HomeMy WebLinkAbout12/15/1986 Meeting
M I NUT E S
e City Council Dinner/Work Session
McNutt Room--City Hall
December 15, 1986
5:30 p.m.
PRESENT: Mayor Brian Obie; Richard Hansen, Cynthia Wooten, Jeff Miller,
Emily Schue, Roger Rutan, Ruth Bascom, councilors; City Manager
Mike Gleason; Assistant City Manager Dave Whitlow; Public Works
Director Christine Andersen; Airport Director Bob Shelby; ASD
Director Gary Long; Finance Director Warren Wong; Carol Calkins,
Finance; Public Information Director Barb Bellamy; Doug Obletz,
Public Works management consultant; Larry Douglas, Eugene Chamber
of Commerce; Rob Bennett, Jim Boyd, Larry Shoop, guests.
ABSENT: Debra Ehrman, Freeman Holmer, councilors.
The adjourned meeting of December 8, 1986, of the Eugene City Council
was called to order by His Honor Mayor Brian B. Obie.
I. AIRPORT FINANCING
Mr. Glec1son distributed summary minutes of the City Council Airport
e Subcommittee meeting of December 12, 1986. He said the subcommittee had
reviewed detailed costs of the airport construction project. He also said the
proposed razing of the existing terminal building would be discussed'as part
of a cost/benefit analysis.
Mr. Whitlow said the subcommittee report had been mailed with packets on
Friday. He said action on the airport was scheduled for the Wednesday noon
meeting and would involve three issues: 1) project scope and budget; 2)
financing of the City's share of the project (including the amounts, if any,
of up-front cash and of referral to voters, along with sources of up-front
fi nanci ng and annual debt service payments); and 3) the need for up to
$300,000 in cash to keep the project on schedule and to carry design and
administrative costs through March 31. Mr. Whitlow said the land portion of
the project was scheduled to go out to bid in February, with work to begin in
June. He said the terminal project was scheduled to begin in December.
Mr. Whitlow said negotiations with the airlines indicated a latest airline
share of $5.65 million. He said changes in the project budget were not
recommended until a Circuit Court decision had been made on use of County road
funds. He added that the hearing date on County road funds was December 29.
Mr. Gleason said a final decision on the City share of airport costs could be
postponed until January 12, when the ballot title had to be set.
e MINUTES--City Council Dinner/Work Session December 15, 1986 Page 1
Mr. Rutan said the current task was to finalize a fair and reasonable proposal
to submit to the community for a decision. He commended efforts to respond to
- and follow through on community concerns. He noted that the City's share of
airport financing was about $6 million, which was less than the amount spent
on the Community Conference Center. Mr. Rutan said he expected debt service
to be a key decision for the council, and he said he thought the annual debt
service payment for the project could be funded internally, as proposed in the
recommendation on page 3 of the agenda attachment.
Ms. Wooten asked about Recommendation 1 on page 3, to pay the debt service
with revenues from increased growth in working capital. Mr. Wong said the
proposal would decrease growth in working capital from the forecasted increase
of $500,000 per year to $200,000 per year. He said that would continue until
the fund reached $7 million, and it thereafter would be increased only as
necessary to meet cash flow requirements. He said the fund now contained $6.6
mill ion. Ms. Wooten said that $300,000 also might be applied to the shortfall
that was forecast. Mr. Gleason said he recommended dealing with decisions on
the operating budget separately from those on airport financing. Mr. Rutan
said the feeling among subcommittee members was that the airport was a capital
project, and if it was a priority, it should be funded out of the CIP.
Ms. Schue said a General Obligation bond could be funded by a property tax
outside of the 6 percent limitation. She said she expected the current
council to continue whatever funding was decided upon, but future councils
might act differently. Mr. Rutan asked about the extent the counci1 could go
to in directing future council decisions. Mr. Gleason said an ordinance could
be passed, or the charter could be amended, but future councils still could
retract those actions. He also said the debt service on the airport had been
e funded through a GO bond within the operating account of the airport for the
past 15 to 20 years. Mr. Hansen said airport construction, but not
operations, had been funded by an increase in property taxes. Mr. Gleason --
...-~_'-
said the first few years of the airport's existence may have been funded by a ,
property tax levy, but as soon as the airport was financially solvent, the GO
debt service had been brought within the airport account.
Mr. Hansen said he had suggested specifying some measurable item, such as the
Pacific Northwest Bell tax revenue, as a funding source, but the subcommittee
had not favored that idea. He said he thought future councils would be
hesitant to overrule a commi tment on the project and he woul d favor a
resolution to continue funding the airport as a priority until the debt was
paid or could be covered by airport revenues. Mayor Obie agreed and suggested
passing an ordinance requiring future councils to refer the item to the public
for any change. Mr. Gleason warned against merging operating and capital
issues because of the possibility that a future council might want to increase
the operating levy of the City.
Mr. Obie asked about the potential for enhancing the income stream from the
airport, so that it could assume a larger portion of the burden over 20 years.
Mr. Gleason said much of the income stream already had been included in
financing plans. He noted that the project also would increase operating
costs, and he said negotiations with the airlines did not separate capital and
operating costs. He said he thought it would be overly optimistic to assume
that any significant revenues would be available for debt service payments in
e MINUTES--City Council Dinner/Work Session December 15, 1986 Page 2
the first five to eight years of operation. Mr. Gleason said some opportunity
existed, but it probably was beyond prediction abilities.
4It Mr. Rutan showed a recent Business Journal article on the expansion of the
Portland airport and said copies would be made available to councilors. He
read portions of the article stating that the airport was a self-sustaining
operation and that no tax dollars were needed to pay for improvements, which
cost more than $11 million. According to the article, the Portland airport
collects about $24 million a year in landing and concession fees, and Mr.
Rutan noted that much of that was in cargo, whi ch he said was a great
opportunity. He added that he had been told the only money-making projects
for municipalities were airports and golf courses.
Mr. Wong said the ordinance for the GO revenue-backed bond was proposed to
state that the first funding source for debt service payment would be airport
profits, the second source would be new revenue sources, the third was yet to
be decided, and the fourth would be property taxes.
Ms. Wooten suggested a combination of new revenues, such as a rental car tax
or an increase in room taxes, and decreasing the amount to be taken from the
capital budget, in order to spread the burden of the debt service. Mr. Rutan
said new revenue sources would take too long to implement, and the
subcommittee had wanted to keep the project on schedul e. He said the
recommendation offered an overall strategy for paying the annual debt service.
He said new revenue sources could be investigated between now and March, and
if they proved workable, they could be incorporated into the overall strategy.
Ms. Schue said she did not think issues could be resolved before March. Mr.
~ Rutan suggested placing a maximum cost of financing before voters, along with
~ a statement of the council.s intention to seek other funding opportunities.
Mr. Hansen said a car rental tax would require annexation of the airport and
would give Eugene one of the nation1s highest tax rates. Mr. Miller said he
thought it would be better for voters and for the City of Eugene to dedicate
funds to capital in a straightforward way. He said all revenues ultimately
came from taxpayers. Ms. Schue said she favored making the airport the
highest priority capital item and continuing to seek other sources of revenue.
Ms. Bascom said she did not want to damage an already underfunded operating
budget. She suggested pursuing regional sources of funds.
Mr. Rutan said he thought it was important to inform voters about what they
would be getting with the airport expansion. He said the airport already had
a tremendous economic impact on the community, and the future impact could be
even more substantial. He suggested including statistics on economic
development opportunities and statements such as that by Atlanta Mayor Andrew
Young, that the airport "was the best investment ever made in the community.1I
Ms. Wooten said she was extremely uncomfortable with funding the debt service
out of capital improvement projects over a period of 20 years. She said the
CIP already was behind schedule, and she thought it was an error not to
involve the public more clearly and seriously in the development of a voter
package. She said she agreed that the airport needed improvement and was part
of an economic development program, but the package being taken to voters was
not the correct course.
4It MINUTES--City Council Dinner/Work Session December 15, 1986 Page 3
Mr. Hansen suggested that a proposed ordinance be prepared by Wednesday. Mr.
Whitlow agreed to do that.
- Ms. Schue said she did not necessarily agree completely with either
Recommendation 1 or 2 at this point.
Responding to Mr. Miller's concern, Mr. Hansen said the $1.1 million up-front
money would not be taken from already-approved capital projects. Mr. Gleason
said the $300,000 payment by March 31 would be used to prepare bid documents
and was needed immediately in order to start work during this construction
season and to avoid cost increases because of delays.
Ms. Bascom asked whether plans to demolish the old terminal building and to
use a temporary facility would change design documents. Mr. Gleason said
staff recommended that the Airport Commission and the council not reopen the
question of design. He said configuration of buildings after negotiations had
left less space for staging than originally had been hoped for. He said a
cost/benefit analysis was being made to determine the best way to proceed.
Mr. Whitlow said no plan or need existed to redesign the project because of
the proposed single-phase construction.
Ms. Bascom asked about possibilities of alternate funding sources, such as a
toll booth and car rental tax. Mayor Obie said the idea of a toll booth had
received a negative response from subcommittee members and others, which he
attributed mainly to inconvenience. He also said he thought the County had
pre-empted the idea of a rental car tax. He said he knew of people who had
found it less expensive to fly to Portland and rent a car to drive to Eugene
than to fly into Eugene and rent a car. Staff said the County tax rate
e currently was 5 percent.
Mr. Rutan said he did not like the idea of a toll booth. He said he thought
the best sources of funds would be State and Federal, such as reinstituting
enplanement allocations from the FAA, establishing a passenger boarding tax,
and app lyi ng for lottery funds. He said he thought the largest challenge
would be addressing ongoing costs.
Mr. Gleason said an application was being submitted to the State for funds
from the IIStripperll oil settlement. He also said more aggressive efforts
would be made to collect fees and to increase ridership through marketing.
Ms. Wooten asked about proceedings of litigation with Lane County on $1.6
million in road funds. Mr. Gleason said the county commissioners had voted to
reconfirm support for their decision to grant the money to the airport
project. Mr. Whitlow said three issues were before the court: 1) whether the
City and the County had the legal authority to enter into an intergovernmental
agreement; 2) whether the agreement that had been signed actually reflected
the order passed by the board of commi ss i oners; and 3) whether statutes
allowed funds to be spent for specific improvements at the airport. He said
staff members felt comfortable with the first two issues, and he said City and
County legal advisers had approved the grant to the airport and were arguing
in its support. Mr. Whitlow said a decision on the issue was expected about
December 29.
e MINUTES--City Council Dinner/Work Session December 15, 1986 Page 4
Mr. Miller asked about the scope of the project. Mr. Rutan said the Porte
Cocheret or covered drivewaYt and an additional 30 feet of ticket lobby space
~ were included in the costs presentedt but he added that the lobby space would
.. be a bi d option. Mayor Obi e sa i d he agreed wi th the subcommi ttee
recommendationt and Ms. Bascom said she thought the Porte Cochere was needed.
Mr. Rutan said the subcommittee had reviewed costs in detail and had concluded
that all of the project was justified, on-targett and comparable to other
public or private projects.
Ms. Wooten expressed appreciation for the work done by the subcommittee and by
staff.
Ms. Schue asked about future roles of the Airport Commission and of the
subcommittee. Mayor Obie said he recommended dissolving the financing
subcommittee.
Mr. Hansen said he hoped customer problems would not be great during
construction.
Mr. Mi 11 er suggested that the counci 1 recei ve reports to keep informed of
construction and financing. Mr. Rutan said he did not favor trying to build
the terminal by council action, but he did favor some council input in order
to avoid disappointment with the finished terminal.
II. NUCLEAR FREE ZONE AMENDMENT
.
~ Mayor Obie suggested that he call a special session of the council t so that it
~ might spend four or five hours in early January discussing implementation of
the nuclear free zone amendment. He said applications for the board should be
sought about January 14-21. He asked staff to prepare a decision tree and
said he would raise the issue again on Wednesday for responses. He also said
he expected major legal issues to be answered by the time of the special
session.
The meeting was adjourned at 6:50 p.m.
.R~y/~
/ (-"'W -
Micheal D. Gleason,
City Manager
(Recorded by Leslie Scales)
mncc1215
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