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HomeMy WebLinkAboutCC Minutes - 02/09/05 WS MINUTES Eugene City Council Work Session McNutt Room--City Hall February 9, 2005 Noon COUNCILORS PRESENT: George Poling, Jennifer Solomon, Betty Taylor, David Kelly, Gary Papd, Bonny Bettman, Andrea Ortiz, Chris Pryor. Mayor Kitty Piercy called the work session of the Eugene City Council to order. A. WORK SESSION: Remand of Hospital Ordinance No. 20299 City Attorney Glenn Klein explained that the ordinance in question was adopted a year ago when the council was seeking to facilitate the location of a hospital somewhere in Eugene. The ordinance allowed for the location of a hospital in most parts of Eugene. He termed it a broad-brush approach to locating a hospital due to the uncertainty of where the hospitals would eventually be. Subsequently, the decision was appealed to the Court of Appeals by the Coalition for Health Options in Central Eugene-Springfield (CHOICES). The court ruled that hospitals could not be located as an outright use in a residential zone as it may or may not be consistent with the Eugene-Springfield Metropolitan Area General Plan; it depended on the nature of the hospital in question. The same was true of industrial zones. Mr. Klein said that the ordinance was not back before the City Council so there was no urgency for action. However, staff had some recommendations for proceeding. He noted the relocation of McKenzie- Willamette/Triad to the Eugene Water & Electric Board (EWEB) site was not firm. Mr. Klein said the council could choose to repeal the entire ordinance, retain those elements of the ordinance not challenged by the petitioners, or develop a response to address some of the issues raised by the court with regard to the industrial and residential zones. The City could not deal with the remand with simple factual findings. Mr. Klein noted that the Agenda Item Summary (ALS) described the options in more detail. Mr. Klein suggested councilors declare potential conflicts of interest at this point. Mr. Pryor declared a potential conflict of interest due to his wife's employment with McKenzie-Willamette/Triad. Ms. Ortiz declared a similar potential conflict because of her employment with PeaceHealth. Mr. Klein said that the conflicts at this point were potential, and the councilors could participate in the discussion. Mayor Piercy called on the council for comments and questions. Ms. Taylor wanted to repeal the ordinance as she thought its initial adoption was a mistake, particularly in regard to its application to residential areas. She had been happy to hear of the ordinance's remand. Ms. Bettman said things had changed since the adoption of the ordinance. When the council had adopted the MINUTES--Eugene City Council February 9, 2005 Page 1 Work Session ordinance, no site for a new hospital in Eugene had yet been identified, and the council's focus was on creating the broadest possible opportunity to locate a hospital. Now McKenzie-Willamette/Triad was interested in the EWEB site. She said the City's interest in the site was only as a site for a hospital. If McKenzie-Willamette/Triad had not chosen the site, the City would not be involved in the relocation question at all. Ms. Bettman wanted the council to focus on how to facilitate a hospital at the EWEB site. She did not think the City should change the EWEB property's zoning for anything else at this time. Mr. Pap6 arrived. Ms. Bettman suggested the council could create a site-specific zoning overlay for the EWEB site to facilitate a hospital at that location. Mr. Klein said that the council could create a special overlay zone. He believed it would be necessary to change the Eugene-Springfield Metropolitan Area General Plan (Metro Plan) designation for the industrially zoned portion of the site as well to facilitate a hospital. Steve Nystrom of the Planning Division concurred. He said that the council could adopt special districts for a variety of uses, but that required plan support for implementation. He noted the industrial part of the EWEB site was designated for heavy industrial use. That was a stumbling block. Ms. Bettman asked what parameters existed for properties zoned commercial to accommodate a hospital. Mr. Nystrom said that hospitals were conditionally permitted in the Community Commercial (C-2) and Major Commercial (C-3) zones. They were not an allowed use in the Neighborhood Commercial (C-l) or Commercial/Industrial (C-4) zones or in the General Office (GO) zone. Ms. Bettman said the council would need to proceed carefully. She favored repealing the ordinance and pursuing a specific code change. Mr. Kelly also favored repealing the ordinance as he agreed it was overly broad. He had argued at the time of its passage for a more specific approach, working cooperatively with the two hospital providers. He said the commercial part of the ordinance, which was not overturned by the courts, was also very broad. Hospitals of the scale envisioned were unusual uses and the best way to accommodate those uses was to work with the providers and design what met their goals and the City's goals. He agreed a site-specific overlay zone was the better way to go. He looked to both hospital providers to assist with the City in that effort, noting that a representative of PeaceHealth was present. Mr. Kelly noted that another option listed in the agenda packet was to initiate a Metro Plan amendment on the EWEB site now; that seemed premature to him. He wanted to see a simultaneous process where a development agreement was signed on the property transfer and work on the Metro Plan amendment commenced. Mr. Poling acknowledged the concerns voiced by councilors, but pointed out the council had passed a goal to facilitate a hospital being located south of the river. The council needed to have something in place to allow for that if another hospital provider entered the picture. He questioned how the City would address a situation where a new hospital wanted to locate at 29th Avenue and Willamette Street, for example. He asked if the City would take a site-specific approach to that or attempt to modify the current ordinance. He thought the City needed to be flexible, and he questioned if a site-specific plan would provide that. Ms. Bettman did not object to flexibility but pointed out the ordinance did not limit the hospital to a location MINUTES--Eugene City Council February 9, 2005 Page 2 Work Session south of the river. It worked against the council's objectives of locating a hospital on the EWEB site and facilitating ongoing negotiations by opening up competing pieces of commercially zoned property for further negotiation, complicating the issue and increasing the expense. She wanted to focus on the City's objectives and accommodate PeaceHealth's plans at its Hilyard site and complete negotiations for the EWEB site. She agreed the City did not want to act prematurely in changing the designation on the EWEB site. Mr. Kelly understood Mr. Poling's points and said he did not want to place a roadblock in the way of a new provider. However, he thought it unlikely such a party would enter the picture. He suggested that given the text of the motion proposed, a site-specific overlay could be done to cover the entire north river bank. He agreed with Ms. Bettman that the current ordinance could also facilitate a hospital at another location other than the EWEB site, which was also a concern to him. Mr. Kelly believed that staff had been responsive to the McKenzie-Willamette/Triad situation and could be equally responsive to a new party entering the picture, or in the event the EWEB property did not work out. City Manager Dennis Taylor indicated his agreement with Mr. Klein that it would be premature to act on the issues associated with the remand until some of the other issues played themselves out further, allowing the City to develop a specific response. Mr. Pap~ determined from City Manager Taylor that EWEB had not yet signed an agreement with McKenzie-Willamette/Triad to sell its site. Mr. Kelly noted that the commissioners had authorized funding for preliminary design work to determine the costs of moving the utility. Mr. Poling determined from Mr. Klein that the council was not obligated to act on the remand by any particular date. Responding to a question from City Manager Taylor, Mr. Klein confirmed that the ordinance and the provisions that would have enabled PeaceHealth to make changes to its site without a conditional use permit were not in effect. The changes the council made in October 2003 were not in effect. Ms. Bettman repeated her suggestion that the council develop site-specific zones, one for the new hospital site and one for the existing PeaceHealth site. However, she did not think the council should open every zone to a hospital use as it conflicted with the City's goals. Mr. Solomon asked if the City was hampering PeaceHealth's ability to move forward through any of its actions. City Manager Taylor reiterated that, in the absence of the ordinance, the hospital would have to go through the conditional use permit process. Mr. Kelly asked if the conditional use permit process was a burden for PeaceHealth and if the council could be more surgical in its implementation. He suggested that PeaceHealth inform the City of its needs in that regard. Ms. Taylor believed the council should wait to see what was presented to it before acting. Mayor Piercy determined that staff would return to the council with more specific information about the two hospitals' plans for the future. MINUTES--Eugene City Council February 9, 2005 Page 3 Work Session B. WORK SESSION: Modifications to the Metropolitan Wastewater Management Commission Intergovernmental Agreement The council was joined by Peter Ruffler of the Wastewater Division and Jerry Lidz of the City Attorney's Office. Mr. Ruffler introduced Susie Smith, General Manager of the Metropolitan Wastewater Manage- ment Commission (MWMC), Bob Duey, Chief Financial Officer of the MWMC, and Dave Jewett, legal counsel for the MWMC. He said that the council was not being asked to take action on the item today. He apologized that the Intergovernmental Agreement (IGA) was not available, noting that it had undergone several revisions since it was presented to the commission and staff still did not have a final working draft. He said staff still believed it was worth having the work session so the council could raise questions and provide staff with revisions it would like to see to the IGA. Mr. Ruffler provided background on the formation of the MWMC, which was created through an IGA between Eugene, Lane County, and Springfield. Mr. Ruffler indicated the modifications to the IGA being proposed now were relatively straightforward, mirroring current operations and practices, and would not change relationships between the parties to the IGA. They would result in an agreement more aligned with current administrative and operational practices and more consistent with regional policies and procedures. Mr. Ruffler said the most controversial changes were those related to the recommendations received from financial advisors and bond counsel and the implementation of the capital improvements projects list, which was estimated to be $144 million over a 20-year period. Most of those costs were front-loaded over the first five to ten years of the planning period. Consistent with financial planning criteria and conditions in the IGA, the MWMC proposed to supplement the funding for those improvements by issuing revenue bonds. Mr. Ruffler said that when the MWMC was first formed it did not have statutory authority to issue revenue bonds, and construction of the original treatment facility was handled by the County Service District. Those bonds were retired in 1997, and the commission is currently debt-free. The changes being proposed were necessary to reflect the changes in the authorities to allow the MWMC to issue revenue bonds. Mr. Ruffler said in preparation for the financing necessary for the facilities plan, the commission hired a financial planner to review the underlying documentation and IGA; that planner recommended some changes to the IGA. Subsequent reviews by the County's financial planner and City's bond counsel also indicated a need for further changes before revenue bonds could be issued by the MWMC. Those recommendations were yet to be reconciled. That was the stage of the process the IGA was at now. Mr. Lidz discussed why the council was considering the IGA at this time, when in the past it was amended by the City Manager. Mr. Lidz said the revisions that the council would see involve the council's commitment on behalf of the City to perform certain acts in the future, such as setting user rates and systems development charges (SDCs). The manager could not make those commitments. Mr. Lidz provided additional background on the issue. He said the discussions that had occurred to this point involved balancing the requirements for access to the bond market with retention of as much governing body authority as was consistent with that access. He said that the bond counsel and bond market state that MINUTES--Eugene City Council February 9, 2005 Page 4 Work Session to sell bonds, one must make a firm commitment that the revenue will be in place to pay the bonds. He had assumed on behalf of the council that it did not want to make more of a commitment than was necessary. Mr. Lidz recalled that when the original IGA was entered into, it was signed at a time when the facility was operating under a loan from the federal government. The IGA required the individual jurisdictions to comply with a specific federal regulation in setting user rates. He did not think that was ever an issue since the user rates were always more than the federal regulation required because MWMC was doing more things with the rates than were needed to pay off the loan. Continuing, Mr. Lidz said, in this case, another way to consider the issue was if the City itself was deciding whether to construct the facilities that the MWMC would build on its own rather than through an intergov- ernmental entity and had to issue revenue bonds, which kind of commitments would it have to make? He said it would have to set user rates and adopt SDCs at a level that could pay off the bond debt and maintain the facilities in a condition that the bond holders knew they could continue to keep operating and generate revenue. Mr. Lidz said bond counsels take a more paranoid view of things as it was their job to assure the bond market that the bonds were secure. They will look to translate those general commitments into a number of specific promises. He assumed the target would be to secure an A rating for the bonds to reduce the interest expense or the cost of insuring the bonds. He said the better the bond rating, the less it cost. However, to get that good bond rating, one must make specific commitments. In this case, the City was not selling the bonds, MWMC was, and it does not set user rates or establish SDCs. When MWMC wants to sell bonds, the underwriters and the potential purchasers of the bonds would want to know where the revenues would come from, and would look to the terms of the IGA to determine the strength of the commitment of the parties to the IGA. Mr. Lidz indicated that staff would return to the council with the IGA in the near future. Mayor Piercy invited questions and comments. Ms. Taylor commended the staff presentation for its clarity. She determined from Mr. Lidz that the City of Springfield would sign the same agreement. Mr. Lidz said the County would sign the IGA as well. Ms. Taylor asked if the County was involved in the guarantee. Mr. Lidz reiterated the County would sign the IGA. However, he pointed out the County neither imposed SDCs nor adopted user rates, but was a party to the agreement. He attributed that to the County's historic involvement and the fact the board believed it had an interest in representing the rate payers who reside in the county but pay the user rates set by the two cities. Mr. Pryor asked who would be responsible if the revenues to repay the loan were not available. Mr. Lidz said the bond holders had no other recourse, which was why those who market the bonds want to ensure there is a strong commitment to the IGA. The bonds were not backed by the general obligation of the City. The City had no obligation to back the bonds with revenue as long as it complied with the terms of the IGA. Ms. Bettman suggested the IGA was another reason special service districts were a bad idea. They created such conflicts, and the City could not be consistent in the same way as it could if it had ultimate authority and was not sharing it with another body. MINUTES--Eugene City Council February 9, 2005 Page 5 Work Session Responding to a question from Ms. Bettman, Mr. Ruffler confirmed that staff had done a preliminary estimate that indicated it would require a 65 percent increase in user rates if the MWMC had to depend on user fees alone to underwrite capital costs. Ms. Bettman suggested the City had no alternative but to build the needed infrastructure, and asked what happened if those improvements did not occur. Mr. Ruffler responded a substantial portion of the projects identified were necessary to handle wet weather flows and the timing of construction was determined by the State. If the City was not able to go forward with those projects, it would increase its risk of violating its permit law and incurring penalties. Ms. Bettman appreciated staff's diligence in the matter. She recalled the council's discussion when it adopted the facilities plan, and at that time she had expressed regret the community would never capture in SDCs what was needed for new capacity, and some of that the burden was being shifted to the rate payers. However, it was obvious to her that the infrastructure was needed, and although she disagreed with the financing mechanism, she had supported the facilities plan. Ms. Bettman saw no alternative but to create the strongest IGA possible. Mr. Lidz said another reason to use revenue bonds was because they allowed the community to spread the cost of projects out over more time and capture revenue from new users moving in to the community. If the MWMC front-loaded the costs with a rate increase now, that meant only current users paid. Mr. Pap~ determined from Mr. Lidz that general obligation bonds could be used to underwrite the cost of projects if the projects in question were City projects. Mr. Pap~ asked if the City of Coburg was party to the discussions about the IGA. Mr. Ruffler said no, as that presumed that Coburg would join the MWMC. That had not yet been decided. Mr. Lidz added that the IGA did not preclude the addition of Coburg to the system, but the IGA must be amended before that occurred. City Manager Taylor noted that staff was engaged in a study of the technical issues involved in serving Coburg, and would return with a recommendation regarding both technical and governance issues should it be recommended that Coburg be included in the IGA. Mr. Pap~ suggested that Coburg be provided with the draft and solicited for comments. Mr. Pap~ asked how often the jurisdictions reviewed the project list. Mr. Poling indicated it was a five-year list; the first review was scheduled for 2010. Mr. Pap6 asked if the City would need to do capital improvements to meet overflow issues even without new construction. Mr. Ruffler said yes. Mr. Pap6 concluded that existing rate payers were part of the problem. Mr. Kelly suggested that the IGA, if very lengthy, be provided to the council via the internet. Mr. Kelly believed the difference between issuing revenue bonds and not issuing revenue bonds was the 65 percent rate increase, and suggested a more likely scenario if the modifications to the IGA did not satisfy the bond counsel was that the bonds could still be issued but at a lower credit rating, meaning higher interest. Mr. Jewett said that in discussions with the bond counsel and the financial advisors, they indicated the draft IGA had the basic minimum requirements to get access to the debt market. If some substantial changes were not made, it was not just a question of quality of the debt, but whether any underwriters would be MINUTES--Eugene City Council February 9, 2005 Page 6 Work Session willing to buy the bonds. Mr. Kelly hoped the community had another alternative. He did not like the comer the City Council had been painted into by bond counsel. He determined from Mr. Ruffler that the MWMC included three elected officials representing the local jurisdictions and four lay representatives. Eugene had two lay representa- tives. Mr. Kelly recalled that the council received an e-mail from Roxie Cuellar of the Lane County Homebuilders Association, who maintained that setting a higher SDC rate to cover the bond payment would be decided by a non-elected board. He asked if that was correct. Mr. Ruffler said the commission recommends rates and SDCs to the elected governing bodies, which then adopted them. Mr. Kelly asked what happened if a community rejected the MWMC's recommendation. Mr. Ruffler said to the extent the rates or charges were necessary to repay bonds, the MWMC could move forward without that approval. Any additional component of the rates that went above that minimum requirement could be refused by the parties to the IGA. City Manager Taylor said the fundamental issue was how to assure the bond holders while still maintaining flexibility for the governing bodies. In the parties to the IGA could not reach an agreement, at a minimum the parties must meet their commitment to the bond holders. Mr. Kelly disliked the fact there was no majority of elected accountable officials on the MWMC if the parties could not reach agreement. The lay members of the MWMC could not be voted out of office. He did not know the solution. Ms. Bettman did not think it was a good idea to include Coburg in the review of the IGA. The council should focus on the parties to the IGA as no decision had been reached that Coburg's participation in the MWMC was in the best interest of other governments. She was concerned that the gesture to review the IGA could be misread by Coburg. She hoped any analysis about including Coburg in the IGA had a rigorous financial component because she wanted to avoid any situation where Eugene ratepayers subsidized capacity for Coburg. Mr. Papd said he was suggesting the review as a mere courtesy. Mr. Papd determined from Mr. Ruffler that Springfield provided financial services for the MWMC, so any analysis of whether bond requirements were met would be done by that city. Mr. Papd asked what happened if the estimates were high and the MWMC had more money than it intended to apply to the repayment of bonds. Mr. Duey said that staff would review the numbers annually and make recommendations for the rate component for the debt service through the MWMC for the cities to consider. The community could also choose to either lower the rate based on the debt service, or raise it based on the debt service. Mr. Kelly was concerned that the IGA eliminated the Metropolitan Policy Committee (MPC) as a dispute resolution body and called for the formation of a new dispute resolution body. Mr. Lidz responded that one reason was that the two councils might want to appoint their MWMC representative to a dispute resolution committee. Mr. Ruffler pointed out that the MPC included representatives from other bodies without an interest in the wastewater program. Mr. Kelly appreciated both answers but neither satisfied him. He thought it could be resolved by modifying the bylaws of the MPC to accommodate the dispute resolution role, and suggested that a community's MWMC representatives could be involved in the discussion. Mr. Poling agreed that the MPC should be the dispute resolution body. He thought the MWMC representa- tives could be a useful source of information as opposed to being part of the dispute resolution body. MINUTES--Eugene City Council February 9, 2005 Page 7 Work Session Regarding the facility plan, he questioned the council's comfort level with that timeline. Mr. Lidz said before MWMC could issue revenue bonds, they must be approved by the council after a public hearing. The council would be aware of the amount of the bond. At this time, Mayor Piercy concluded the published agenda and recognized Ms. Bettman, reminding the council that Ms. Bettman had e-mailed notice of her intent to offer a motion the previous day. Given the complexity of the topic in question, Mayor Piercy suggested that the item be tabled to give the council more time for discussion in a work session setting. Ms. Bettman, seconded by Ms. Taylor, moved to direct the City Manager to obtain a professional appraisal of the McDougal property that is the subject of consideration for a Santa Clara Park. Specifically, the 77 acre site outside the urban growth boundary that staff is considering for a re- gional park and including a discreet appraisal of the 40 acres considered to eventually be most likely the developed portion of the park. Ms. Bettman expressed appreciation at the Mayor's suggestion for a work session, which she would welcome. However, she did not think that superceded the need for the information the appraisal would provide. When she talked about the issue with citizens, one of the first things they asked about was the value of the property. She said the work session could follow the appraisal. She questioned how one could weigh the benefits of a proposal given the range of values provided by EcoNorthwest. No money to develop, so even if acquired, would be a long time before it could be developed. Mr. Poling, seconded by Ms. Solomon, moved to table the motion to March 7, 2004. Mr. Kelly indicated opposition to the motion to table because he did not think the processes were competing and the information provided by the assessment would be useful. He said the council could get the information soon and cheaply. Mr. Pryor asked if having an appraisal would impede or create a hardship in the discussion around the transaction. City Manager Taylor did not think so. He thought the question was whether it was premature. He thought a general discussion of land exchanges first would be desirable. Mr. Solomon questioned how useful the appraisal would be at this point. She thought it premature to commission an appraisal and said she needed to get up to speed on the issue. Ms. Ortiz did not want to table the issue because the Santa Clara neighbors would meet on the issue before March 7. She thought it would be useful to have preliminary numbers before that time. Ms. Taylor thought the council needed all the information possible if it was to discuss the issue. The motion to table failed, 6:2; Ms. Solomon and Mr. Poling voting yes. The main motion passed, 7:1; Mr. Poling voting no. MINUTES--Eugene City Council February 9, 2005 Page 8 Work Session Mr. Pap~, seconded by Ms. Bettman, moved to direct the City Manager to commis- sion an appraisal on the 130 acres owned by the McDougals in the Laurelwood area. The motion passed, 7:1; Mr. Poling voting no. The meeting adjourned at 1:27 p.m. Respectfully submitted, Dennis M. Taylor City Manager (Recorded by Kimberly Young) MINUTES--Eugene City Council February 9, 2005 Page 9 Work Session