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2000-48-Minutes for Meeting January 20,2000 Recorded 1/31/2000VOL: CJ2000 PAGE: 48 RECORDED DOCUMENT STATE OF OREGON COUNTY OF DESCHUTES *02000-48 * Vol -Page Printed: 02/01/2000 09:50:28 DO NOT REMOVE THIS CERTIFICATE (This certificate constitutes a part of the original instrument in accordance with ORS 205.180(2). Removal of this certificate may invalidate this certificate and affect the admissibility of the original instrument into evidence in any legal proceeding.) I hereby certify that the attached instrument was received and duly recorded in Deschutes County records: DATE AND TIME: DOCUMENT TYPE: Jan. 31, 2000; 8:19 a.m. Regular Meeting (CJ) NUMBER OF PAGES: 16 MARY SUE PENHOLLOW KEY UN EOD DESCHUTES COUNTY CLERK FF Jz000 00 JAN 3,' AH 8: ) 9 MARY SUE F HOLLOW COUNTY 'C'L _RK MINUTES /� �� MEETING OF DESCHUTES COUNTY BOARD OF COMMISSIONERS, DESCHUTES COUNTY FAIR BOARD, AND DESCHUTES COUNTY FAIR ASSOCIATION Thursday, January 20, 2000 3:00 p.m. Present were Deschutes County Commissioners Linda Swearingen, Tom DeWolf and Dennis Luke; County Finance Director Marty Wynne; County Legal Counsel Rick Isham; and Deschutes County Administrator Michael Maier. Also present were Fair Board members Jim Diegel, David Bishop, Duane Hought, Don Miltenberger and Neil Davis; and Fair Association members Elton Gregory, President; Barry Slaughter, Rachel McIntosh and Ross Rogers, Directors; and Diana Barker, Alex Brander, Ron Nelson and Chris McMullen, Budget Committee. Also in attendance were Greg Lynch, representing the Fair Association; Jason Moore, The Spokesman Newspaper; Jan Volz, The Bulletin Newspaper; Marcy Tretheway and two other Deschutes County Fair staff members; and Ben Norton, an interested citizen. ELTON GREGORY: The first budget process has just been completed, first with the County and then with our own Board, and it was a challenging process. The Fair has signed the Motor Coach Association venue for 2001 and 2004, and several issues need to be resolved prior to this very large event and prior to other venues. We are also looking at some old issues to be resolved, such as campgrounds and horse facilities, that are causing immediate problems in other venues. These are above the level of the bond issue and these needs cannot be met. The issues of marketing planning and long-range planning also need to be resolved. I would like to see resolution to current problems and set up future goals and planning; I want to see all parties work on the problems collectively. Communication has been lacking, perhaps because everyone has been very busy. Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 1 of 16 LINDA SWEARINGEN: For the agenda today, the group should go by what was listed on the letter Elton Gregory had sent out calling for the meeting. GREG LYNCH: It has become apparent that long-range planning is needed, and issues that keep occurring must be resolved. Everyone must work together to create an opportunity to make the facility what it was intended to be, avoiding adversity and negative press. I have been talking with Elton and Alex about a number of issues that affect the Fair Association. It is apparent that there is a need for the various entities to get together for long-range planning, which could go a long way to resolve the issues that seem to be coming back over and over again. When Elton and Alex asked what they should do to solve this, they told me they need to work on their budget right now. It seems to me that they should be working together with the Board and the Commissioners to put together a strategy to do a number of things. One of these would be to retain the services of an outside consultant, if necessary, to come up with a marketing strategy. They should also do some market research to see what the facility can do in terms of income, how best to market the facility; and come up with some sub -committees to look at the facilities and take advantage of some of the resources available right now. Linda Swearingen has a background with the Chamber of Commerce, and Dennis Luke has a background as a contractor, and may be able to come up with a preliminary idea in terms of costs for marketing and building maintenance, short-term and long-range. Once all of this information has been retained, a realistic budget that makes sense can be developed. You'll know what is needed in the way of revenue, and everyone will know what the facility can do and how best to do it. People need to look at various alternatives for its administration and management. All parties need to be on the same page and going in the same direction. The Fair Association is committed to this approach, and has an obligation to the citizens, the Commissioners and the Board; and the Commissioners and the Board have an obligation to the Fair. I recommend putting the budget on hold until the groups can come together, as a consensus is needed first. Regrouping is appropriate at this time, with the immediate concerns regarding expenses and a funding strategy being addressed. Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 2 of 16 MIKE MAIER: Greg mentioned developing an accurate budget, is this one not accurate? GREG LYNCH: The budget was done without benefit of long-range planning and an accurate, professional assessment in regard to income potential. MIKE MAIER: Are we are close to or within budget at this time? GREG LYNCH: Yes, we are within budget, and in terms of where we are financially relative to the documents Mike has, I don't feel there are any problems This is not a pretext to asking. for more money, if that's what you're thinking. But we need to address capital improvements, as this is a big issue that could generate a lot of money for local communities. ELTON GREGORY. The matter with the Family Motor Coach Association is a good example of what can happen to throw your budget off. What is the process involved for the Fair Association to get future funds as the need arises, borrowing or a line of credit or what? GREG LYNCH: This needs to be professionally analyzed to see if potential items should be budgeted or purchased early, and there is a need to plan or do a study prior to involvement with certain venues, that is, strategic planning. You don't wait until the last minute to budget or plan for these types of items. MIKE MAIER: I agree that such planning should take place prior to getting involved so you know what your capabilities are, and you will know what you need to save up or borrow. Some key items with financial implications need to reach closure before going on to the next task. The Kirby Nagelhout matter is key, as well as the southern property sale. There is a big difference in the dollar amounts that need to be looked at so planning will be accurate. Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 3 of 16 GREG LYNCH.- I don't feel these have to be resolved prior to planning, although they may affect the bottom line. Based upon my involvement with the Nagelhout and Arnett matters, I haven't seen the dissention that has been published. The positions of the County and the Association are in agreement. MIKE MAIER: It is just the bean counter in me coming out; it would be nice to know how much money you have in the bank. GREG LYNCH.- I spoke with Kirby's attorney yesterday and today; Kirby says there was a snag with Garco. I would like to meet with Kirby and Garco together to hash out the issue. This should produce a settlement or will at least clarify the issue. I feel we'd have been sued if they had a strong enough claim. I met with Max Merrill regarding the Arnetts, and the land issue was never clarified, and it is not as simple as all parties think. They should look at where they were and regroup; that the Arnetts feel they have a right, but it wasn't even clear what land was included in the sale; and there were some significant land use actions involved in the issue as well. I told Max Merrill that the sale won't happen at $800,000. This could drag out for months or years, even though the Arnetts did not ask for specific performance, only actual damages. The City has complicated matters a lot, especially in regard to the Arnett situation, which I hope is resolved soon. MIKE MAIER: Closure needs to be reached on these issues before making significant financial commitments. GREG LYNCH.- The critical issue is on the table, and must dispel any rumor or idea of an adversarial situation between the Board of Commissioners and the Fair Association. Outside help is needed to develop goals and strategies to be able to address the needs of some of the larger venues. Too much negative energy has been generated, and it's time to go on record to say that we should work together. These are our thoughts. Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 4 of 16 LINDA SWEARINGEN: Of the eight items listed on the agenda, one of them is to review any budget concerns and establish a line of credit needed from February through June. I have looked at the budget and you are projecting a shortfall. Has that changed? GREG LYNCH: It isn't so much it is a shortfall as it is that there is going to be a need for some money for things like the parking lot. ELTON GREGORY: The line of credit needed that is shown on the budget will have less income at that time than we will have bills. After that we will have kicking in what we already have scheduled, which is pretty typical of an operation that started in July with a major source of income on a convention center, which. are typically booked a year or two or three in advance. It is fairly atypical of an entity starting with only a budget based upon revenue and no source of income from anywhere else. We frankly expected a half million dollars in revenue by this time; and in fact we are in the black, based upon donations. MIKE MAIER: The budget presents that you are in the black until March Is', like around $100. ELTON GREGORY: We're on track and feel very good about what is happening right now. In fact, the revenues appear to be good for this month and within budget. Since that budget was done, we've taken in a number of new activities that weren't on the schedule at that time. MIKE MAIER: Is this money that has come in on deposits on future activities? ELTON GREGORY.- That is correct. They are non-refundable retainers, not a liability. The only one we have where we have to provide some kind of guarantee is the Motor Coach event; we have a contract for 2,000 rooms. The other is the parking lot, which we'll need to get done. Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 5 of 16 GREG LYNCH: There has been no establishment of a line of credit, and no commitment on a line of credit at this point. This is one option that was being considered, but no one has made any commitments in that regard for obvious reasons. ELTON GREGORY. Can we get some direction in how to go about doing this? Should the Board or the Fair Association do this? It is agreed that long-range planning is needed, the Fair Association Board does not want to run the facility and run the Fair. Professionals are needed to give us the information we need to make sure it is being done right. We must use our County Board, and they must know what is happening. The County needs to be involved and informed. We want help with the administration, so we can host the events with a marginal number of people. We're living off revenue, and we won't be able to, -live off revenue for a few of those months. RICK ISHAM: What are your fixed monthly operating costs? ELTON GREGORY.• (Asked Marcy Tretheway for details. Some discussion ensued.) Eventually an average amount would be about $96,000 per month. There are some uncertainties regarding heating, electrical use and other costs since we don't have a winter to use as a basis yet. MARCY TRETHERAY.- There is no history established yet, and there won't be until we have been in operation a year. At this point we are trying to track expenses and predict as well as we can. ELTON GREGORY: When some contracts are renegotiated, we will then have a better idea of what to charge the events. Some in the past have been undercharged while others were overcharged. Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 6 of 16 BARRYSLAUGHTER: Building maintenance should not be a factor at this time as most components are under warranty, but it will be a factor later. LINDA SWEARINGEN: It appears there is a projected shortfall of about $100,000. Is this figure accurate? MARCY TRETHEWAY.• It is correct. Right now, as of the first of the year, with cash carryover we're better than expected. Some of this is due to acquiring more deposit funds from one particular event. We realized it earlier than expected. At this particular time as far as cash carried forward at the beginning of the year, we are actually better than expected because we obtained $20,000 more than what was required of them. LINDA SWEARINGEN: Is it good to use deposits for cash flow,'since that's tomorrow's revenue? Do you have some sort of methodology on what you spend; and what if bookings go down? ELTON GREGORY.- We know this is true, but we don't have a choice right now. We hope this changes through continuing cash flow eventually. We'll know more when we have a full year scheduled. MARTY WYNNE: According to your budget, it looks as though you started with $75,000, and have a $75,000 contingency; which means your cash carryover for the next year should be $75,000. ELTON GREGORY.- It correct for this year, we didn't increase the contingency mainly because we plugged in the maintenance budget and the capital projects budget which we never had before. We hope that next year we can add to that, and we feel everything is in place. (He then discussed upcoming events, activities and marketing opportunities in which they are currently involved.) Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 7 of 16 MIKE MAIER: What about the items that need to be in place - a marketing plan, a capital expansion plan, a business management plan, and a long-term financial plan. Is that where you are headed? Is some outside assistance needed? ELTON GREGORY.- We are looking into some of those avenues, as soon as a first draft of our business plan is completed. If we like what we have, we'll then have a professional look at it and make recommendations. MIKE MAIER: Perhaps Commissioner Swearingen could help in this regard. LINDA SWEARINGEN: I do not personally have the expertise .to runtan expo center, and I suggest as before that an outside expert be hired who has had some experience in running an expo center, and put together an operating�performa, a business plan and a marketing plan. We all have the best of intentions here but I don't think anyone in the room has the expertise to honestly stand before the rest of us and say they can do it properly. I would rather see us spend a little money, even if the County has to foot the bill, to get some expert advice and help to make sure our assumptions are accurate. ELTON GREGORY: I feel we have put together enough information so that someone could take a look at it and really give some good feedback. (He then discussed long-term plans for additional facilities, referring to a wall aerial map of the Fairgrounds area.) DAVEBISHOP: I feel the County's offer is a good one. There are several trains on the track now, and every one has different issues and there have been some stumbling blocks along the way that may or may not end up in court. I totally disagree that issues should be solved piecemeal. This group should not be addressing the items as they are in such minute detail; and the three groups need to be setting policy and should use this opportunity to bring in outside help. Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 8 of 16 Fair employees are spending a terrific amount of time and energy adopting a new software program, but if the Fair must be a public entity, a team should be built to analyze if this software is appropriate. We all need to come back to set strategies and policies to address the bigger issues as we move forward; there is enough blame for everyone. We cannot wait for the Kirby and Arnett issues to be resolved; we need to be able to meet payroll or lay off people. We need a parking lot and campground to secure the Motor Coaches venue; a half a million dollars or more. The clock is ticking and funds are needed. We need to focus on the big picture. This is my second meeting with the Association, the County and the Board, and I feel there seems to be a lack of communication. An executive board is needed to strategize, as it is a waste of the energy of all the people in this room to keep doing this type of meeting. TOMDEWOLF. I do not consider what Linda Swearingen said an offer; she is speaking for herself only. There are no specifics to back it up and there's not necessarily a consensus of the Board of Commissioners. A group does need to come together to address the issues. Meetings of a smaller number of people in a work group are needed to deal with the important issues. In addition, frankly, everyone deals differently when the press is present. A smaller work group to bring back recommendations to the larger group should be able to put everyone on the same page. DA VE BISHOP: I feel Linda Swearingen's offer was understood to be helpful but I realize she needs Board approval. MIKE MAIER: Perhaps the County can offer assistance as needed, maybe Planners and others if appropriate. GREG LYNCH: I think I'm hearing "let's get to it". (General discussion ensued regarding this idea.) Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 9 of 16 LINDA SWEARINGEN.- When will the Fair be out of money? ELTON GREGORY.- The committee could go to work immediately on two issues, the budget and the Motor Coach venue. They need about $400,000 for the parking lot as soon as possible, or they will have to cancel. The lack of structure has caused the Fair Board to assume some things; we are not used to reporting to anyone. We grabbed the bull by the horns and got into some trouble by not asking the County first. LINDA SWEARINGEN: When will you be out•of money, since that's the deadline from which you say you need to get something, ELTON GREGORY.- We will be out of money next month. We can handle one more payroll and bills, with February 15th being the final date. LINDA SWEARINGEN. Does that mean on February 15th you are out of money? ELTON GREGORY.• Yes, we are right on plan, where we projected. MIKE MAIER: Does this includes the $20,000 the County added, since the budget reflects $16,024 in February? NANCY TRETHEWAY.- Additional expenses have come in that offset the $20,000. ELTON GREGORY.- There have been a few surprises - equipment and supplies for the year ordered by personnel when they weren't supposed to. But at least later in the year we won't have to worry about this equipment and supplies. Anyway, we would like the group to meet the first week in February. Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 10 of 16 RICK ISHAM: Perhaps one person from each group instead of six or seven people - a smaller group - would be more appropriate, especially in view of the timing. BARRY SLAUGHTER: Three people maximum should get together to decide on the money situation. LINDA SWEARINGEN: I suggest that one of the County Commissioners, one Association member and one Board member meet and put together a proposal to bring back to the larger group. Marty Wynne has several questions to ask that we would need to be able to work through. We have a problem in that the County cannot sign for a credit line; it is illegal to do so. One of the problems we have internally is that we would probably�have to call back the Budget Committee to put something together. GREG LYNCH: This may be a moot issue, and it is too soon to do this until the situation is evaluated. It is my understanding that the Association was looking at different options in order to cover what is available in case certain things didn't work out. A line of credit was one available option. MEMBER (unable to identify): What is the time frame for the County to make a financial commitment to cover that expense - the process and the time line? DENNISLUKE: If the number is over a certain amount, we have to go through a supplemental budget process. The Budget Committee would have to meet. The County's budget process has just been started, and gets very busy. We don't know how much money you want or need, and you don't do just a month at a time. DAVE BISHOP: Are there are discretionary funds that are available for the short- term? The only person who is going to show up at this building in 25 days will be Elton Gregory, and he will have to bring a flashlight because the lights will have been shut off. We, as a three -party entity, need to take care of what's needed here. Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 11 of 16 MIKE MAIER: If the County Board chooses to access general fund contingency money, it can do so for a short period of time, but much depends on the amount of money. DENNIS LUKE: Is this a gift, or will it be paid back after the Fair? There is a consideration as to whether as a policy we are going to put general fund money in the operations budget of the Fair. This is a policy discussion. How would these funds be repaid? DAVE BISHOP: Is the Fair Board Association Board prepared to go to a private entity if it can't be obtained from the: County? GREG LYNCH: This may not be an appropriate question to ask at this time. One of the Commissioners has stated that they feel it is not legal to do so; although Mike Maier said there is a contingency fund that may be used. LINDA SWEARINGEN $75,000 is one thing; but if it's $400,000 that's another story. GREG LYNCH.- The $400,000 relates to other issues that are longer term. LINDA SWEARINGEN: Take a look at the budget. Elton said the budget is accurate, and we're looking at $150,000 to $200,000 at a minimum should everything happen as planned. GREG LYNCH: You wouldn't have to make a decision on that by February 151h MIKE MAIER: If this committee is put together, perhaps they will be able to come up with a number and bring it back to the Board for consideration. Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 12 of 16 RICKISHAM.• I would like to clarify one thing regarding the line of credit issue. The Fair Association is a corporation, and a public entity is prohibited from guaranteeing the debts of or investing in a corporation. Consequently, if you were to go to a private entity, what Linda is saying is that we cannot sign a guarantee for a line of credit with a private entity. I do not know what your assets are to pledge for a private borrowing or what kind of financial data would be required, but I presume it would be a fairly rigorous test. The problem is that if the Fair was to go for private financing, the County can have no role in that. GREG LYNCH.- The Fair Association never intended the County to be a part of that. We understand the County would not be a player. MARTY WYNNE: A private lender would look at the same cash fl6w'statement that we are examining. It also shows that you don't need more than.$12,000 until April I". But now it appears that you need $75,000 in two or three weeks. I would suspect that part of the issue would be that you need a line of credit up to the time of the Fair of at least $225,000 to $250,000. DAVE BISHOP: If this committee finds that certain amounts are due by certain dates and brings these numbers before the Commission, is the Commission supportive of that; or, will the Fair Association be willing to create a line of credit? As I said, 25 days from now, Elton, you will be the only one here with a key and a flashlight because everyone else will be laid off and the lights will be shut off. The clock is ticking. DAVE LYNCH: There is a partnership the three entities, with the Fair Association having the contractual responsibility to manage the facility. At the same time the County is a partner as is the Fair Board. The answer should be obvious, that is, all of us individually and collectively will do whatever is reasonably necessary to make sure that this outfit is managed correctly, which includes paying bills. Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 13 of 16 r- - - - - - - - - - - RICK ISHAM.• The delegation for operation does not come from Deschutes County but from the Fair Association, under state law. GREG LYNCH.- What I mean is all have a commitment to the facility. The first step is to seek a committee to make recommendations early enough to address the immediate problems. DENNIS L UKE: We are elected officials, but we must look to staff before making commitments, and we need full information. DAVE BISHOP: We are asking for your willingness only. DENNISLUKE: We are always willing to move forward with this. DAVE BISHOP: If the County is not supportive, we'd like to know now. DENNIS L UKE: The County is supportive of the concept, but we cannot go beyond that without further information. TOMDEWOLF: Why is it we are here on the 201h of January when it appears you aren't going to be able to make payroll after February 15th? If any financial commitment is requested of me, I'm going to want to know that whatever steps we collectively agree to are made with the assurance that this is going to work. I am not sure that these issues can be resolved within three weeks. There are a number of things that came up today that draw a whole lot of red flags. Government doesn't move very quickly, but works because issues are gone through thoroughly and deliberately. Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 14 of 16 DENNIS L UKE: Just to clarify, the group needs to meet right away. Marty Wynne has questions that need answers, and our County Administrator and Legal Counsel have questions as well before we can be properly advised. You don't operate thirty days at a time. We have to know what is being asked of us before we deliberate and make that decision. DAVE BISHOP: Is twenty-five days is unrealistic? If so, the Association may need to pursue other avenues. MIKE MAIER: I might suggest that you do both at the same time to cover the bases, as the information required will likely be very similar. LINDA SWEARINGEN: I am willing to serve for the County, perhaps David Bishop will serve as a Fair Board Member, and. Elton Gregory and his staff are willing to serve as well. (It was decided the first meeting would be held next Monday, January 24th at the Fair Building.) ELTON GREGORY. I am out of town next week, but Marcy Tretheway will attend in my place. RON NELSON: I can attend the first meeting as well. BARRY SLAUGHTER: When will the group hear of any decisions made? LINDA SWEARINGEN Minutes will be taken, and copies need to be provided to everyone after each meeting. Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 15 of 16 The meeting adjourned at 4:55 p.m. DATED this 20`h day of January 2000 by the Deschutes County Board of Commissioners. Attest e- yr, Lin wearingen, Chair Dennis R. Luke, Wcqe C air Tom DeWolf, CommINZner Minutes of Meeting of County Board of Commissioners, Fair Board and Fair Association January 20, 20000 Page 16 of 16