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HomeMy WebLinkAboutCCMinutes - 01/28/04 WS MINUTES Eugene City Council Work Session McNutt Room-City Hall January 28, 2004 Noon COUNCILORS PRESENT: Gary Pap6, Nancy Nathanson, Scott Meisner, David Kelly, Betty Taylor Bonny Bettman, George Poling, Jennifer Solomon. His Honor Mayor James D. Torrey called the meeting to order. A. WORK SESSION: Transportation Financing City Manager Dennis Taylor stated that the work session was a continuation of the conversation on transportation funding and an outgrowth from the joint meeting held on this subject with the Lane Board of County Commissioners and elected officials of other jurisdictions in Lane County. He said the work session was intended to get council direction on the response the City should give to the County. He introduced Kurt Corey, Director of the Public Works Department, who spoke on the issue. Mr. Corey noted that on numerous occasions the department had provided a well-documented need to reduce the backlog of deferred maintenance in the City of Eugene. He said there had been similar difficulties in the operating side of the Road Fund. He briefly highlighted the recent developments authorized by the City Council and legislature to implement two new revenue sources, the gas tax and the transportation system maintenance fee (TSMF). He stated that several projects had been completed with this revenue. He recalled the council's decision to repeal the TSMF in late 2003. The board had requested specific feedback in three areas from individual cities pursuant to the joint meeting held in November: 1) To the extent that Lane County would agree to share the new money from House Bill 2041, also known as the Oregon Transportation Investment Act (OTIA) III, under what formula should the distribution of those dollars be made to the cities of Lane County? 2) Do the cities within Lane County, specifically Eugene and Springfield, have a willingness to participate in looking at an operational efficiency audit by an outside consultant? 3) What recommendations might the City have as far as other potential revenue sources? Mr. Corey stated that there would be a presentation to the Budget Committee on broader Road Fund issues on February 18. He said that absent an infusion of new money, the operating side of the Road Fund would be up to $2 million out-of-balance in fiscal year (FY) 2005 and the capital preservation side would be up to $6 million out-of-balance in that fiscal year. He estimated that the new OTIA funding to be received by the County could amount to $1.4 million per year and depending on the funding formula, as yet to be determined, the City would stand to receive approximately $700,000 per year. Regarding additional revenue sources discussed at the County level, Mr. Corey said a countywide gas tax could yield $620,000 per year and a potential vehicle registration fee increase could yield up to $4 million per year to Eugene. Mr. Corey stated, regarding the OTIA III distribution formula the City would recommend to the County, that the County commissioners had suggested a strong consideration for sharing the new revenue with the cities. He anticipated no more than a two-year agreement with the County at this point as the federal timber legislation from which the County Road Fund was derived was slated to expire in 2006 and the subsequent ability to provide this fund would depend on the reauthorization of the bill. Mr. Corey summarized the three formulas for funding distribution developed by County staff: the formula based on road miles within jurisdictions; a population-based formula; and a combination based on an average of the two. He conveyed the staff recommendation to support the latter as the cities of Springfield and Eugene would benefit most from the population-based formula, the outlying communities would benefit most from the formula based on road miles driven, and the formula that averaged the two was most likely to attain the greatest amount of support. Regarding the operating efficiency audit, Mr. Corey noted the specific areas that commissioners thought represented partnering opportunities with other jurisdictions, such as engineering costs, sign shops, and signal electricians. He said an audit had been conducted two years earlier within the City in order to improve efficiency, adding that the City did operate at the present time under a number of partnering agreements with Lane County and the Oregon Department of Transportation (ODOT). He felt there was no doubt that the City could conceivably benefit from taking this broader look and conveyed the staff recommendation that the City participate in the funding of an external review. Mr. Corey stated that the countywide gas tax and fee increases were outlined in Attachment E of the council packet. Mr. Meisner said it was true that the TSMF had been repealed at a time when there had been a push by the Chamber of Commerce and members of the Board of Commissioners to initiate a petition drive to repeal it. He remarked that the resulting gas tax was characterized by the Eugene Weekly as an unfair tax. He expressed interest in the countywide gas tax, but stressed that it had to be at a level that reimbursed the City for the amount it was receiving from its current gas tax. He also supported the countywide increase in vehicle registration fees, stating that it would "go a long way toward filling the gap." Mr. Meisner averred the formula for distribution of any countywide tax needed to be automatic and not a tax collected by only the County and distributed upon approval of an application for funds. Ms. Taylor was pleased by the cooperative atmosphere in the joint meeting of the County and its cities. She supported the formula that averaged miles driven and population base. She did not feel that more discussion was needed, but rather the County was seeking support from the City. She thought the populace would be more amenable to the vehicle registration fee increase than a TSMF and would support it on a ballot. Mr. Kelly agreed with Ms. Taylor. He called the conversation regarding the shortfall in transportation funds "slow." He supported making a proposal to the board in order to make a strong statement. He approved of the first two staff recommendations, but felt the third one needed to be strengthened. Mr. Pap6 concurred with Mr. Meisner that a formula for funding allocation needed to be established ahead of time. He supported the countywide gas tax, but cautioned the council to take care that it did not exceed a threshold wherein voters would not support such a measure. Ms. Nathanson agreed with all three staff recommendations. She said it was important to keep talking with the County and to keep moving forward on the funding. She supported the direction that staff had taken on this issue. In response to the question of how Lane County could assist the City, she had the following recommendations: 1) Share money that was already available; 2) initiate a countywide solution that would help the County and all of its cities; 3) Support individual efforts in cities that wish to control their own destiny by assisting, support- ing, or acknowledging that some things needed to be done locally. Regarding the amount that the City should ask for, Ms. Nathanson said it was yet unknown what sort of funding would be designated for this. She advised against designing a solution based on what was predicted to happen two years from now. She felt the main question was how quickly the City would make progress on its backlog of road maintenance. Mr. Poling concurred with the comments made. He thanked the County commissioners, officials, and staff for the work done at the joint jurisdictional meeting. He felt that, with support from the cities, the County and the Eugene Area Chamber of Commerce, progress could be made. Ms. Bettman approved of the formula based on an average of the miles driven and population. Ms. Bettman asked if the City received OTIA moneys directly. Mr. Corey estimated the OTIA money that would come to the City of Eugene to be $900,000 to $1 million per year. Ms. Bettman adamantly opposed any new transportation taxes. She read aloud from the audit and asserted that the City had enough existing revenue from different sources to put together a "healthy sum" to address the existing problem and the backlog. She said that the Metropolitan Policy Committee (MPC), staff, and community leaders chose to spend the money on new road projects rather than on preserving existing roads. She noted that the State had doubled registration fees. Mayor Torrey agreed with the recommendation with one exception. He said he did not want a process that would take two years to get an answer. He recommended identifying a few key areas that would produce "good results" and that it should take no more than 120 days. Mayor Torrey urged the council to go to the meeting and convey that the City had a $6 million problem and that the City was prepared to work with the County to achieve an answer to the problem. He was willing to look at the gas tax but asserted that it would need to make sense to the City of Eugene. He supported looking into an increase in registration fees. He stressed the importance of coming forward willingly to take a portion of the General Fund money for spending on transportation. He averred that if in the end the City needed to cover what was not there, the City should go back to the TSMF passed in the previous year and either submit it to the voters or pass it and face a potential referendum. He conveyed his willingness to look at every possible solution to the problem the council faced. Mr. Kelly agreed that it would take time to "knock down" the backlog. In response to a question from Mr. Kelly, Mr. Corey explained that of the $9 million that was recom- mended by the citizen members of the Budget Committee, $3.5 million was necessary to address ongoing need and $5 million was requested to keep the backlog from increasing. Eric Jones, Public Affairs Manager for the Public Works Department, stated that the numbers that were used at the time of the last analysis and presented to the Budget Committee were likely to be updated for the February 18 presentation. He recalled that the numbers from the previous analysis were that the current problem amounted to $67 million that would, with no treatment, grow to $231 million, and that the annual application of $9 million would have brought the backlog of road work to $40 million after ten years. Mr. Kelly suggested that a motion be made that required adequate funds to keep the backlog from growing. With respect to the efficiencies that might be found, Mr. Meisner also felt two years was too long for a study. Noting that the City had a sign shop, he asked where the efficiency would lay. He recommended looking at areas where the need was greatest. Regarding the County Road Fund, Mr. Meisner stated that the figure in the house bill was yet unknown, but unless the City made it clear that it would support the bill if it had a distribution formula, it would approve a reauthorization from which ;;70 percent of the County would see no benefit at all." Mr. Meisner asked what percentage of vehicles registered in the county belonged to city residents. Assistant City Manager Jim Carlson stated that the law required the County to distribute at least 40 percent of the revenue from registration fees, but the population was the best indicator for the percentage. Mr. Meisner responded that 40 percent was too low. Ms. Bettman agreed with comments made by Mr. Meisner regarding the assurance that there would be a distribution formula for the revenue. Regarding the County gas tax and motor vehicle registration, she felt the County did not need more money, but rather should spend the money it had differently. She reiterated that spending should be concentrated on preservation and maintenance and not on new projects. She noted that the County had spent $1.8 million on a new bridge to Buford Park that was too wide. Ms. Taylor agreed that the bridge was excessive. She opined that the priority should be on maintenance and not new construction. She thought the increase in vehicle registrations was fair as people had to vote on it. Ms. Taylor reiterated her opposition to the TSMF. Mayor Torrey commented that all people use the transportation system whether they had cars or not. Mayor Torrey related the following question he wanted to ask the County Commissioners: ;;Assume the County did not have the funds that come from timber receipts and the County was in exactly the same situation as every city in Lane County, what methodology would you use to maintain roads?" Ms. Bettman, seconded by Mr. Poling, moved to direct the City Manager to send a letter to the Lane County Administrator consistent with the staff recommendations and to include some specifics, that enough funds would be created to keep the back- log from growing and filling the shortfall; any gas tax should at least maintain the current level of City funding; a possible different allocation for current Road Funds from the County; looking at registration fees specifically, a new County source should have an automatic allocation formula. The motion carried unanimously, 8:0. B. WORK SESSION: Roosevelt Yard Property Acquisition City Manager Dennis Taylor asked Mr. Corey to speak to this item as well. Mr. Corey stated that the purpose of the session was to brief the council on the Roosevelt master planning effort and to provide the information requested subsequent to the Supplemental Budget 1 process. He referred the council to page 1-4 in the chapters of the master plan. He explained the yard facility was located at the southeast comer of Roosevelt Boulevard and Garfield Street and presently housed the majority of Public Works staff, equipment and materials. Most of the buildings were constructed in the 1940s, having formerly been occupied by the Lane County Public Works Department. He stated that the City had purchased the property in 1978 and had invested a considerable amount of work into upgrading it. He said there was an initial facilities plan prepared for the site in 1989, and updated in 1991 and 1995, contemplating property purchases in the adjacent areas. Currently, 216 employees work out of the Roosevelt Yard site. Mr. Corey described the remaining parcel that the Public Works Department sought to purchase, 4.8 acres of leased commercial warehouse property that currently generates $160,000 per year. He reported that the negotiated purchase price was $1,625,000, a market-based price arrived at in an appraisal prepared by a locally certified, mutually agreed upon appraiser. Mr. Corey underscored that the policy issue before the City Council was the necessary council approval for the interfund loan. He explained that the financial aspects of the proposal involved funding from five different funds: General Fund; Fleet Fund; Road Capital Fund; Stormwater Fund; and local Wastewater Fund. He said approximately $515,000 had been identified as an available cumulative fund balance, but the balance of just over $1.1 million would remain and was proposed to be paid with a loan from the Fleet Reserve Fund, with proposed repayment over a course of three years to be offset by the lease revenue. The budget action's effect on service delivery would in general lower the balance available in the two-month operating reserves in the funds. He said the exception to this was the approximate $35,000 General Fund component, which would be absorbed by the Parks and Open Space existing service budget for that period of time. Mr. Corey added that the Road Capital Fund would be impacted by approximately $40,000 per year for three years and that fund was derived from interest earnings and ending balances from completed projects. This specific proposal would not affect the proposal to be made in the annual budget on the operating or capital sides. He related that the Stormwater Capital Fund would be impacted by approxi- mately $15,000, reflected as a lesser balance available carried forth in the budget. Mr. Corey added that after three years, the property would bring revenue into the budget until it was developed for use. Mr. Corey called the property purchase an opportunity, noting that the seller was willing and the price would only rise from this point. He stressed that the financial impact was manageable and the funding was dedicated and not available for other areas of City government. Ms. Bettman, seconded by Mr. Poling, moved to authorize the City Manager to move forward with the purchase of the property as soon as possible using the fi- nancing plan described in the Agenda Item Summary (ALS) and to include the interfund loan and other necessary appropriation changes for the purchase in the next supplemental budget. Mr. Pap~ remarked that in difficult budget times, this property purchase was not a high priority for him. He called it a presentation ~in a void." He said he would like to look at the whole picture prior to approving such a sizable purchase. Mr. Meisner underscored that there were two questions before the council, that of the interfund loan and that of an implicit approval of the master plan. He asked if the rent revenue was gross or net. He concurred with Mr. Papa's statement that this was not a priority. He felt that not enough was known about the future of Public Works, whether the City would partner with the County, if the City would purchase or contract for equipment to do its work, and how much space it would need. He did not object to the interfund loan or the mechanics of the loans, nor did he question the appraisal. Ms. Taylor voiced her agreement with Mr. Pap6. She opined that if it was known that the land would be needed in ten years, the decision would be simpler. She reiterated the need for efficiency in government services. Ms. Bettman concurred that the acquisition was not a high priority. She questioned the assertion that 40 employees would be added to Public Works by 2024. She called this assumption false, given the fact that the City was not intending to expand services. She also questioned the need for the acreage, noting that the master plan had called for approximately 3-1/2 acres less land than the property offered. She did not feel the City had the ability to take advantage of the opportunity at this time. Ms. Nathanson said it was not her top priority either, but the organization needed to take care of its business. She recommended taking advantage of the opportunity before it was taken away. Mr. Pap6 left the meeting at 1 p.m. Ms. Nathanson averred it was a centrally located site and could be desirable to other local agencies. She felt the City could ultimately share the site, stating that the site had not yet shown all of the promise of what it could be in the future. She expressed hope that an investment could be shared with other partners. Mr. Kelly said he was ;;struck by sticker shock." He felt Mr. Meisner's point regarding finding efficiencies with other agencies was well-taken. He commented that appropriate sharing should be proposed and that the master plan could change. Mr. Corey reiterated that the General Fund money under consideration was in the baseline Public Works budget and would not be taken from other City programs. Mr. Kelly could not support using any Road Capital Funds for the purchase given that road preservation and maintenance was a high council priority. He noted that the council had also voted not to increase the Stormwater Fund level. Ms. Solomon thanked Mr. Corey for the clarification on this issue. She felt the information provided had addressed the questions the councilors had raised. She supported the motion, stating that it was important for the City Council to be flexible in order for staff to be flexible. She agreed that opportunities for space- sharing could add to the City's revenue. Mr. Taylor stressed that, should the motion not be adopted, the opportunity to acquire this property and at this price would be lost. He encouraged the council to support the motion. Mr. Poling agreed the property acquisition was an opportunity that should not be passed up. He also felt the property could bring revenue to the City. He supported the motion. In response to a question from Mayor Torrey, Mr. Corey stated that the most critical need for space was for the fleet facility, currently projected out for three years according to the master plan. Mayor Torrey urged the council to seriously consider purchasing the property. He pointed out that the worst thing that could happen as a result of the purchase was that the council could realize it needed the money and then sell the property and take advantage of the upside of the valuation of the property. He stated that the property would, in effect, represent a reserve, and opined that a reserve was not a bad thing for the City of Eugene to have. Mr. Kelly opined that he could not imagine that the property would be purchased and then sold. He reiterated his opposition to the motion. In response to a question from Mr. Kelly, Mr. Corey stated that the seller was the Giustina family. Ms. Nathanson asked what percentage of the budgets the money requested for the purchase represented. Mr. Corey estimated that the $1 million reserve would drop by $35,000. Ms. Nathanson responded that it was a small amount. She cited the City Manager's indication that the organization could observe this and maintain City operations and services to the residents and called the purchase a "good move." Ms. Bettman called the benefits to the purchase "speculative." She reiterated that some of the assumptions were incorrect. She alleged that the land in that area cost $120,000 to $140,000 per acre. She felt the price the City was being asked was "extraordinary." She did not think it could be resold for the amount the City had offered to pay for it. Mr. Meisner agreed the property was over-priced, stating that he had spoken with owners and appraisers in the area it was located. He reiterated that he would need to know what the net income from lease revenues would be prior to making this decision. He asked who would be liable in the case of a fire. Mr. Meisner stated that $105,000 per year over three years out of the General Fund would pay for a lot of staff work. Mr. Taylor assured the Mayor and City Council that the City had used professional appraisers. He underscored that the strategic issue was the maintenance of the facilities and infrastructure. He asserted that it was not unusual for a municipality to purchase property and then not use it for up to 20 years. He said, regardless of what future needs would be, the purchase was consistent with the City's long-term planning. Mr. Corey stated that the net figure for lease revenue was $160,000 and this was subject to lease renegotiation. Regarding insurance, he said coverage on the facilities would be similar to other buildings owned by the City. Mr. Meisner expressed concern that homeless people used the buildings and asked what the City's liability would be should an indigent person be injured or killed on the property. City Attorney Glenn Klein stated that the lease would need to be examined in order to determine whether it required that the lessee or occupant carry liability insurance. Mr. Meisner conveyed his discomfort regarding the unknown level of responsibility the property held for the City. Ms. Solomon emphasized that the City had used professional appraisers agreed upon by both parties. Ms. Solomon asked Mr. Meisner if he would prefer to table pending further information. Mr. Meisner affirmed this to be so. Mayor Torrey declared he would not second-guess the City staff who had conducted the appraisal. He commented that a simple amendment could make the lease failsafe. He agreed that liability was a major concern, but stressed that the City had staff who dealt with leases all of the time. He reiterated his confidence that these issues could be resolved. Ms. Bettman reiterated her previous concerns. Mr. Meisner asked staff to provide a history of the updates to the master plan and who approved them. Mr. Meisner, seconded by Mr. Poling, moved to table the motion until February 9, 2004. The motion passed, 5:3; Ms. Bettman, Ms. Taylor, and Mr. Kelly voting in opposition. Mayor Torrey adjourned the meeting at 1:28 p.m. Respectfully submitted, Dennis M. Taylor City Manager (Recorded by Ruth Atcherson) MINUTES--Eugene City Council January 28, 2004 Page 8 Work Session