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HomeMy WebLinkAbout09/25/1989 Meeting -' e M I NUT E S Eugene City Council Dinner/Work Session BJ's Restaurant--44 East 7th Avenue September 25, 1989 5:30 p.m. COUNCILORS PRESENT: Ruth Bascom, Shawn Boles, Debra Ehrman, Bobby Green, Emily Schue, Freeman Holmer, Rob Bennett, Roger Rutan. The adjourned meeting of September 20, 1989, of the Eugene City Council was called to order by Mayor Jeff Miller. 1. PACIFIC NORTHWEST NATURAL GAS FRANCHISE RATE RENEGOTIATION Tony Mounts, Finance Division, gave the staff report. Mr. Mounts said that as the City's franchise agreements have expired in recent years, the City has been increasing the franchise fees from three percent to five percent of gross reve- nues. This increase reflects the growing cost of maintaining the public way and represents a return on the public investment in the infrastructure. The City of Eugene currently has franchise agreements with US West, AT&T, TCI Cable, Pacific e Northwest Natural Gas, and Burlington Northern Railroad. Mr. Mounts explained that franchise agreements cover the use of public right-of-way by a private corporation. Mr. Mounts said that the City's existing franchise with Pacific Northwest Natural Gas was adopted in 1979. Section 10 of the agreement provides that lithe amount of the annual compensation shall be subject to renegotiation and redetermination at the end of the first 10-year period for the franchise term." The current fran- chise fee is three percent of the gross revenues earned within the city limits. Staff is proposing to increase the rate to five percent of gross revenue. Assum- ing the increase is effective in October or November, the rate increase will yield in excess of $100,000 this year. The rate increase is expected to yield approxi- mately $180,000 additional revenue for the General Fund per year. Mr. Mounts reviewed the franchise rates for natural gas companies in other Oregon cities. Rates for these cities were all at, or scheduled to become, five percent. Mr. Mounts reported that Pacific Northwest Natural Gas does not support the rate increase. The company is concerned about how the increase will affect its custom- ers and feels it has an obligation to avoid cost increases for their customers. The company also expressed concern that, because of clauses in franchise agree- ments with other small cities, it would have to increase the franchise rates in those cities. e MINUTES--Eugene City Council September 25, 1989 Page 1 Dinner/Work Session e Mr. Mounts said staff recommends that the City proceed with adoption of an ordi- nance amending the City's franchise agreement with Pacific Northwest Natural Gas to increase the franchise fees from three to five percent. He noted that revenue based on an increase in this franchise rate was included in the adopted FY90 budget. Mr. Mounts said that if the company chooses not to accept the ordinance, staff recommends that the City nullify tbe franchise and impose a five-percent utility tax after a 30-day waiting period. Mr. Sercombe explained that the Oregon statutes limit the City's ability to impose more than a five-percent privilege tax for utility companies using a public right-of-way without a franchise agreement. If Pacific Northwest Natural Gas decided not to accept the franchise agreement, the City is limited in the amount of tax it can impose in lieu of a franchise agreement. Mr. Sercombe said that historically the franchise fees have been set at three percent, because of a rule requiring utility companies to bury a franchise fee of three percent or less in their rates. A franchise fee greater than three percent can be shown on the company's bill as a City tax. Mr. Boles pointed out that sales of tariff-governed industrial gas is not included in the gross revenues and, therefore, is not taxed. He asked how much additional money would be generated for the City if this gas were included in the revenues. Mr. Holmer and Mr. Boles asked whether the two-percent rate increase will allow the City to recover the costs of maintaining the public right-of-way. They were concerned that the increase was not large enough. Mr. Whitlow said staff conduct- ed a very specific analysis of the costs of maintaining the public right-of-way e when renegotiating its franchise agreement with Pacific Northwest Bell. Staff found that a franchise fee of five percent did not cover the full cost of creating and maintaining the public right-of-way. Mr. Mounts said that if the company chooses not to accept the ordinance, staff recommends that the City nullify the franchise and impose a five-percent utility tax when the franchise expires. Mr. Sercombe explained that the Oregon statutes limit the City's ability to impose more than a five-percent privilege tax for utility companies using a public right-of-way. If Pacific Northwest Gas decided not to accept the franchise agreement, the City is limited in the amount of tax it can impose in lieu of a franchise agreement. Mr. Sercombe said that historically the franchise fees have been set at three percent, because of a rule requiring utility companies to bury a franchise fee of three percent or less in their rates. A franchise fee greater than three percent can be shown on the company's bill as a tax. Mr. Boles pointed out that tariff-governed industrial gas is not included in the gross revenues and, therefore, is not taxed. He asked how much additional money would be generated for the City if this gas were included in the revenues. Mr. Holmer and Mr. Boles asked whether the two-percent rate increase will allow the City to recover the costs of maintaining the public right-of-way. They were concerned that the increase was not large enough. Mr. Whitlow said staff conduct- ed a very specific analysis of the costs of maintaining the public right-of-way when renegotiating its franchise agreement with Pacific Northwest Bell. Staff e MINUTES--Eugene City Council September 25, 1989 Page 2 Dinner/Work Session e found that a franchise fee of five percent did not cover the full cost of creating and maintaining the public right-of-way. I!. DISCUSSION WITH NEIGHBORHOOD LEADERS REGARDING URBAN RENEWAL Members of the council and the Eugene Neighborhood Leaders Council introduced themselves. The following Neighborhood Leaders were present: Ada Joyner, Jan Gund, Paul Nicholson, Monte Marshall, Mary Bentsen, Jerry Finigan, Greg Calvert, Marcia Atwood, Brad Perkins, Karen Darling, Doris Traudt, Teresa Hanley, Rufus Hanley, Ken Carpenter, Mary Edgecomb, Ed Kashin, and Jan Wostmann. Ms. Ehrman said the council was surprised by the Neighborhood Leaders' resolution about urban renewal. She said the council invited the Neighborhood Leaders to this meeting to discuss their position on this and other issues, time permitting. Jan Wostmann made a brief statement on behalf of the Neighborhood Leaders. He said the group's resolution is not targeted at specific urban renewal projects but is based on the group.s general sentiment that the urban renewal program repre- sents a significant decision about how the City's resources are allocated over a long period of time and that it is appropriate for the voters to have input into how their tax money is allocated. Mr. Wostmann said the Neighborhood Leaders unanimously agreed that the council should refrain from incurring debts and pledging tax increment funds as payment without first gaining approval of the voters, and that voter approval should also be sought before the council expands current tax increment districts or creates new ones. Mr. Wostmann said this e resolution represents the group's commitment to grass roots democracy. Ms. Schue asked if the Neighborhood Leaders are primarily concerned with the length of time that funds are pledged to urban renewal projects, or with the amount of funds that are committed. Mr. Wostmann said the committee is concerned with both. Mr. Marshall added that it has been more than 20 years since urban renewal was initially accepted by Eugene citizens; the Neighborhood Leaders Council believes that the citizens should be given a chance to vote on the issue again to determine if public opinion has changed. Mr. Calvert said the group is also concerned about the revenue impact of urban renewal in Eugene over the past three years and about the discretion given to council to choosing what projects to allow. Another concern is whether tax increment financing is being used for appropriate purposes. He said the law enabling urban renewal specifies that it be used as a tool for addressing urban blight. Mr. Calvert said the blight of some of the areas for which the council has approved tax increment financing is questionable. Mayor Miller said one of the issues raised by this discussion is whether Eugene should be run as a representative democracy or as a grass roots democracy. He said he places a lot of faith in representative democracy and feels it works very well. Mayor Miller said that in grass roots democracy, negativism and emotions often influence the outcome of an issue rather than the rationality. e MINUTES--Eugene City Council September 25, 1989 Page 3 Dinner/Work Session e Mr. Perkins said the Neighborhood Leaders Council is concerned with the council's apparent lack of understanding that the group is a valuable resource. He pointed out that every year, the neighborhood organizations must plead for funding for newsletters. Mr. Perkins said the Neighborhood Leaders Council feels strongly that communication between the neighborhood organizations and the council should be strengthened. He said the group could also help process issues in the communi- ty. Ms. Bentsen expressed concern in City government, but said she does not feel that the City should earmark funds for development and exempt these funds from the normal budgetary process. Ms. Bentsen pointed out that the City has gone through some very agonizing budget cuts; this highlights the need to be very careful in how money is allocated. She said she would like to see the urban renewal projects go through the typical budget process in which all the needs of the City are weighed when determining how money should be spent. Ms. Ehrman responded that urban renewal projects do go through a budget process. She added that the Downtown Commission serves as the "neighborhood representative" of the downtown core and the commission requests projects in the downtown area just as neighborhood leaders request projects for the neighborhoods they repre- sent. Mr. Rutan noted that the council often hears the opposite sentiment to that being represented by the neighborhood leaders--namely, that the council has a public process that is too extensive and that the council uses this process to abrogate its deCision-making responsibility. Mayor Miller agreed. e Mr. Wostmann said the Neighborhood Leaders Council feels that because revenue for urban renewal projects is often committed for such a long time, these types of spending decisions should be ratified by the citizens of Eugene rather than by the eight elected officials serving on the council at anyone time. He said the NLC is comfortable giving council the discretion to approve or disapprove short-term (e.g., five-year) projects. Ms. Schue noted that many of the dowtown projects are joint public/private ven- tures. She asked if the Neighborhood Leaders discussed this issue and whether the group sees a reason to distinguish between this type of project and strictly public projects. Mr. Nicholson agreed that there is a distinction between these two types of projects but said the distinction is no reason to exempt public-pri- vate projects from the public process. Answering a question from Ms. Ehrman, Neighborhood Liaison Christine Donahue said that the Neighborhood Leaders have received presentations about urban renewal and tax increment financing. Ms. Atwood expressed dissatisfaction with the summary information that the group received. She had hoped for more detailed information about specific projects and the amount of money spent on those projects. Ms. Atwood said many citizens feel that urban renewal money, which is public money, is spent in ways that benefit some Eugeneans more than others. She said that as long as this feeling continues, the council will see resistance to urban renewal projects in general, regardless of the merits of the projects. Ms. Atwood e MINUTES--Eugene City Council September 25, 1989 Page 4 Dinner/Work Session e said the Neighborhood Leaders Association believes that it can playa valuable role in getting positive information about projects to members of the community. She said that if citizens have this type of information, they are more likely to be accepting of projects. Ms. Atwood added that if the council is interested in making the City's representative democracy work it must be willing to respect the decision of the voters even if their decision runs counter to the desires of the council. Mr. Calvert agreed that the urban renewal information given to the Neighborhood Leaders was inadequate. He described the information as paltry and propagandis- tic. Mr. Calvert said he would like to see information about how urban renewal funds have been spent over the past 20 years, how the urban renewal projects have affected taxes in the area, and whether urban renewal has accomplished what it was intended to. Mr. Wostmann submitted a copy of the information about urban renewal and tax increment financing that the Neighborhood Leaders received. Mr. Wostmann reiterated that the Neighborhood Leaders Council unanimously agreed that the voters should be consulted about the projects that are funded by tax increment financing. He said that there is disagreement among members as to the appropriateness of tax increment financing in general. Mr. Calvert said the original proposal made by Ms. Bentsen was to phase out the central Eugene project, while keeping the device of urban renewal projects for other purposes. Ms. Schue asked whether the City could have tax increment financ- ing without an urban renewal district. City Attorney Tim Sercombe explained that if the urban renewal agency were terminated at this point, the tax increment e district would continue to be enforced and would continue to collect increment to pay the indebtedness of the Eugene Renewal Agency for several years. If, however, the Eugene Renewal Agency were terminated and the urban renewal plan were aban- doned, there would be no new projects on which to create indebtedness for the purpose of tax increment financing. Mr. Marshall made a plea for more comprehensive planning. He noted that the percentage of the City budget devoted to planning has declined over the past several years. Mr. Marshall said the lack of long-range planning in Eugene affects the quality of life here. Mr. Bennett supported Mr. Marshall's position. He expressed his disappointment that the update of the Metro Plan was abandoned and said he hopes to see this decision reversed. Mr. Nicholson said he remains unconvinced that urban renewal and tax increment financing have worked for downtown Eugene. He challenged staff to collect hard evidence showing that these tools have triggered development in downtown Eugene. Mr. Bennett said he firmly believes in urban renewal and feels that it is a very successful development tool across the country. He added that rather than reaf- firming its commitment to urban renewal, the community needs to reaffirm its commitment to downtown. Mr. Bennett said he believes that Eugene's downtown is a special part of the community and should be given preferential treatment to other parts of the community. He stated his belief that urban renewal triggers develop- ment in the downtown core that would not otherwise occur. e MINUTES--Eugene City Council September 25, 1989 Page 5 Dinner/Work Session ---- e Mr. Holmer endorsed Mr. Bennett1s position about the virtue of urban renewal as a process and about the importance of downtown. He said he believes, however, that the citizens of Eugene should share in the decision making about urban renewal projects and tax increment financing. Mr. Boles agreed, saying that urban renewal should not be used in a vacuum. Mr. Marshall said that while councilors express strong support for maintaining the viability of downtown as a commercial center, the City's planning documents facilitate regional shopping centers and other dispersed commercial development. He said the City's support of decentralized commercial activity undermines the viability of downtown as a commercial center. Mr. Marshall used Salem as an example, stating that Salem has prohibited regional shopping centers within its urban growth boundary. As a consequence, downtown Salem is distinctive as an urban commercial center. Mr. Marshall reiterated that better long-range planning would help address these contradictions. Ms. Bascom pointed out that Salem has used urban renewal extensively. She said the council has consensus that urban renewal is a good way to bring about the downtown development it desires. Mr. Nicholson pointed out that Seattle has a thri'ving downtown core and that this was developed without using urban renewal or tax increment financing. Mayor Miller pointed out that Washington's taxing structure is very different from Oregon's and that this affects the ability to facilitate downtown development. Ms. Schue said that downtown Eugene will probably never be the commercial center of Eugene. Rather, it will be the government and business center of Eugene, with related commercial uses. She said Eugene has a very good chance of success in e developing this type of a downtown. Mr. Calvert urged councilors not to give up on a downtown that is commercially and culturally lively. He said currently downtown Eugene is disappointing and that urban renewal might have contributed to its fa 11 ure. Mr. Perkins agreed that Eugene should not content itself with developing downtown as an office center. Mr. Boles urged councilors to consider the Neighborhood Leaders unanimous recom- mendation that voters be given an opportunity to ratify long-term expenditures of tax increment funds as well as expansions and creation of urban renewal districts. Mr. Holmer said he would like the council to discuss its relationship with the Neighborhood Leaders Council at the next council goals session. Mr. Marshall said that this meeting had been very beneficial and expressed a desire for the council and Neighborhood Leaders to meet more regularly. The meeting adjourned at 7:10 p.m. R?;;.:;.P~~~~~~;~1p tt ""'"!'f'""""..' !rr~.. ..... /' .~ ..... ~ Mic al Gleason City Manager (Recorded by Tanya Northman) e MINUTES--Eugene City Council September 25, 1989 Page 6 Dinner/Work Session ---- e MNCC 092589-530 e e MINUTES--Eugene City Council September 25, 1989 Page 7 Dinner/Work Session