. Zelenka asked if the Industrial Corridor Community Organization area in which the property was located would exist forever. City Attorney Jerome Lidz said annexation had to occur within ten years of sewer connection or by 2010, whichever was earlier. He said all of the property that had been developed would come into the City on January 1, 2010. He said the corridor was governed by a complicated set of agreements dating back several years. Mr. Braud added that annexation on January 1, 2010, was not automatic and the City would need to take action. Mr. Zelenka commended GloryBee as exactly the type of business the City wished to attract. He asked if the amount of the tax exemption was known. Mr. Braud replied that the estimated amount of exemption was $450,000 over the three-year period, of which 40 percent would be City taxes if the property were annexed. Mr. Zelenka asked if there was any mechanism that required jobs to be retained throughout the exemption period. Mr. Braud said a business was disqualified if jobs were not maintained and would be required to repay the exemption. Mr. Zelenka said it was unclear to him that the project would not move forward without the property tax exemption. Mr. Pryor, seconded by Ms. Bettman, moved to approve Resolution No. 4925 au- thorizing the City Manager to make application to the State of Oregon to amend the boundaries of the West Eugene Enterprise Zone. MINUTES—Eugene City Council January 28, 2008 Page 3 Work Session Ms. Bettman, seconded by Ms. Taylor, moved to amend the motion to limit the boundary expansion to the twenty-acre site of the GloryBee expansion. Ms. Bettman said she had questions about the extra territorial extension of urban services. She said that GloryBee was leveraging its good reputation in the community to buy additional property so that it could be included in the boundary expansion and result in a profit from the sale of property within the enterprise zone and that was not the purpose of the enterprise zone. She said the County foregoing taxes would impact the City because of the number of overlapping services. She did not think it was fair to consider a boundary expansion that would give the benefit of potential tax breaks to companies that were not yet identified. She said the creation of ten jobs was a very low threshold for qualifying a business. The motion to amend failed, 5:2; Ms. Bettman and Ms. Taylor voting in favor. Mr. Zelenka said he would not support the request to amend the boundary because it was not clear to him that the project would not happen anyway. He questioned whether the council should be making companies more profitable and said the threshold for providing an exemption should be very high. He said a business should have to make the case that without the incentive a development would not occur. He thought there should be incentives for sustainable development such as proposed by GloryBee. Ms. Solomon, seconded by Mr. Poling, called for the question. The motion passed, 5:2; Ms. Bettman and Ms. Taylor voting in opposition. The main motion passed, 4:3; Ms. Bettman, Mr. Zelenka and Ms. Taylor voting in opposition. Ms. Ortiz arrived at 6 p.m. B. WORK SESSION: Tax Levy for Funding of Pavement Capital Preservation Projects Sue Cutsogeorge, Finance Division, stated that materials in the agenda packet explained the types of expenditures proposed to be made from bond proceeds and provided a list of high profile street repair projects. She referred to a map showing the location of projects, which were distributed throughout the City primarily on major arterials and collectors. She said those projects comprised about one-third of the proposed bond spending and the remainder would be used for additional street repair projects defined in the ballot measure language and determined by the City's pavement management system, including $350,000 annually for off-street bike and pedestrian paths. Ms. Cutsogeorge distributed and reviewed a summary of results from a January 2008 poll of citizens indicating a majority was willing to pay additional property taxes for street repair. She said the poll also identified respondents' street repair priorities. She said the recommended motion directed the City Manager to bring back a resolution placing an $81 million bond measure on the May 2008 ballot with the list of high profile projects included in the resolution. Ms. Bettman asked what percentage of the $81 million was not construction costs. Kurt Corey, Public Works, replied that non-construction expenses included project management, engineering and oversight, which typically ranged from 10 to 20 percent of a project's costs. MINUTES—Eugene City Council January 28, 2008 Page 4 Work Session Ms. Bettman said she was unwilling to support the recommendation as it allowed too much discretion on the part of staff. She understood that the bond measure would be a package of projects on which the funds would be spent. She said the list of priority projects did not appeal to her as it omitted several sections of heavily traveled road in her ward, but even if those were on the list they could be supplanted by other projects that staff deemed a higher priority. She objected to combining street repair funds from the bond measure with funds for new construction as that would add bond funds to a capacity enhancing project without a clear dividing line. She said inclusion in the resolution of five principle areas of restriction on the use of bond proceeds meant there were other non-principle areas that were not listed. In response to a question from Mr. Pryor, Mr. Corey said the list of priority projects presented to the council represented about one-third of the street repair projects. He said the pavement preservation program for each construction season derived projects from the pavement management system, which identified projects before they reached the point where reconstruction became necessary. He said that system considered several factors that guided developing a project list. He said the priority projects list represented a broad cross-section of the City and matched with feedback from citizen polling about street repair priorities. Mr. Pryor said he trusted the Public Works Department and traffic engineers to identify the streets most in need of preservation. He agreed it was important to be clear with the public about how the bond proceeds would be used on projects. He said he was considering changing the election date from May to November when he placed the motion on the floor and asked for feedback from councilors. Mr. Zelenka said the intent was to address the $170 million backlog of street repairs that was growing daily. He said it was unlikely that State or federal funds would be available for projects, which was why the council subcommittee had recommended a funding package that included several funding components. He agreed that there should be a list of projects for which bond proceeds would be used and it was reasonable to begin with a short-term list of projects for the next two or three years, as it was difficult to predict what projects would be priorities over the next ten years. He said the criterion was to prevent streets from moving into the reconstruction category, which was five times as expensive. He did not want to see the funds used for new system capacity increases when the City could not afford to maintain the ones it had. Mr. Zelenka, seconded by Ms. Ortiz, moved to direct the City Manager to bring a resolution forward placing an $81 million General Obligation bond to be used for preservation only, no system capacity enhancements, on the November 2008 ballot. Mr. Clark concurred with placing the bond on the November ballot. He felt that fixing the problem of street repairs was one of the council's most important tasks. He said in the spirit of compromise he was willing to consider a garbage hauler surcharge as part of the solution to the problem. Mr. Poling agreed with waiting until the November election as it would allow the council additional time to build trust and confidence with the community. He said it would also allow the council to consider during the budget process whether there were existing funds that could be directed toward street repair. He stressed a focus on street repair and was not willing to support any initiative that included increasing capacity. Ms. Taylor agreed with limiting use of funds to street repairs, but felt the bond should be on the ballot in May. Ms. Ortiz agreed with limiting use of funds to street repairs and placing the bond on the November ballot. MINUTES—Eugene City Council January 28, 2008 Page 5 Work Session Mayor Piercy felt the issue was important enough to work on further to develop a list of projects that could be agreed upon and to complete the budget process before an election. She said the City was constantly working within its capacity to repair streets but was hampered by limited resources. She supported waiting until November. Ms. Bettman stated she would not support the motion unless there was a specific project list and the bond was on the May ballot. She did not believe that 10 to 20 percent of the funds were required for project planning and engineering since the problem was well defined. She reiterated her objection to allowing staff discretion regarding the project list and to using the funds in a project that also included capacity enhancing funds. She characterized the garbage hauler surcharge as a pass-through to residents, who would be paying for street preservation through several different mechanisms. Mr. Zelenka said he was willing to accept Ms. Bettman's request for a complete project list as a friendly amendment. Ms. Ortiz accepted the friendly amendment. Mr. Zelenka clarified that the bike and pedestrian path language was still included in his motion. He said the garbage hauler fee and gas tax were part of the transportation funding package because there was a direct connection between the damage to streets and who paid for it. He said more time was required to better understand and communicate information about the need for the bond to the public, develop a project list and go through the budget process. Mr. Clark noted that streets in the vicinity of City Hall were not on the project list. Mr. Poling thought it was appropriate to retain some flexibility in the project list and use some funds for engineering because over time conditions changed and a road that might currently be at the top of the list could be surpassed by one that was deteriorating more rapidly. He did not want to be handcuffed by a list of projects that could not be reevaluated on a regular basis and revised as necessary. Ms. Solomon agreed there should be some flexibility in the project list as councilors were not traffic engineers and could not predict what projects would be priorities over the life of the bond. She preferred to see a project list for at least two-thirds of the bond proceeds. She asked if that was Mr. Zelenka’s intent. Mr. Zelenka explained that the intent of his motion was to develop a full list for the $81 million in bond proceeds, but also allow flexibility by including a process whereby the list could be adjusted. He agreed with Mr. Poling that ten years was a long time and priorities could change during that period. Mr. Pryor said the capital improvement program (CIP) process could provide the flexibility to develop a project list. He stressed that the subject under discussion was not a garbage hauler fee; more information was required before that fee came before the council again. He would support the motion. Ms. Bettman stated she preferred to commit to a specific list and reserve a small amount of discretionary funding for emergent issues. She objected to publishing a list that could be changed in the future. Mr. Zelenka clarified that his motion was intended to direct the City Manager to develop a resolution for a bond measure that identified the time, the size and the content and there would be an opportunity to debate that, including details of the project list, when the resolution was presented to the council. The motion passed, 7:1; Ms. Bettman voting in opposition. MINUTES—Eugene City Council January 28, 2008 Page 6 Work Session C. ACTION: An Ordinance Concerning Motor Vehicle Fuel Dealer's Business License Tax and Amendment Section 3 of Ordinance No. 20337 Mr. Corey stated that the City’s gas tax was presently set at five cents per gallon, two cents of which would sunset on February 29, 2008. He said the Oregon Petroleum Association (OPA) had pledged at the January 14, 2008, public hearing to work toward a statewide gas tax if the two-cent portion of the City’s tax was allowed to sunset. He said in the spirit of cooperation, staff was recommending extending the sunset period by three years instead of repealing it. He said that would allow time for the legislature to address transpor- tation funding during the 2009 session. He said allowing the two cents to sunset at the end of February would create an additional $1.4 million annual deficit in the street repair budget. Ms. Taylor stated she would support a three-year extension of the sunset provision. Mr. Zelenka expressed concern about testimony that suggested the decrease in gasoline sales was associated with the two-cent tax. He felt that was unlikely as the entire State had experienced a reduction in gasoline consumption. He said the OPA was vague about its commitment to work on the concept of transportation legislation in 2009. He preferred to keep the tax in place until that funding materialized. He supported extension of the sunset provision. Ms. Bettman supported removing the sunset provision altogether as she was not optimistic that the legislature would provide sufficient funds for road repairs because they would not be able to resist the temptation to dedicate a large portion of that to modernization. She supported the three-year extension as a compromise. Mr. Clark said he understood that the volume of gasoline sales had decreased in Eugene but been flat or increased in the rest of Lane County during the past two years, which related directly to price competition. He was in general agreement that fuel taxes were a good idea because they were closer to being a user fee. He was unhappy with the council’s decision not to place the issue before voters when gas dealers had gathered enough signatures to place both the three-cent and the two-cent tax on the ballot. In the spirit of compromise he was willing to extend the sunset, although he preferred extending it only until the end of July 2009. He hoped the council could work toward a combined solution to transportation system funding, including the commitment of some General Fund moneys. Mr. Pryor remarked that the dilemma was whether to sunset the tax as an incentive to work with the legislature or retain the tax as an incentive and then rescind it if State funding became available. He was willing to extend the sunset to avoid adding $1.4 million to the annual deficit and would work with OPA and the legislature to pass a State gas tax. He said it should be made clear that the extension was only until there was a legislative solution. Mr. Poling also felt that lower gas sales were the result of competition. He said the council had made a commitment to the public to sunset the two-cent tax and should honor that agreement. Mayor Piercy recollected that the commitment was to rescind the two-cent increase when the problem was solved and that had not yet happened. She noted that the council could not commit future council's to take action. She hoped that a State solution would be beneficial for Eugene. MINUTES—Eugene City Council January 28, 2008 Page 7 Work Session Ms. Ortiz remarked that a transportation funding bill was passed by the Washington State legislature and then referred to the voters by unhappy taxpayers, so a State solution was not guaranteed. She said a sunset provision required the council to discuss and reconfirm a tax. She applauded the citizens of Eugene because using less gas meant people were changing their driving behavior and operating more fuel-efficient cars, not going out of the area to buy fuel. She pointed out that the gas tax could be rescinded at any time the council wished and if other funding became available she would support that. She was in favor of the second option. Mr. Pryor, seconded by Ms. Bettman, moved to direct the City Manager to go with Option 2, an ordinance concerning motor vehicle fuel dealer's business license tax as shown in Attachment A. Mr. Lidz read the action section of the ordinance: Section 3 of Ordinance No. 20337 (the sunset provision) adopted by the City Council on January 24, 2005, is hereby amended to read: "Unless otherwise extended by the City Council, the amendment to Subsection (b) of Section 3.467 shall sunset on February 28, 2011, and the tax will revert to three cents per gallon." Mr. Zelenka said he was willing to compromise on a three-year extension, but the sunset should be linked to solving the problem. He clarified that the council's action did not increase the tax; it maintained the status quo. He stressed that if the sunset extension was placed on the ballot and defeated, that would mean a reduction in the pothole fund and there would be consequences in terms of worsening street conditions. He said that the Oregon Department of Transportation indicated that gas tax revenues were declining because people were driving hybrid vehicles, driving smarter and using less gas and as Ms. Ortiz pointed out, that trend was reflected locally. He said the extension would provide time for the legislature to act and for the council to work on other funding options discussed by the subcommittee. Mr. Clark said he would have a difficult time supporting the motion because voters had earned the right to vote on the matter. Mr. Poling said that Ms. Ortiz had persuaded him to support the motion. The motion passed, 7:1; Mr. Clark voting in opposition. Mayor Piercy adjourned the work session and called the council into executive session at 7 p.m. C. EXECUTIVE SESSION Pursuant to Oregon Revised Statutes 199.660(2)(e), the City Council met in executive session. Respectfully submitted, Angel Jones City Manager pro tem MINUTES—Eugene City Council January 28, 2008 Page 8 Work Session (Recorded by Lynn Taylor) MINUTES—Eugene City Council January 28, 2008 Page 9 Work Session