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HomeMy WebLinkAbout05/12/1986 Meeting . e e M I NUT E S Eugene City Council Dinner/Work Session Bloch Room--Eugene Conference Center May 12, 1986 5:30 p.m. PRESENT: Mayor Brian Obie; Cynthia Wooten, Richard Hansen, Ruth Bascom, Debra Ehrman, Emily Schue, Jeff Miller, Roger Rutan, Freeman Holmer, councilors; City Manager Micheal Gleason; Assistant City Manager Dave Whitlow; Warren Wong, Finance Director; Abe Farkas, Development Director; Public Information Director Barb Bellamy; Elaine Stewart, Scott Luell, Eugene Development Department; Jim Ivory, Eugene Downtown Association; Anne Bennett, Jim McCoy, Downtown Commission. Mayor Obie opened the meeting. Mr. Gleason requested the addition of an item on law enforcement and jails. I. DOWNTOWN PARKING PROGRAM Mr. Farkas reviewed the 12 recommendations for restructuring the current park- ing program. He noted the recommendations to increase the gross receipts tax from $2.50 to $3.50 on an interim basis, and to begin charging a user fee by January 1988 or sooner. He also said the recommendations would be the subject of a public hearing on June 23. Mr. Farkas reviewed the history of the Downtown Development District, which was formed in the 1970's and was charged with economic promotion, downtown development, and dealing with parking. He said the subsidy provided by the DDD currently was not adequate to support downtown parking operating costs, debt service, and reserve fund, so a change was needed. He also said the present subsidy did not allow setting aside funds for parking needs to be generated by development of sites at 8th and Willamette and 11th and Willa- mette. Mr. Farkas said that a higher burden on retailers would act as a disincentive to business locations downtown. He also said some people were taking unfair advantage of the free spaces that should be available to shoppers. Mr. Farkas said a mechanism was needed to provide for future garage needs. He said the parking program was heading in the direction of bankruptcy, and he added that an opportunity existed to bring in about $100,000 annually through users' fees. He also said that ample lead time was needed to deal with the user fee issue. Mr. Farkas reviewed the public process, noting that a number of public forums and surveys had been conducted. He said a turnover study had indicated that most parking use involved periods of two hours or less. MINUTES--Eugene City Council Dinner/Work Session May 12, 1986 Page 1 --- .... e Mr. Luel1 reviewed the parking program and the enterprise funds outlined on the first page of the brown handouts. He said that 60 percent of the DDD funds went to enterprise funds, and $312,000 of that $355,000 went directly for rental of spaces. He also noted that the Eugene Performing Arts Center and Conference Center garages are part of the entire program, but are not involved with the DDD. Mr. Luell reviewed the functions of enterprise funds, noting that the Overpark and Parcade both depended on commercial space to subsidize the parking func- tion. He also reviewed components of service. e Responding to questions from Ms. Ehrman, Mr. Luell said parking revenues col- lected at the EPAC and Parcade garages during Hult Center events remained in each of those enterprise funds. He added that the EPAC and Conference Center funds did not receive money from the Downtown Development District. Mr. Luell showed development sites on the Downtown Parking Lot Summary and said development was expected to result in a decreased supply and an increased demand for parking. He said pay lots shown were either owned by the City or by Diamond Parking. Mr. Luell said that each enterprise fund was intended to be self-supporting. He reviewed the DDD Funds flow chart, noting that the changes to working capi- tal were negative in the first three funds, which he attributed to the current program's inability to generate revenue. He said debt servicing was not listed under expenditures for the Parcade or EPAC because it currently was being funded through tax increments and G.O. respectively. He said the City does not have the ability to support additional debt servicing. Mr. Luell said debt servicing for the EPAC was about $180,000, and for the Parcade was about $275,000. e Mr. Luell reviewed highlighted amounts on the subsidized parking program cost summary. He said the replacement reserve average of $4.80 was one-quarter of the industry standard for privately owned structures in Portland or Seattle. He noted that total costs were about $26 per space, while DDD contributed only about $19, including the $1 increase, but new development still required an even greater contribution. Responding to Ms. Ehrman's question, Mr. Luell said the Downtown Association had given no indication that it would pay more than a $1 increase. He said the policy group initially had indicated that it favored making the program self-supporting without a tax increase and had been about to recommend charg- ing for parking after the first two hours. The merchants then initiated the $1 increase in gross receipts to try and keep the program unlimited free. Responding to Mr. Hansen's question, Mr. Luell said that two taxes currently were collected: an ad valorem tax of about $3.50 per thousand on downtown property ownership, and a gross receipts tax of $2.50 per thousand on non-pro- fessional retail sales. He said the increase would affect the gross receipts tax, adding that it had been $2.50 since 1973 when the DDD was initiated. Mr. Luell also said an audit of the non-professionals was part of administra- tion costs. Mr. Wong said audits were done periodically, but, in the last year or two, only walk-throughs had been done. MINUTES--Eugene City Council Dinner/Work Session May 12, 1986 Page 2 - e e Responding to Mr. Holmer's question, Mr. Luell said the professional tax had been eliminated because it had been viewed as a disincentive for professionals to locate downtown. Responding to a question from Mr. Holmer, Mr. Gleason said the ratio was not the same as the 20 percent ratio because free spaces represented only one- third of the total spaces. He said spaces were subsidized at $18 and rented for an average of $25. Mr. Luell said actual costs averaged $25.71, and reve- nues generated were less than that. Mr. Luell reviewed the Downtown Commission recommendations, noting that a shift from a tax-supported program to a user-supported program, such as two free hours followed by a charge, could occur based on the amount of develop- ment. Lots at 11th Avenue and Willamette Street and 8th Avenue and Willamette were potential development sites, he said. Mr. Luell also said private con- tractors are being sought for services like custodial maintenance and security. Responding to questions from Mayor Obie, Mr. Luell said the expenditure for EDD under surface lots included rental of lots from The Bon Marche and Sears and adjacent to the Eugene Hotel, along with costs for personnel, equipment, and service contracts. Mr. Luell said the Parks Department was responsible for maintenance of the commercial space in garages, and Public Works did maintenance of surface lots. He said that Central Service Allocation included election, audit, and collections costs. Mayor Obie said that maintenance costs seemed high. Mr. Luell said the Parcade fund would include bidding for security and main- tenance. He also said utility and property tax costs for the commercial space were included under the Parcade expenditures. He said about $90,000 of the $177,000 under Parcade EDD expenditures was for commercial space management, and he added that it generated about $195,000 in revenue. Mr. Rutan said he thought users of commercial space in City buildings should bear some of the overhead costs for the building. Mayor Obie requested more detailed information on the line items. Ms. Bennett suggested that seeing the same figures as the Downtown Commission had seen might be helpful. She also said the commission had felt that some services could be provided more efficiently by the private sector. She said that after reviewing the numbers, the commission had felt comfortable with them but also had felt that private contracting should be explored for Parks and Public Works functions. Responding to Mr. Miller's question, Mr. Gleason said that developing sites and building garages never would result in a positive cash flow because of the tax increment structure. He said garages were required because of the density of the urban core, and the value of the tax increment then would be assessed to pay for the structures. Ms. Ehrman asked about the EDA contract, and Ms. Stewart said the contract included services like advertising, marketing, sales events, mall programming, and administrative staff. She added that additional marketing was done for the parking program. MINUTES--Eugene City Council Dinner/Work Session May 12, 1986 Page 3 . e e Mr. Luell said the industry standard for parking garage replacement reserves was two percent annually. He said the City goal had been one percent, but $4.80 was the highest amount that currently could be set aside without severely depleting working capital. He said a total of about 1,400 free spaces existed. Mr. Gleason said those free spaces were subsidized, but the subsidy was not breaking even. Mr. Luell said the replacement reserve for the entire parking program was listed as $212,000, which was one-quarter of the industry standard. Mr. Miller asked whether rental spaces were collecting adequate replacement costs. Mr. Farkas said they were not because rates charged were lower than the market and because many people used spaces for free. Mr. Gleason added that free spaces created a depression in the market. Mr. Hansen asked for a projection if all parking were paid. Mr. Luell said an alternative program, with two free hours followed by paid parking, was described on the last page. Mr. Holmer said that including both the replacement reserve and the debt ser- vice on a 20-year bond with a 50-year life seemed to be a double accounting error that increased apparent annual cost to more than it should be. Responding to Ms. Ehrman's question, Mr. Luell said designated spaces would be marked with signs and outlined in leases, of which short-term were preferred. Ms. Bascom said she found it confusing to use the word "free" in describing the subsidized program. Mr. Miller noted that replacement costs did not include new parking struc- tures, and he asked how those would be paid for. Mr. Luell said replacement reserves would be used for major improvements and could be used to help build- ing parking structures. Ms. Ehrman said she thought including the Downtown Manager salary in the park- ing fund skewed the deficit inappropriately. Mr. Farkas said the salary was charged to the ODD and not to the parking portion of the fund, which constitu- ted about 60 percent of DDD. II. JAILS/LAW ENFORCEMENT Mr. Gleason said that annual negotiations with representatives of Lane County were occurring for use of jail facilities. He said a proposal would be pre- sented to the County Commissioners, and the jail issue would be part of the urban transition discussions to be resolved in about August or September. He said an immediate need existed, architects had been contacted, and the City could purchase structures to be attached to existing buildings. He said about 40 beds would be provided, and he proposed using the $400,000 already budgeted in 1986-87 for jail services to purchase those structures. Mr. Gleason said the County would attach the structures to the building, staff the jail, and provide space for administration, laundr~l and food handling, in addition to providing access to alternative programs llKe work release. MINUTES--Eugene City Council Dinner/Work Session May 12, 1986 Page 4 e Mr. Gleason said the City needs were for about 20 to 25 people per day, and that capacity would be guaranteed by the County. He said the County hoped the structures would ease the overcrowding situation for one year while a long- term solution was sought. Ms. Bascom said the possibility of providing some beds for alcohol treatment also had been discussed. Mr. Holmer asked about re-use of the structures. Mr. Gleason said they might be used for training, but bids would have to be examined. Ms. Bascom and Ms. Schue said they recalled being told that jails were holding inmates because of a lack of capacity in private detoxification centers. Mr. Gleason said he would check into that. e Mr. Hansen said schools were being leased in California, and he urged leasing for a year rather than making a purchase now. He also asked how any shortfall in the amount budgeted for County jail services would be covered. Mr. Gleason said the agreement would specify that any shortfall be made up by the County. He added that the numbers he had seen did not indicate a shortfall. Mr. Glea- son explained that the City obligation was for the "lower end" of security, which cost less per capita than the higher-end security provided by the County. Mr. Gleason said that additional space would be provided for Municipal Court inmates and for felons handled by the County. Ms. Ehrman said she was not interested in having the City of Eugene enter the jail business. She said councilors were not included in discussions to set the Federal cap and should not be involved in questionable expenditures. Mr. Gleason said only felons could be incarcerated, and providing bed space was the only solution. He said the City was not entering the jail business or trying to subsidize the County but was trying to resolve an immediate problem. Mayor Obie suggested holding further discussion on the issue at Wednesday's meeting. Ms. Ehrman requested information about the amount already spent this year for County jail services. Mr. Miller said that because only the amount, and not the use of the funds, would change, he saw no problem. Mayor Obie agreed. The meeting was adjourned at 7:20 p.m. ~~ ' (-<<~77 /f4 ~ Micheal Gleason Ci ty Manager (Recorded by Leslie Scales) ~ lS:vr/2040C MINUTES--Eugene City Council Dinner/Work Session May 12, 1986 Page 5