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HomeMy WebLinkAboutCCMinutes - 04/21/04 WS MINUTES Eugene City Council Work Session McNutt Room--City Hall April 21, 2004 Noon COUNCILORS PRESENT: Bonny Bettman, George Poling, Nancy Nathanson, Scott Meisner, David Kelly, Betty Taylor, Gary Papd, Jennifer Solomon. His Honor Mayor James D. Torrey called the meeting of the Eugene City Council to order. A. WORK SESSION: Comcast Franchise Fee Review Franchise Manager Pam Berrian of Information Services joined the council for the item. She introduced Milo Mecham of Lane Council of Governments, Patty Boyle of Finance Services, and City Attorney Jerome Lidz, who were also present for the item. Ms. Berrian said the issue was governed by the City's franchise agreement with Comcast, a mutually negotiated contract outlining the conditions under which the cable company was permitted to make nonexclusive commercial use of public rights-of-way. The contents and enforcement of the agreement are governed by local, state, and federal law, and address things such as compensation for the private use of the public right-of-way, customer service standards, construction requirements and the like. Continuing, Ms. Berrian said the franchise fees were a percentage of revenue earned in the service territory. An unresolved dispute exists over a category of Comcast revenue earned in the local franchise service area. An independent financial review indicated Comcast underpaid franchise fees from advertising commissions and program launch revenues for a period of three years and a debt was owed to the City as well as to Lane County and Springfield because of their franchise agreements with the company. Comcast disputed the review's findings but the three jurisdictions did not accept the rationale offered by the organization. Because the dispute could not be resolved, staff was seeking authority from the council to enter into binding arbitration with Comcast in accordance with the franchise. She said the Metropolitan Policy Committee (MPC), which acts as the Cable Commission, would consider the matter in May. Ms. Berrian noted that the Lane Board of County Commissioners authorized County staff to enter into arbitration, and the City of Springfield had held an informational work session on the subject. Ms. Berrian reported that Comcast asked staff to delay initiating binding arbitration until one or more other municipal arbitration cases were resolved. She recommended against that because staff believed the review's findings were valid, a year had been spent attempting to reach resolution, and staff had yet to receive the third-party agreements Comcast had with other agencies that it requested. Additionally, other arbitration decisions could not be applicable outside the specific jurisdictions in question unless Comcast specifically agreed to abide by the decisions in those cases. There was no guarantee that would occur. Finally, the franchise agreement requires Comcast to reimburse the City for its arbitration costs if the City MINUTES--Eugene City Council April 21, 2004 Page 1 Work Session prevailed; Comcast does not receive compensation if it prevailed, but under Oregon statutes Comcast could attempt to collect those costs. Ms. Berrian recommended the council proceed with binding arbitration as being in the public interest. Ms. Bettman, seconded by Mr. Poling, moved to approve that binding arbitration be initi- ated as provided in the franchise, that the decision be relayed to the Metropolitan Policy Committee, and that arbitration costs be proportionately split between participating juris- dictions. Mayor Torrey called on the council for questions and comments. Ms. Bettman expressed appreciation for the background materials. She asked if Springfield would take action before the next MPC meeting. Ms. Berrian did not think so. She said that Springfield held a work session without providing specific direction to its representatives on the MPC. No motion was presented. Ms. Bettman determined from Ms. Berrian that the costs of binding arbitration would be divided proportion- ately between the three jurisdictions on the basis of franchise revenues received. Ms. Bettman did not think the legal costs should be predicated on proportionality, but because the amount was relatively small would not oppose the motion on that basis. She was prepared to support the motion because she thought the City should be a strong advocate for its contracts and its citizens. Ms. Taylor supported the motion for the reasons stated by Ms. Bettman. She asked if future franchise agreements could include the option of franchise termination. Ms. Berrian said yes, noting the franchise agreement sunsets in 2008 and renegotiations could begin as early as 2005. Ms. Taylor favored the inclusion of such an option in future agreements. Mr. Pap~ determined from City Attorney Glenn Klein that legal counsel supported the staff recommenda- tion. He further determined from Ms. Berrian that all three jurisdictions would participate in a single arbitration, as they hold identical but separate franchises. Responding to a question from Mr. Pap~, Ms. Berrian said Comcast assumed the agreement negotiated with the former franchise holder, AT&T. Federal law dictated the revenues earned in the service category, and that included launch revenues and advertising commissions. Comcast disputed what a third party received, but that third party is wholly owned by Comcast, which was the root of the dispute. She indicated there was some cross-over of underpayment between the current and previous franchise holder. Mr. Pap6 indicated support for the motion. Mr. Meisner indicated agreement with the remarks of Ms. Bettman and support for the motion. Responding to a question from Mr. Meisner regarding what recourse Comcast had under State law to pursue compensation for its legal costs, Mr. Klein said Oregon had a statute stipulating contracts which provide for prevailing fees to one party must also provide them to the other party. Mr. Poling determined from Ms. Berrian that staff recommended the three jurisdictions divide the legal costs in the event they did not prevail. Mr. Poling asked if the decisions reached in other arbitration cases could MINUTES--Eugene City Council April 21, 2004 Page 2 Work Session be used to give more weight to the City's arguments once arbitration between the three jurisdictions and Comcast commenced. Mr. Lidz indicated the City could employ other decisions for persuasive value, but they were not legally binding on anyone other than the parties subject to them. Mr. Poling said he had initially planned to oppose the motion as he did not think the net gain would be worth the damage done to a good corporate citizen. However, based on legal advice and the background materials, he would support the motion at this time. Ms. Solomon said she would not support the motion. It ~felt hostile" to her and was not business-friendly toward a good corporate citizen. Mr. Meisner said the City needed to enforce its agreements. He confirmed with Mr. Klein that the outcome of binding arbitration was legally enforceable. Mr. Meisner asked about the potential of an appeal. Mr. Mecham indicated the franchise agreement does not provide for an appeal. Ms. Nathanson agreed with the remarks of Mr. Poling. She appreciated Comcast's community contribu- tions, but the situation at hand regarded a specific contractual issue. Mayor Torrey agreed Comcast was a good community citizen. However, he believed it was in the best interest of both parties that the issue be resolved before the next franchise agreement was negotiated. The motion passed, 7:1, Ms. Solomon voting no. B. An Ordinance Concerning Multiple Unit Housing and Amending Section 2.945 of the Eugene Code, 1971 Mr. Taylor introduced the item, reminding the council that it recently adopted the Downtown Plan, and an important element to realizing the plan's vision was downtown housing. The Multiple-Unit Property Tax Exemption (MUPTE) was a tool to help stimulate downtown housing. Urban Services Manager Richie Weinman was present for the item. Mr. Weinman said the MUPTE was designed to induce new housing in downtown. Improvements were exempted for ten years while the land continued to be taxed. State statutes govern the MUPTE, and stipulate any development receiving the exemption must prove it would not have been built without the exemption. Mr. Weinman reported that the community had examples of developments that returned in taxes more the first year after the exemption ended than was foregone the previous ten years, had the project not been constructed. Mr. Weinman recalled the public hearing that was held on the ordinance and the ten people who testified in favor of the program. Four requested specific border modifications and two supported additional standards. Mr. Weinman noted the options before the council: Option 1 replaced the public benefits portion of the current application with one that referenced seven quality standards; Option 2 placed those quality standards in the preamble of the application with the expectation the applicant would address them; Option 3 retained MINUTES--Eugene City Council April 21, 2004 Page 3 Work Session the public benefits portion as is; and Option 4 did not require any additional standards above those current contained in the code. Mr. Weinman recommended Option 2. Ms. Bettman, seconded by Mr. Poling, moved to adopt Council Bill 4862, Option l(a), re- placing the ;;public benefits" portion of the MUPTE application with one referencing seven quality standards, adding new standards 8) ;;Designed for home ownership" and 9) %olici- tation of Comments from the relevant neighborhood association," and stipulating MUPTE applications must meet five of nine standards. Ms. Taylor asked how a developer would prove a project would not be built. Mr. Weinman said a financial analysis must be provided to the City. Ms. Taylor asked if the exemption would apply to vacant land. Mr. Weinman said the exemption applied to vacant land and already developed land. He cited cases where several small buildings were removed from a site and replaced with a larger building; the land continued to be taxed, but the small income from the three structures was taken from the tax roll over the ten year period. Ms. Taylor wanted to see a requirement that the projects constructed with the aid of the MUPTE have single rooms and studio apartments for low-income people. Mr. Weinman pointed out that each MUPTE application came to the council for approval and it could condition the incentive if it chose. Mr. Meisner said he wished to preserve the view shed before the Shelton-McMurphy Johnson House. He did not want to encourage development on the lot, and noted it was proposed for acquisition by the City at some point in the future. However, the lot still appeared to be in the boundaries on the maps before the council. Mr. Klein indicated the appropriate boundaries were reflected in Boundary Change Option C, and the lot would be deleted. Mr. Meisner, seconded by Mr. Papd, moved to amend the motion by substituting Option 2a for Option la, replacing the public benefits portion of the application with new language in the preamble, adding new standards 8 and 9, and including Boundary Change Option C. Ms. Nathanson supported the amendment. She determined that Mr. Meisner and Mr. Papd would accept a friendly amendment to the amendment to replace Standard 8 with "Number of units that are identified or designed for home ownership." Ms. Nathanson did not want to give applicants the impression the City was requiring that 100 percent of a project be designed for homeownership. Mr. Kelly opposed the amendment as he wanted to include the standards in the ordinance. He supported the original motion. He wanted to encourage downtown housing and wanted incentives that created good quality housing. Mr. Kelly said because each application was reviewed by the council, he wanted some sort of a ~floor" that each applicant must meet before the application reached the council to avoid creating a perception that the council was acting on an ad hoc, project-by-project basis. He did not think the standards in question were onerous and pointed out that not all needed to be met. Mr. Kelly said ifa project did not meet five of nine standards, he did not want to provide tax incentives for it. Ms. Bettman said she supported the MUPTE in the core because housing would not occur there without public assistance. She disagreed that the area in question was in the core of downtown; only some of it was. Since the City would be foregoing needed school and General Fund revenues to provide the MUPTE MINUTES--Eugene City Council April 21, 2004 Page 4 Work Session incentive, it needed to be targeted to what was needed, and that was downtown as opposed to the West University Neighborhood, which she termed a ~hot market for student rentals." Ms. Bettman said that if the council did not include the standards in the ordinance, it would not see high- quality housing in the area in question. She said that the City would be giving some developers an incentive and not others, and given the oversupply of rental units and the existing nature of the neighborhood, she did not think the City would leverage any owner-occupied or long-term residency there. She thought the motion was counter to what the council was attempting to achieve in the neighborhood. Ms. Bettman moved to amend the amendment to the motion by substituting Boundary Change Option D. The amendment to the amendment to the motion died for lack of a second. Ms. Bettman stated she would vote against the amendment. Mr. Papd asked if Mr. Meisner was willing to accept the addition of Boundary Change Option B and Boundary Change Option C as a friendly amendment to the amendment to the motion. Mr. Meisner said yes. Mr. Papd emphasized the fact all the applications would be reviewed by the council and he did not think the council would accept poor development. He thought the tool was one of the few options the City had to encourage housing in downtown. Mr. Meisner asked if developers had expressed interest in making MUPTE applications. Mr. Weinman said staff received informal contacts. At the request of Ms. Nathanson, Mr. Meisner described the impact of the amendment to the motion as it applied to the boundaries. Ms. Bettman said the Jefferson Westside Neighbors were promised there would be no extension of the MUPTE beyond Lincoln Street. She did not believe people living at 17th Avenue and Alder Street thought they lived downtown. She reiterated her previous remarks regarding foregone revenues. Ms. Bettman maintained the council would approve all MUPTE applications in spite of their quality. The developments would put a demand on City services without paying any taxes. Ms. Taylor thought the boundaries to which the MUPTE would be applied created less incentive for building in the downtown core because development on the fringe of downtown would be subsidized. The amendment to the motion passed, 5:3; Mr. Kelly, Ms. Bettman, and Ms. Taylor voting no. Mr. Kelly, seconded by Ms. Bettman, moved to amend the motion by revis- ing the MUPTE boundary to Boundary Change Option D. Mr. Kelly said if the MUPTE was a central city housing incentive, it needed to be applied to the center of the city. He said the City needed to be careful about the incentives it offered in tight financial times. MINUTES--Eugene City Council April 21, 2004 Page 5 Work Session Ms. Taylor supported the amendment as she thought it made the MUPTE less onerous. Ms. Nathanson said the area in question was a neighborhood in distress and the properties it contained were in decline. She noted the council's many goals for the neighborhood and its recent adoption of a report forwarded by the University of Oregon-City of Eugene Joint Task Force on the West University Neighbor- hood. She asked about the condition of housing stock in the area proposed to be removed from the MUPTE boundaries. Mr. Weinman said the area in question contained a considerable amount of substandard housing. There was also the potential of condominium ownership with the MUPTE. Ms. Nathanson noted the 2002 riots took place in the area in question. For that reason, she would probably not support the motion. Mr. Pap6 said that during graduate school, his daughter lived in the area in substandard housing. He said the MUPTE was a tool to help the City improve the area, and emphasized the council could reject an application if it did not believe the public would benefit. Mr. Meisner was inclined to support the amendment. He said that there were several multi-unit develop- ments constructed in the area without a subsidy, citing specifically the development at 14th Avenue and Hilyard Street. Mr. Weinman said that development was constructed with the use of the MUPTE. The alley project near 18th Avenue and Hilyard Street was not built with the assistance of the MUPTE, but he would not characterize it as high-quality development. Mr. Kelly acknowledged there was substandard housing in the neighborhood but did not think the council would be helping the neighborhood if it defeated the motion. He noted that the West University Neighbor- hood Association indicated its support for the MUPTE was based on the inclusion of the standards. The joint task force had recommended the MUPTE as a tool, but as a tool to diversify the housing stock. Without standards, the final decision on applications was ~up to the whim" of the council. Ms. Bettman supported the boundary reduction. She thought expanding the boundary would defeat the purpose of having the MUPTE downtown. Removal of the standards gave the council no leverage over housing quality. She feared that existing housing would be tom down to accommodate higher density housing in an already dense area. Ms. Bettman said the council should adopt housing standards if it was concerned about substandard housing. Ms. Nathanson pointed out that the standards were not deleted but merely placed in another part of the application. The applications would be evaluated by the council on a project-by-project basis to ensure the public benefit outweighed the temporary loss of tax revenue. The standards continued to exist; if a project did not meet the standards, the council did not have to grant the exemption. Ms. Nathanson asked staff if they had ever discouraged an application from coming to the council because it did not meet the standards. Mr. Weinman said no. Mr. Pap~ concurred with Ms. Nathanson's remarks. He wanted to see redevelopment of substandard housing in the West University Neighborhood and thought one of the ways to encourage that was through use of the MUPTE. MINUTES--Eugene City Council April 21, 2004 Page 6 Work Session Ms. Taylor questioned what proportion of the taxes on a two-story single-family large house would be applied to the land and which to the structure. Ms. Nathanson suggested the condition of the house was a factor. Mr. Weinman estimated a ratio of approximately 4:1 for the structure to land proportion. Ms. Taylor said the house could be in good enough condition to live in, but could be torn down to make way for a multi-family project, leading to the loss of needed low-cost rental property. Mayor Torrey said he would oppose the amendment in the case of a tie. The vote on the amendment to the motion was a 4:4 tie; Mr. Meisner, Mr. Kelly, Ms. Taylor, Ms. Bettman voting yes, and Ms. Nathanson, Mr. Pap6, Mr. Poling, and Ms. Solomon voting no. Mayor Torrey cast a vote in op- position to the motion, and it failed on a final vote of 5:4. Mr. Kelly expressed concern about the council's use of tax incentives. He said that it seemed the council had ~no restraint whatsoever" in its application of tax incentives. He said tax revenues were very limited, and the approach of %ome-one, come-all" could not be supported by the budget and he did not think it would be supported by the public. He hoped future councils exercised some discretion in their review of applications, but he would not have supported exemptions for about half of the projects that had already received the MUPTE. They were, at best, ~adequate" rather than distinctive and did not diversify the housing stock. He believed the public would get the wrong message, leading to defeat of money measures at the polls. Speaking to Mr. Kelly's remarks, Ms. Nathanson said that it was essential for the council to follow through on the goals it had for the West University Neighborhood and improve housing in that area and downtown. It would be a disservice to the community to do nothing. She said that for him to say the council had no restraint was a vast overstatement. She asked what percentage of the land area of the city was in question. She pointed out the City was not extending the exemption citywide, rather on a focused and targeted area that had been identified consistently as a place where the City wanted to see improvement. Ms. Bettman said she would vote against the main motion because of her previously stated remarks about lost revenues and subsidies to student rentals that would be built anyway. She did not think that condomin- ium development or home ownership was viable in the area given the current state of affairs. The City had taken no steps in the process to encourage quality housing or long-term residency. Mr. Meisner noted the council had modified the ordinance to target a specific area, and he hoped that meant something in the long-term. Mr. Meisner said future decisions about applications would be made by future councils, which might decide to deny applications on the basis of quality or location. He did not want to predict what a future council would do. The main motion as amended passed, 5:3; Mr. Kelly, Ms. Taylor, and Ms. Bettman voting no. MINUTES--Eugene City Council April 21, 2004 Page 7 Work Session C. An Ordinance Amending the Eugene-Springfield Metropolitan Area General Plan (Metro Plan) to Adopt as Part of Periodic Review Metro Plan Housekeeping Revisions; a New Metro Plan Chap- ter III-C: Environmental Resources Element; a New Metro Plan Diagram; Adopting Savings and Severability Clauses; and Providing an Effective Date Principal Planner Kurt Yeiter, Carol Heinkel of the Lane Council of Governments (LCOG), and Planning Director Susan Muir were present for the item. Ms. Bettman, seconded by Mr. Poling, moved that the City Council adopt Council Bill 4860, an ordinance amending the Metro Plan to adopt house- keeping revisions as part of Periodic Review. Ms. Bettman asked about the status of the Westmoreland School property. Mr. Yeiter said the Metro Plan Diagram represented the staff recommendation for both schools and medium-density residential zoning on the Westmoreland site. The neighborhood association's appeal to the Planning Commission was denied and had not been appealed further. The Hearings Official's decision was effective as of 5 p.m. on April 20. There was no further avenue for appeal. The Santa Clara School site was proposed for low-density development. He noted that School District 4J had indicated a preference for commercial zoning on the site. Ms. Bettman indicated support for the motion as the appeals process had been exhausted. Mr. Pap~ said he would have liked to have seen some amendments providing flexibility in the way services could be delivered, but he understood a different process was being employed for that. Ms. Taylor asked if the lack of further appeals meant there was no hope of public open space at the Westmoreland site. Mr. Yeiter said a public park could occur on a medium-density residential designation. Mr. Klein called the council's attention to an amendment to the findings proposed by Lane County. Ms. Bettman and Mr. Poling accepted the amendment as a friendly amendment to the motion. Mayor Torrey asked what the school district could do to secure the commercial zoning it sought on the Santa Clara property. Mr. Yeiter said the district could seek concurrent amendments to the Eugene- Springfield Metropolitan Area General Plan and neighborhood refinement plan. The motion passed unanimously, 8:0. The meeting adjourned at 1:08 p.m. Respectfully submitted, Dennis M. Taylor City Manager (Recorded by Kimberly Young) MINUTES--Eugene City Council April 21, 2004 Page 8 Work Session