Loading...
2000-962-Minutes for Meeting October 09,2000 Recorded 10/19/2000VOL: CJ2000 PAGE: 962 RECORDED DOCUMENT STATE OF OREGON COUNTY OF DESCHUTES *02000-962 * Vol -Page Ptinted: 10/20/2000 10:56:21 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: Oct. 19, 2000; 4:48 p.m. Special Meeting (CJ) NUMBER OF PAGES: 29 MARY SUE PENHOLLOW DESCHUTES COUNTY CLERK KEY NC D 0C*0 2000 C 96w� MINUTES MEETING OF MEMBERS OF DESCHUTES COtl ffj 19 PH 4: 48 FAIR BOARD AND OTHERS ��� �� r' ;;l f F_!r .COUNTY CLERK MONDAY, OCTOBER 9, 2000 DESCHUTES COUNTY FAIRGROUNDS ADMINISTRATION BUILDING REDMOND David Bishop, Chair of the Deschutes County Fair Board, opened the meeting at 4:05 p. m. Present at the meeting were David Bishop, Don Miltenberger, Lee Smith, Jim Diegel and John Leavitt, Deschutes County Fair Board; and Deschutes County Commissioners Linda Swearingen and Tom DeWolf. Also in attendance were Mike Maier, County Administrator; Rick Isham, County Legal Counsel; several representatives of the media; and citizen Charles Brewer. BISHOP: We have a quorum here. We have a termination agreement, to be executed between the Deschutes County Fair Association and the Deschutes County Fair Board; and an assumption agreement that is proposed. These are in draft form. (Copies were distributed.) First thing, Mike Maier and I met with Charlie Brewer and others of the Columbia River PRCA Circuit to find out if we can honor the contract that the Fair Association has executed to host this event. With that in mind, one of the provisions of the contract is that we, the community, are to pay them $75,000 up front to get the even up and running. That's improbable. What Mike, as a County Administrator, has suggested and is willing to approve is to encourage the PRCA to do it on their own; and Mike committed the facility for three days for no cost to them. They're going to have to go out and promote it on their own and host it on their own, and they are going to have to take all financial risk on their own. Minutes of Meeting: of Representatives of the Fair Board, Page l of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 BISHOP: We've encouraged them to move forward, and it's an embarrassing situation having a customer here like this, being treated like this, and unfortunately it is just a series of calamities. MAIER: In the agreement that has been drawn up, includes arenas 9, 10, and 11; it would include a room here with a telephone for Charlie to do his promoting; and the facility will be available prior to the event for setup. There was a concern regarding tickets currently being sold; we agreed that the funds would go to the PRCA even if this were not a break-even situation. DIEGEL: Do we know how many tickets have been sold? ISHAM: That's a little bit of a problem, knowing how many were sold. BREWER: All we can do is base it on the $82,000 which they showed we had on our financial statement given to us last year. DIEGEL: So we have no way of figuring out how many tickets have been sold so far this year. BISHOP: That can be delineated from Ticketmaster, and there are 450 tickets still blocked, showing as sold, that haven't been sold because they are the seats that people paid $500 a year for, and they won't drop back into inventory until the 19th. So, what we hear will be overstated. MAIER: The other thing that we discussed for which we didn't have an answer was regarding the concessions. Minutes of Meeting: of Representatives of the Fair Board, Page 2 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 ISHAM: There are basically four concessions. There's High Desert Management, which is the caterer. Then there's a event concession contract, which I gather is everything but pop, but may include pop; the exclusive pop distributor is Pepsi. Then there's another contract for beer, which I believe is from Coors. The relationship between the concession contract and the Pepsi contract is unknown. The Pepsi contract actually is not in writing; it was a proposal that has some notes marked on it, and everybody has worked as if that were a contract. MAIER: Regarding the arena, we will make sure the dirt is in there, and we will assist with the setup - chutes and things like that. We'll provide whatever assistance possible with existing staff. We aren't in a position to guarantee hiring more people, because we don't know what's going to be in existence at that time; but we've promised that whatever staff is here will provide assistance. I thought it was a good meeting, and I think that Sam and the other folks are very supportive and easy to work with. They want it to be a success, and they want to come back here. This contract applies just for this year, not for future years. ISHAM: Probably by late Wednesday we will have an initial draft to circulate and review. BISHOP: Do we need any action on this? 1 If possible, maybe this Board can approve Chair signature of the contract once it is completed. They want to get started, and you wouldn't have to meet again on this. DIEGEL: I move to approve staff recommendation that we authorize the Chair of the Fair Board to execute the appropriate documents at the appropriate time. SMITH: I'll second that. LEAVITT: When will that be? Minutes of Meeting: of Representatives of the Fair Board, Page 3 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 SMITH: There will be some costs involved, obviously. Normally those would be covered by rent, but we're giving up the rent. We're donating those variable costs to make sure this successful. I have a concern regarding the ticket sales. The problem is I need access and control of the tickets now. I need to be able to sell them and commit them. We also need to clear up the issue with the concessionaires so I can proceed. BISHOP: You're speaking of the tickets that are printed here to take elsewhere? DEWOLF: This is a Ticketmaster outlet? BREWER: Yes. Any other outlet would hold on to the funds for the tickets they have sold. The only ones I'm worried about are if someone buys a ticket here with cash, where do the funds go? BISHOP: Mike gave him his word that he would make good with the integrity of the ticket sales. Ron Nelson should be able to give you access. Does Ticketmaster take their amount off the top? BREWER: I think so. BISHOP: Please talk with DCFA today to make sure. We know you need access to the tickets. DIEGEL: I move to approve staff recommendation that we authorize the Chair of the Fair Board to execute the appropriate documents at the appropriate time. SMITH: Second. VOTE: Unanimous "ayes". Minutes of Meeting: of Representatives of the Fair Board, Page 4 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 BISHOP: Now for the second motion. DIEGEL: I recommend that the Deschutes County Fair Association cooperate fully with the PRCA in regard to ticket sales. LEAVITT: Second. VOTE: Unanimous "ayes". ISHAM: Contracts that exist will continue under the assumption agreement, and we may be required to deal with them. The Fair Board needs to look at the commission arrangements in this particular instance. There's either a 10% or a 20% markup that the Association has with these on-site concessionaires. If he's required to go with the existing vendors, since he is a full risk promoter here, the markup should go to the PRCA. BREWER: We have to split this with the Columbia River Circuit. Why must I deal with the previous vendors? You are giving me full rein on the building; why are you insisting I have to deal with whatever vendors were set up before. BISHOP: We don't know the terms and provisions of the existing contracts. There may also be OLCC requirements out of our control as well. We don't know which contracts we're going to assume, which ones we're not, which ones we'll re-edit. MAIER: I thought that was clear with Sam. We cannot make deals regarding the contracts, only the facilities. BISHOP: Does everybody have a copy of Draft 2? There are two agreements, the assumption and the termination agreements. The first one is a three-part agreement that is called the assumption agreement. The last two pages are called the termination agreement. Minutes of Meeting: of Representatives of the Fair Board, Page 5 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 DIEGEL: Rick, did you draft these documents? And have they been reviewed by legal counsel of DCFA? ISHAM: Yes on both. DIEGEL: Have you received any commentary? ISHAM: Yes. There are three main issues. The first is the assumption agreement dealing with running the 2001 Fair. The issue is that it is limited to one year; a desire to have a more positive statement, more of a "shall" instead of a "might". The second issue is with respect to the budget, although it was stated in a way that I think goes beyond a reasonable expectation. Basically, that the budget be guaranteed or in a fixed amount. The third issue deals with retainage of some of the property of the Fair Association, although that was not quantified. I don't know to what extent, but I was told the keeping of some property so they'd have enough to set up shop so they could get ready to run the Fair. S WEARINGEN: What do you mean by that? ISHAM: I don't know. I told Greg that one of the problems is the public versus Association assets were mixed. In fact, we've had some difficulty tagging and inventorying for County purposes all the stuff that was purchased with bond funds. I know from time to time, just based on statements, that somehow stuff that was purchased with public funds were perceived to be Association assets. I told Greg to send me over a copy of the inventory list, which I don't believe exists. If it did exist, there would be some difficulty in determining what is truly an Association asset. Realistically, in the environment we're dealing with here, all of their assets would be insufficient to cover the outstanding liabilities and future costs and the rest. Those were the three issues. I think on the third one, that will clarify itself hopefully within short order. The sort of guarantee of funds is more problematic. Minutes of Meeting: of Representatives of the Fair Board, Page 6 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 ISHAM: What I told Greg was that I think they need to view themselves as if they do a good job in 2001, then they'll prove to everyone that the Fair is a great event that the Fair Association has historically sponsored and put on, and why would anyone want to change that. They are definitely looking for more of a commitment in that area, though. BISHOP: I want to thank Rick for taking the bull by the horns and getting this done; as Greg Lynch promised it would be done a week ago tonight, and it wasn't. Thanks very much for stepping forward. This is the fourth meeting in the last ten days or so that this group has set to entertain this, and I know you've been working a lot of long hours. ISHAM: After I spoke with David this morning, I made two changes. The first change was in Section 4, I added the words that they would "operate the Fair under a license". I thought that was a good clarification because David had expressed a concern as to what the relationship of the Fair Board would be to the Association if it was operating the Fair. I think it was a valid concern that we needed to create appropriate separation between the Association and the Board when the Fair is being operated. The terms of that license agreement would be to come. The other change was a clarification with respect to Paragraph 2, where I added a sentence. I did not send this out, but I'll just tell you what it says. It says, "nothing in this agreement shall be construed to obligate the Board to pay any obligation, liability, or liability of the Association arising from the Association's activities undertaken by the Association not acting as an agent of the Board." That came from a discussion where it was clear under certain circumstances that the Fair Association is not necessarily in all things it is doing acting as an agent of the Board. Although it may not be clearly defined in everybody's mind when those different activities - where you're an agent and where you're not - if something clearly arose where it was not an agency type of activity, but clearly a corporate activity that they were entitled to do on their own with no supervision from the Fair Board whatsoever, then fine - they can be responsible for that wholeheartedly. Minutes of Meeting: of Representatives of the Fair Board, Page 7 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 SMITH: I have a question. A statement says "the Board agrees to assume and pay all lawful liabilities incurred by the Association acting as an agent of the Board", and the Board doesn't have money to do that. Up above it says "obligations of the Board set forth in this agreement are subject to the appropriation of funds in the Deschutes County budget". I would assume, too, where it says we agree to assume and pay all of these things, would be subject to accrual and appropriations of funds in the budget process. So those two are linked. ISHAM: Correct. MAIER: On #5, does that mean that all the revenues and all of the expenses associated with the Expo Center and the Fair will be run through the County budget? ISHAM: In conjunction not only with this assumption agreement, but also with respect to the Fair, the proposal is that these will be budgeted within the County. Nothing in this agreement prohibits the Association from using their funds somewhere else. The terms of that license agreement will determine how we account for cash and funds through the Fair activities. SMITH: You are proposing that in the first sentence of #4, the Board agrees that the Association will operate rather than shall operate? ISHAM: They are proposing that they want basically a guarantee on that. Interestingly they weren't concerned about the subject to, but they wanted the stronger statement on the front end. The reason I used the word "may" was, that when everything comes to rest at some point, they may not want to. If they sign this and say "shall" and they start to self-destruct, they may create a future liability for being unable to perform. MILTENBERGER: This takes all of the property and everything away from the Association. I wondered if they can sign this without having a stockholders' meeting. Minutes of Meeting: of Representatives of the Fair Board, Page 8 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 ISHAM: I read the by-laws, which say that without a stockholders' meeting they cannot sell real property. There are two interests that relate to real property. One is a power of appointment on the old fairgrounds, which is a result of a deed from the City of Redmond to Deschutes County. That power of appointment is probably of questionable validity and may not be an interest in property. In other words, it's a contingent right to direct property. The executory interest that was reserved in the three -cornered agreement between the Deschutes County Fair Association, the Fair Board and Deschutes County, relates to an executory interest valued at the value of the contributed old fairgrounds property. That is a contractual right at this point, and is not a property right. So that doesn't require the stockholders to meet. The problem with that very issue is that it would probably be, under the best of circumstances, it would take some time for the stockholders to meet and approve it. Certainly the Board of Directors, under the circumstances, can approve the assumption agreement. I put in here that they have to approve it by resolution of the Association and meeting with a quorum present. This means they would, in essence, adopt a proper resolution authorizing the signature of this document. I kind of struggled with that myself. I don't know what it takes to pull the stockholders together for a meeting. DEWOLF: Can it be done by proxy, quickly? BISHOP: I think that's the normal course of the way they do business. On the assumption agreement, a couple things need to be addressed, on the payables and the contracts. I've been in two different meetings I've had since Friday, either with vendors or payables, or potential customers who have a contract here. If we meet with these individuals - maybe not all of them will be the same - the net financial difference to this facility is significantly improved by meeting with them, one of which is PRCA. Today I met with Cameron Clark and part of his contract and/or claims may go away; it may not. The ball is in his court. I've also talked with Columbia River Bank, and there may be some attractive terms available on the repayment of that indebtedness. Minutes of Meeting: of Representatives of the Fair Board, Page 9 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 ISHAM: First of all, this group has no responsibility for the financial situation of DCFA. Ultimately that is going to fall on the Commissioners' shoulders anyway. If you want our recommendation and blessing on this, I'd like to see a specific, agreed- upon list of payables to move up to you so we can say that every one of them has been contacted and these bills are legitimate; and any contracts that are out there to be operated have been analyzed. There may be contracts out there that in the best interest of this facility to pay back their deposits and/or cancel the event. If you want the final say-so and want us to do handle the due diligence in inquiring about them, it's probably incumbent upon us to negotiate with them. We can't go in and totally take over the indebtedness, but it would be like someone inquiring about assuming someone's mortgage position. We don't need to know the details and the collateral and that kind of thing, but there is a lot of work to be done to identify what the financial challenges are or are not going to be. Mike and Rick, maybe staff can help us with this. SWEARINGEN: How much of this will occur prior to them signing the transfer and assumption agreement? DEWOLF: From my perspective, we need to get the Fair Associations' agreement to these two documents. That is the next step. Without that, there is nowhere to go. At that point, we can do the rest. People who have performed in the past and have money due from past services or products need to be paid. If there are other things out there that are still to be dealt with in the future, those are the ones I want to know the details about, especially the larger creditors and agreements. ISHAM: David brings up a good point. To do this in the most commercially reasonable way, you would have a list of each creditor. I got a fax this morning from an Association employee, and attached to that fax was her overtime claim. She said there are other employees who have unsettled claims for overtime. She also said that over the last week or so that a number of other bills had come in. She said the ones that she had seen were approximately $14,000. Apparently these are new ones. So there is a little bit of uncertainty with respect to these undiscovered liabilities. And there are other things that could be filed, even if they aren't legitimate. We may end up with defense costs even if ultimately it is not our responsibility. Minutes of Meeting: of Representatives of the Fair Board, Page 10 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 MAIER: How do you handle this, timing -wise, when you want to get this thing signed tonight? You can't start digging until you have an agreement. ISHAM: I heard that they aren't meeting tonight, that they put it off until tomorrow. SWEARINGEN: You mean to tell me that they're not going to meet tonight even though the money shuts off today. Are they all going to show up here tomorrow without any money? Are they going to allow their employees to continue working, and carry on business, without an agreement between the County Fair Board and the County Commission, and no money? BISHOP: Yes, they couldn't care less about the timeliness of this agreement, I'm sorry to say. SWEARINGEN: That's $2,500 a day. I can't believe this. BISHOP: Linda, this is the fourth meeting that this group has set and re -set to entertain this kind of agreement. We're not there, and they're not either. SWEARINGEN: I should be talking with the Fair Association and not with you, but the cash register is continuing to move forward. They're backwards. DEWOLF: To be fair, we don't know anything. The only person I've spoken with today from the Fair Association is Ron Nelson, who was under the impression that there was a meeting scheduled tonight. When I talked with Greg Lynch, their attorney, he said he didn't think there was going to be a meeting tonight. I asked him what happens tomorrow. He said that he believed they would be meeting tomorrow, and it would be signed tomorrow. He was under the assumption that he and Rick were very close and that everything would be resolved. There are 15 directors of the Fair Association? We can't speak for all of these people, and it's unfair to do so, because we don't know what information they've been given, either, by their leadership. Minutes of Meeting: of Representatives of the Fair Board, Page 11 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 SWEARINGEN: But, Tom, they do know that the money runs out at midnight tonight. ISHAM: The motion that the Board made, so as to not interfere with the operation of the Fair Association, was that to the extent that they did not have sufficient revenues to cover payroll for the period October 1 through October 9, that the County would, as a grant, give them, subject to a written grant agreement, up to $20,000 to cover payroll so that no employee would suffer the fate of being unpaid for labor that was contributed to the Fairgrounds. DEWOLF: And the reason we had this draft agreement in their hands Friday was with the assumption that they would meet over the weekend, which is why this meeting was set for 4:00 p.m. today. ISHAM: And they did discuss it over the weekend, as Greg said he talked with a number of the different Association board members. SWEARINGEN: So do you believe they are going to meet tomorrow? ISHAM: I don't know. SWEARINGEN: They can't keep their employees coming to work when you don't have the money to pay them. It's not right. It's not fair. BISHOP: Frankly, to allow this kind of business strategy to continue is wholly giving them to run amok in their management style. The money that they assume that they are perhaps going to cover this indebtedness for a few more days of salary probably is the revenue for Charlie's tickets. Or spending cash from some other resource. To allow this to continue, this Board is participating in that irresponsible management style. SMITH: I agree with that. I think we need to cut it off. Minutes of Meeting: of Representatives of the Fair Board, Page 12 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 BREWER: That's what scares me, from the standpoint that this big event coming in November. But also on the 14'h I've got 200 kids coming for a peewee rodeo. Just like Linda was saying, if these people show up tomorrow morning and discover they aren't getting paid, they'll walk off. Can I be in that building Saturday night, that's my question. DIEGEL: What legal rights do we have as a Fair Board if the Association is not moving in a timely fashion, to move forward with eviction, which I'm prepared to do. ISHAM: You can file a complaint for ejectment. The first thing you would do is to request that they vacate the premises. If they fail to do so, you can file for ejectment. DIEGEL: How long does this process take? ISHAM: You could probably do it within a day. I would say Wednesday morning, assuming we can get before a judge. DIEGEL: This is crazy, folks. SMITH: I really thought they'd be here to negotiate this and get it all signed tonight. I am very disappointed. SWEARINGEN: Where's Alex? Where's Elton? Where's Ron? BISHOP: I invited Ron and Alex. SWEARINGEN: I understand that Alex is at a monster truck show in California. BISHOP: He was here this morning; at least I talked with him on the phone. Minutes of Meeting: of Representatives of the Fair Board, Page 13 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 MAIER: Rick, there's no reference here to the employees in the agreement. Is it understood that with signature of this agreement that they would be let go, rehired, or what? ISHAM: They are currently employees of the Fair Association. The discussion has been that the Fair Board would review the list of employees and those who are necessary to keep the facility operating would be hired through a temporary agency, and carried until such time a more permanent arrangement can be made. DIEGEL: I thought on Friday that we were in agreement that all of the employees would be picked up, assuming they wanted to stay, through a temporary agency until things settled. It was quite clear to me that we were not going to allow employees to be hurt during the transition. 1 .4mem I echo that. The Fair Association representative, Mike Schiel, was to meet with staff on Friday to tell them what the plan was for this week. As of this morning, that has not happened, so staff does not know what's going on. ISHAM: It's my understanding that Elton laid some people off on Friday. S WEARINGEN: So how many staff do they have left? Is it eleven? MAIER: We don't know. There may be costs involved in paying off vacation time and so on. ISHAM: I did relay your request for an accounting of accrued but unused vacation. That's another figure that we don't have. DIEGEL: So we're kind of in limbo, then, in terms of whether the Fair Association will meet, and whether they will accept the agreements in their current forms. Minutes of Meeting: of Representatives of the Fair Board, Page 14 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 ISHAM: Right. The word I have from their lawyer is that it's close but not yet acceptable. They want those items addressed in a satisfactory way. SMITH: What's their recourse if we tell them we won't change it. DEWOLF: I just spoke with Ron. The meeting for tonight was cancelled. There's no meeting scheduled. They are prepared to call a meeting whenever necessary - Ron is willing to call a meeting for tomorrow. I explained that I didn't think there was a lot of sentiment for much more room for either time extension or compromise on the existing draft. I said, quite frankly, what happens tomorrow. The funding that exists is through tonight. How do we cover the payroll tomorrow? Ron said that Greg Lynch had presented the contracts in a positive light. BISHOP: First of all, Ron, by all of us, has been asked to surface and help us work though this, as one with credibility. He's not the president of the board, so he himself can't call a meeting. I'm not sure if Elton is even in the country. It just continues to drag out and create uncertainties for this group. I think what we should do is move the line in the sand, give them a drop -dead date, and suffer the repercussions thereafter. DIEGEL: I'll move that we communicate to the DCFA that the assumption agreement and the termination agreement need to be signed by tomorrow at 3:00 p.m. If not, this Board respectfully requests the County Commissioners through our legal counsel to serve a notice of immediate vacation of the premises; with appropriate legal action thereafter. I offer that as a motion. MILTENBERGER: I'll second that. If we could get the termination agreement signed, but not the assumption agreement signed, would that take them out of it? ISHAM: The assumption agreement has the issue of the personal property, the running of the Fair, and the budget for running the Fair. They are, I believe, significantly separate. The reason we have two agreements is to eliminate any possible confusion with respect to the notice that was given September 27, 1999. That was the notice that the Board gave with respect to termination of the three -party agreement. Minutes of Meeting: of Representatives of the Fair Board, Page 15 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 DEWOLF: The only thing I would offer is that I don't know all of the Fair Association members' work schedules or what have you. Perhaps 3:00 p.m. is not that much different than 7:00 p.m. tomorrow, which would give them an option of meeting at 5:30 p.m. tomorrow. BISHOP: Let me read you a letter of resignation I just got from Robbie Meyers. BISHOP: Ladies and gentlemen, they are pointing the finger at the County Commissioners. That is the kind of arrogance, the kind of lack of foresight. He's not your employee, he's not our employee, he's an Association employee. If he's not been included in the circle and has been misguided by anybody, it's DCFA. And yet his perception is it is you, as the County members. For these reasons, we must move on. Whether the line in the sand is 3:00 or 7:00 p.m. tomorrow, it doesn't really make any difference. But the line must be moved again to whatever time is appropriate. SMITH: In discussion, I would favor keeping it at 3:00 p.m. Let them worry about how they're going to meet. I second the motion. DEWOLF: Is this motion to sign both of these agreements, or just the termination agreement? DIEGEL: My motion is to sign both agreements. And I'm not prepared to modify that motion. SMITH: I look at things like, "oh, we want to separate out the inventory list, that should take at least a week". "We want to talk about this budget, that could take another week". In response to what Tom said earlier, if they want to change one, single word, even if that word is insignificant, if the intent is to stall this process, it is a major deal. We should not accept any changes that would stall this process. MILTENBERGER: I have spoken with some of the former Association board members, and they don't think they can sign this. Minutes of Meeting: of Representatives of the Fair Board, Page 16 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 BISHOP: Jim, is 3:00 p.m. the line in the sand, or is 7:00 p.m. more reasonable? DIEGEL: I amend my motion to 7:00 p.m. LEAVITT: I second. DEWOLF: The goal is to get this done. There are still language issues. If changes are significant, go to it. If changes are minor and there is some wordsmithing to make this a safer or better document for us legally, per Rick, if you're binding our attorney to this particular assumption agreement without a word change potential, then you aren't allowing Rick to do his job to the best of his ability. BISHOP: Is this a legal, binding document in the way that you have drafted it today? ISHAM: It can be improved upon. With every discussion, I think it has gotten better. I took the motion to mean that there would be a negotiated deal along these terms that would not be delayed beyond 7:00 p.m. tomorrow; and that if we need to change a few words here and there to strengthen the agreement, I didn't take the motion to mean that this could not happen between now and 7:00 p.m. DIEGEL: The intent of my motion was to set a clear, delineated time for the transaction to take place. I do not object to any final wordsmithing as long as it does not really affect the intent of the document. If that's the case, that would be unacceptable to me. If it's fine-tuning, that is okay. What I want to have happen is this must come to an end. ISHAM: I worked most closely with David on these agreements. My intent would be to rely on David's advice with respect to where we can go and what will work, so that early tomorrow Mr. Lynch and I can get together and work through this. Minutes of Meeting: of Representatives of the Fair Board, Page 17 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 DIEGEL: This Board for the most part has given you a clear indication of where we're at. We need to bring this thing to closure. We have to bring this to closure and then start the new steps, recognizing that it may be a little bit cloudy when we launch. ISHAM: From my perspective, I'll call it the trust issue, every statement that I've heard made was that the Association is the right entity to run the Fair. We're in a real predicament with these issues, so it is appropriate that you have the 2001 Fair in the agreement. It's the issue of whether you trust Deschutes County and the Fair Board to do the right thing for the 2002-2003 Fair. Likewise, having the appropriate budgets, operational plans and policies, a clearly delineated chain of command, that's their side of the equation. If they do a good job, they will in fact be successful because they'll have other people helping them be successful. It becomes a two-sided agreement where each side has to have some faith and trust. But to have things run in perpetuity, they are saying that even if we botch up the 2001 Fair, we're entitled to run the 2002 Fair, no, I don't think SO. SMITH: I absolutely agree with that. I will not sign a document that gives them any authority beyond 2001. I think they have to prove their capability. They are coming from a position where they have put themselves half a million dollars in debt, or more. In terms of procedure, I would be willing to sign both of these documents today; and if you want to renegotiate some terms, you can come up with a different document. I would still like to have this one signed. S WEARINGEN: Why wouldn't you do that from a negotiation standpoint? They're putting their money where their mouth is. This is what we're willing to live with. You can make some changes, then bring it back for ratification. DIEGEL: Rick talks a little about future faith in them. The Fair Association will be granted the opportunity to run the 2001 Fair. It's theirs to lose, that's how I look at it. So I'm operating from the standpoint that they will be successful, that we will work in good faith with them, but I think we have to be reasonably prudent as we move forward. It's really theirs to lose. Minutes of Meeting: of Representatives of the Fair Board, Page 18 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 ISHAM: If I could comment on approving this agreement. There are two changes that I proposed and read to each of you. There is also something else that came up in part of a result of the meetings that occurred today. That's with respect to the rodeo, Cameron Clark, and possibly some of these other events. I would like to make an attempt at having a clause in the assumption agreement that protects or preserves that right of renegotiation so as to not create a document that is too positive in the assumption of liabilities section. I would like to back off of that a little bit more, even though we clarified some additional things; in limiting our assumption to not contract away or allow a contractor to come in and say they are a third -party beneficiary of this assumption agreement - kind of like PRCA. I think that what Mike conveyed to me is a really good solution to that problem. We lose some rental and we have some fixed operating costs, but generally they are stepping in and taking us out of it. If they make money, that's great; if not, they had a chance at it; but we didn't interfere with that. I don't think that's in there the way it needs to be. DIEGEL: Can you write that clause or that sentence now? ISHAM: I think it needs some thought. BISHOP: This agreement says what we will do. It specifically does not say what we won't do. One of the things that I'm concerned about is that there are a lot of side deals, anywhere from a contract to an unexecuted, written document that people have been relying upon, as well as a handshake. Without knowing the details and the intent of both parties, I'm not comfortable in assuming anything that DCFA has done. ISHAM: That would be in that area of reservation, figuring out how to do that. That's a contract yet to be performed. It may be that if we look at these only to be assumed to the extent that they constitute a current liability. He somehow craft language to clearly say that our intent is not to honor that contract, but to look at it to decide whether it is properly worded, is economically reasonable under the circumstances, and so on, before we'd agree that we'd honor it. It deals with the problem that was raised. It will take me a little while to think this problem through and express it properly. Minutes of Meeting: of Representatives of the Fair Board, Page 19 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 DIEGEL: There's a motion out there with a second to have both the assumption agreement and the termination agreement signed by all parties by tomorrow night at 7:00 p.m. Rick's recommendation is a solid one, but my concern is if we're going to stall this process ourselves by inserting more language that then requires Rick to go back to legal counsel for the other side. ISHAM: I'm going to go back to him first thing tomorrow anyway. DIEGEL: I've got a motion out there that has been seconded. BISHOP: To restate the motion, it is to have both agreements - the termination and assumption agreements - executed substantially as they are today on or before 7:00 p.m. tomorrow, October 10. DIEGEL: To serve notice to the Association from the County to vacate the premises immediately and put in place the appropriate legal mechanisms to do so. VOTE: Unanimous "ayes". DIEGEL: If they disagree with us and choose to go another way, so be it. We'll deal with it. At least we're off dead center. BISHOP: Rick, when you're drafting those words, I would ask the question: will it encompass conditions like the catering contracts? Can we extend exclusivity without a public bidding process? ISHAM: The Board of Commissioners believes this should be a competitive selection. The alternative could be to allow a number of prequalified contractors, where you could select your own caterer and the commission or kitchen rental fee or whatever would come back to the Fair Board as compensation. But you wouldn't be "owning" the caterer on site. Those contracts could be developed for any event. The renter of the facility makes its own contract, and you receive payment from each as appropriate. Minutes of Meeting: of Representatives of the Fair Board, Page 20 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 (A general discussion ensued regarding the use of caterers and other service providers) BISHOP: We need to talk about the contracts, commitments or understandings now out there. These include the exclusivity to catering, promotion with Cameron Clark, concessions with Pepsi or whoever; with COVA that has some Chambers a little bit miffed that they can't help partner with us as well. In a blanket request, I guess I'm not desirous of assuming any of those until we have the opportunity to meet with the people and get an understanding of the obligations of it. We're now a public entity, so we need to now really do the bidding process, request for proposals and those kinds of things. DIEGEL: Do we have the legal right not to assume those exclusive agreements; or must we? ISHAM: There are a couple of different levels to look at that. One is the scope of the agency. To the extent that any of those create a contingent future liability, my answer is no; that would be an unlawful contract. It may be that under that agency the contract would not be valid, but it would be a valid contract to the Association. Which means no, you don't have any obligation to assume that. DIEGEL: Say that again? ISHAM: The Fair Association operates events as an agent. That's what the contract says. There's nothing inherently wrong with that. But the Fair Association also has the right to operate independently of that agency. So they can enter into lots of contracts that maybe have nothing to do with the Fair Board whatsoever, or that delegation of authority that the Association received from the Fair Board. DIEGEL: I would make a motion that it would seem prudent in terms of protecting public resources and allowing the new management, however configured, a clean slate to move forward, that we renegotiate all of those agreements, and not just assume those agreements. Minutes of Meeting: of Representatives of the Fair Board, Page 21 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 SMITH: I second that motion. My understanding would be that the renegotiation could in fact be to renegotiate the same terms as the original. BISHOP: If we pass this motion, would we be forced into a RFP or a bid process to ratify the existing process? ISHAM: In my opinion, yes. DIEGEL: If that's the process, that's the process. BISHOP: If we do this, then how can PRCA get a vendor in there to sell anything? ISHAM: He can hire his own. DIEGEL: Again, the reason I bring that up is that it is terribly confusing, and I think going through each agreement right now to figure it out creates an undue burden on this Board. BISHOP: We would need to know from DCFA who they have agreements with and what the understandings are. It's so open-ended, we don't know. They may not even be in writing or available to us. ISHAM: They have some agreements that are exclusively written for the Fair. Those are not agreements that relate to the daily operations. For instance, the Fair. DIEGEL: I don't want to interfere with the Fair. Minutes of Meeting: of Representatives of the Fair Board, Page 22 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 SMITH: I thought I heard a clear message from the FMCA that they were not happy about being required to use the contractors picked by the Association. So this is in our interest as well as our customers' interests. VOTE: Unanimous "ayes ". BISHOP: In the parking lot engineer selection process, I have two, maybe three, possibilities. Let me just summarize. We have two bids that were presented, one by David Evans and Associates, and the other was Hickman Williams and Associates. If you would like to peruse it; I would like to boil it down to cost and substance. I understand that this morning the Commissioners voted to approve the Hickman Williams and Associates contract, subject to our approval. Hickman Williams has a total fee of $67,685 to engineer, where David Evans has a fee of $124,500 plus $2,000 of reimbursable estimated expenses. So we're looking for a contract, and when you go through it, you'll find much more detail at half the price. I would entertain a motion to ratify what the Commissioners have done, and recommend to them that they move forward with Hickman. DIEGEL: Are both proposals materially similar? And did both proposals meet all of the criteria as stated in the RFP? BISHOP: Yes on both. SMITH: I will make the motion, with the added comment that I've worked with Hickman Williams in the past on the La Pine Industrial Park, and they do a good job. LEAVITT: Second. VOTE: Unanimous "ayes". ISHAM: David, do you want to contact Jerry Yeatts (of the FMCA) and let him know this has been approved? Minutes of Meeting: of Representatives of the Fair Board, Page 23 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 BISHOP: Sure, I can do that. MAIER: I spoke with Joe Borelli of SMG Corporation, and they are very interested. I Fed Ex'd him some information on the area and the limited amount of information I had on the Fairgrounds and Expo Center. They are trying to set some dates to meet with the Fair Board during the next week or two. SMG has offices in Salt Lake City and Boise, and they may be able to provide some immediate assistance from there. They said they would really like a lot more information about the facility, and advised that this might have to suffer for a while before it ends up in the black; many take time to set up in the proper fashion. DIEGEL: Do they do interim work, too? MAIER: They don't like to do that, but they said, given the circumstances, they would consider talking with the Fair Board about it. DIEGEL: In many respects, Mike, we may need that interim intervention right now. The only reason to lean toward an interim arrangement is that it is a national entity with resources. They would have access to expertise that you may not get if you just engage a single person. You get a whole team. SMITH: I did some research on this company, and they get very high reviews from many of their clients. MAIER: We've gotten written responses back from the Chambers, COVA and from the City of Redmond; these were all positive. They recommend the Fair Board invite them out. BISHOP: In prior meetings we've asked the Commissioners to expand the scope of work that Dick Donaca would do to cover three things. I would like them to determine a full balance sheet, because getting a snapshot of current assets is unacceptable to get a picture of their financial situation. Secondly, I would like to see a cost accounting report on the Fair event. Minutes of Meeting: of Representatives of the Fair Board, Page 24 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 SWEARINGEN: Is that possible, given the records that they have? BISHOP: It's as good as we can get. Before the other meeting with Dick, he said that it is a lot better this year than last year. Even if we end up with $144,000 cash movement in one lump sum, at least we'll know about that moved and we'll have to make a seat of the pants guess as to where it came from and where it was allocated. Whoever does the Fair will need to know that, and DCFA doesn't haven't the wherewithal to do that. And it needs to be done for them - and us - anyway. MAIER: I'd like to sit down with Marty Wynne, our Finance Director, and come up with a written scope of work. I think Dick did the best he could in the timeframe that he had, but I can't speak for Dick as to whether he has the manpower to do something like this in a timely fashion. I'd like to lean on Marty to give us some advice. The other firm we have used in the past is Moss Adams, and they do a lot of work for Counties with Fairs. Maybe we can put together a scope of work and have both Dick and Moss Adams look at it, and compare their cost. SWEARINGEN: It might be nice to bring Moss Adams in just to have a comparison. Dick doesn't have a Fair besides this one, and at least Moss Adams could give us the right questions to ask in the future. I LTJ1�14-;U I can take the lead on that. I think we need a written scope, and Marty can put that together. BISHOP: The net effect of the written scope - and I don't care who it is - is that we get a full and complete balance statement and as close to a full and complete income statement as possible. Also, it needs to be broken out as painstakingly as possible for the benefit of whoever operates the Fair. It needs to have a timeline and a budgetary process that we can use as a template to move forward this year. We know it won't be exact, but next year it will be. It will be a significant project. (A general discussion occurred about the scope of work, timing, etc) Minutes of Meeting: of Representatives of the Fair Board, Page 25 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 DEWOLF: We have a meeting on October 17 on the supplemental budget process where we hope to learn what options are available to us. We won't have a finalized supplemental budget, though, until after the elections, as we don't know what the effect might be if the Sizemore issues pass. If we don't have an agreement with the Fair Association, I'll cancel the budget meeting. BISHOP: Extension/4-11 has asked about rental of office space here. Is there appropriate space for the 4-H people rent after the first of the year? I understand that in some building there's office space that they've been in. DIEGEL: I think they were talking about North Sisters? BISHOP: They're going to pay rent to somebody; it would be wonderful if they would pay it to us. However, if they don't get their building finished within a year or two, we could end up with a permanent tenant; and that's something to think about. SWEARINGEN: We are really pretty close on fundraising for them. DIEGEL: My thought on that, David, is sometimes when you talk about tenants on the Fairgrounds property, 4-H is about as congruent as you can get. I would try to accommodate their needs, and help them get their building, which is the plan. S WEARINGEN: The other thing that we can always do with 4-H - and they don't want to hear this is if they don't have $700,000, build with what you've got. Build a building that will accommodate your budget. They do have about $500,000 right now. BISHOP: Regarding the Karen Smith report, is she one of the payables listed? She created the last marketing plan for DCFA. ISHAM: Not to my knowledge. Minutes of Meeting: of Representatives of the Fair Board, Page 26 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 BISHOP: They hired her, and I know they met with her. (A general discussion took place. It was decided that Karen Smith might be known as Resort Resources, Inc. Rick Isham will investigate whether she has been paid.) BISHOP: I had a conversation with Bill O'Laughlin, who hosts the sporting events, and one is scheduled again for this coming March. He has sold out his entire project, and is a bit crabby because he doesn't have a contract. I told him we are in the process of going through this. He is willing to give us money and to sign a contract. That reiterates the urgency of getting someone in here as soon as possible. Doesn't it make sense to have some kind of boilerplate contract that you don't have to re -write and re-edit? Every contract we have here is different. DIEGEL: I suspect the reason that happens is that the entity that's coming here probably has a contract, and we modify to meet their contracts. This is backwards. There should be a contract forms bank and certain things that are just in there. ISHAM: Most of the vendor -type contracts were written by the vendors, and slightly modified. The contracts for renting space are on their word processor, and they customize them. Because of the way their operations were handled, they add and subtract, and the documents become very unwieldy before they are issued. A lot of people have ended up not getting their contracts, or the contracts get delayed. Almost everyone I spoke with said that the contracts were the single biggest problem. MAIER: Since they haven't talked with their employees here, should we talk to them? BISHOP: Did we not ask Ron and Lee to get together last Thursday to meet with staff and create a management team to get this taken care of? DIEGEL: We did. Minutes of Meeting: of Representatives of the Fair Board, Page 27 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000 BISHOP: So what happens tomorrow morning? My assumption is that Express Personnel should be here to sign up anybody who comes to work tomorrow. MAIER: I think we need to wait until Wednesday to see if we get an agreement signed. These people need to know, and we're going to lose some more if we don't. DEWOLF: Can we step in and interfere with their employees at this point? We would begin to accept liability, and it's not our place. DIEGEL: We have employees here who have a very uncertain future, and a high degree of angst, and it is reprehensible that the Fair Association is not communicating with them. BISHOP: We've asked for the help of Lee and Ron. Lee, I hope this can be done in the morning. DEWOLF: Ron is having a meeting with Mike Schiel this evening, and I told him that they have until 7:00 a.m. tomorrow per the Board's motion, and that's it. We talked about the potential sticking points, and he thought the one that would create the biggest problem is not having anything addressing the operation of the Fair beyond next year. He said that might be the issue that kills this thing. I told him that perhaps a sentence could be put in the agreement relating to the Board being satisfied with the obligations and work next year. I told him also that there is no guarantee beyond next year, because people are expecting to see performance. ISHAM: If volunteers are going to put on the fair, it does not matter who handles the checkbook. There may be other issues here that are not apparent on the face of this. BISHOP: Three previous Fair Association board presidents have called to say that they will put on the Fair if necessary. They have called me unsolicited. I have had 100% confidence that this community will not let the Fair go by if DCFA chooses not to ratify the agreement. Minutes of Meeting: of Representatives of the Fair Board, the Fair Association, the Board of County Commissioners and Others Page 28 of 29 Pages Monday, October 9, 2000 SMITH: We are missing files already from these offices. I would like it if none of the rest of the files disappear. Do we need the Sheriffs Office here? BISHOP: Including asking for those files back. ISHAM: It presents an interesting question. If they were files that were developed through the agency relationship, you have a right to have them. We can ask for them to be returned. BISHOP: We have been deceived. Actions speak louder than words. If information on the going concern has been removed, this is a deceitful act, as well as manipulative. Okay. Lee and Ron will meet with staff in the morning. MAIER: I have spoken with Manley and some County staff. We had our building services people take a tour of the facility last Friday. We will cover as necessary. We may not be able to conduct any business because we don't know the business, but the lights will be on. It was agreed that the next regular meeting of the Fair Board would take place on Thursday, October 12, 2000, at 3: 00 p.m., at the Deschutes County Fairgrounds Administration Building. Deschutes County Fair Board Chair, David Bishop, adjourned the meeting at approximately 8:05 p.m. Respectfully Submitted, T Bonnie Baker Acting Recording Secretary Minutes of Meeting: of Representatives of the Fair Board, Page 29 of 29 Pages the Fair Association, the Board of County Commissioners and Others Monday, October 9, 2000