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HomeMy WebLinkAbout2008-07-23 Work Session Minutes Deschutes County Board of Commissioners 1300 NW Wall St., Suite 200, Bend, OR 97701-1960 (541) 388-6570 - Fax (541) 385-3202 - www.deschutes.org MINUTES OF WORK SESSION DESCHUTES COUNTY BOARD OF COMMISSIONERS WEDNESDAY, JULY 23, 2008 ___________________________ Present were Commissioners Dennis R. Luke, Michael M. Daly and Tammy Melton. Also present were Dave Kanner, County Administrator; Erik Kropp, Deputy County Administrator; Kristen Maze and Anthony Raguine, Community Development Department; Marty Wynne, Finance; David Inbody, Assistant to the Administrator; Laurie Craghead, Legal Counsel; and approximately twenty other citizens, including representatives of the media. Chair Luke opened the meeting at 1:30 p.m. 1. Monthly Finance Update. Marty Wynne gave an overview of the status of reserves and working capital. Investment rates have been declining even though mortgage rates are higher than normal. It appears that the County’s yield will be better than budgeted this fiscal year. He then discussed a summary of beginning net working capital compared to budget. There will be some invoices coming in that will be charged against last fiscal year, but for the most part the beginning amount will exceed what was anticipated. The only concerns are the Mental Health fund, the Sheriff’s Office fund and the Solid Waste fund. The three reserve funds for Community Development Department is being impacted Reserves were established to sustain departments during the slower economic times. Earnings have to be distributed daily to the various departments. Minutes of Administrative Work Session Wednesday, July 23, 2008 Page 1 of 8 Pages Minutes of Administrative Work Session Wednesday, July 23, 2008 Page 2 of 8 Pages 2. Discussion of a Proposed Text Amendment regarding Adding “Event Venue” in the MUA Zone. Laurie Craghead stated this a work session and was not noticed as a public hearing. It is a legislative matter and not tied to a particular property, so ex parte contact is not a concern. It is up to the Board as to whether to let anyone speak today. Typically, it is just a work session between staff and the Board. Written comments can also be submitted until the record closes. Anthony Raguine said there was an error in the memo he sent the Board. This change could affect over 6,000 MUA zoned properties. Commissioner Luke asked if this is an exception to the outdoor mass gathering allows. Mr. Raguine said this would override it; the event could be held more often but could not have the number of people that an outdoor mass gathering could accommodate. The maximum attendance recommended by the Planning Commission was 200 people for “small” parcels, with no definition of what constitutes a small parcel. This would also require a conditional use permit. Ms. Craghead stated that the application was turned down by the Planning Commission as they didn’t like the language and could not agree. They asked the Board to find a way to approve these events and come up with specific language. Mr. Raguine said events held are reunions, weddings, family get togethers and similar situations. Ms. Craghead said that there are more agricultural uses allowed in MUA than in RR-10 zones. Only commercial type activities are regulated. There are issues in regard to roadways and traffic, noise and Sheriff services. He stated that the applicant is currently under Code enforcement. Ms. Craghead said that if something is not listed in a zone, they can’t do it if they are charging a fee. This is applicant driven and they paid the fee. Usually the Board will hear these. The wording “small parcel” has yet to be defined. If there is not enough room for parking and a drainfield, it would be denied. Commissioner Luke stated that he feels this should fall under the outdoor mass gathering ordinance, and he didn’t want to hear it. Minutes of Administrative Work Session Wednesday, July 23, 2008 Page 3 of 8 Pages Commissioner Baney said she feels the Board has an obligation to hear it. The Planning Commission want to see if there is a way to do this. This could mean that the County will ultimately put some people out of business. This can’t be considered lightly. Commissioner Daly stated that commercial wedding operations perhaps should be allowed in some places that would not hurt anyone. The Board should determine under what circumstances this would work. The Commissioners asked for information on how many MUA parcels there are and how many of those are within subdivisions where these events would not be practical; and the potential cost of mailing to all MUA properties. Ms. Craghead stated that if the Board decides not to hear it or turns it down, there is probably no recourse for the applicant at that point. Commissioner Luke asked if there is a way to compromise. The lot size or placement, the time of day, the number of days, or what other criteria. This may be on the Wednesday, July 30 work session for further discussion. 3. Discussion of Humane Society of Redmond Loan Agreement. Dave Kanner explained that the shelter has run up a huge amount of construction debt, with monthly payments of over $10,000. The County may be able to pay off those loans and be repaid later. The outstanding debt is about $1.5 million. They can’t expect that much from the Teater trust fund, however. They have five construction loans at this time with payoff amounts as follows. Sunwest Builders: $47,937.04 Columbia River Bank: $653,153.32 and a second note for $37,802.07 taken out to make payments on the others. Community First Bank: $131,399.82 Total: $870,292.25 Another loan with Bank of the Cascades is $588,000 but would not be paid off at this time. There are other dated receivables of a substantial amount. Minutes of Administrative Work Session Wednesday, July 23, 2008 Page 4 of 8 Pages A loan agreement would allow payoff of the loans, to be paid back through the trust, plus minimal interest. The investment pool is at about 3.68% so interest should cover this. A provision in the trust says, however, that they cannot do this. The trust can enter into an agreement, though. Commissioner Luke said that if the trust does that, per Dennis Karnoff, it will not be distributed unless the shelter is active. If it shuts down, what happens to the property. The reversionary clause on the land is to the County. Dave: secured two ways, agreement with trust; and with a trust deed, using the property to guarantee the loan. The County could reclaim the property if the shelter no longer functions, due to the reversionary clause in the deed. Some discussion took place as to the value of the property. Commissioner Melton said she did not want to speculate on this in light of today’s economy. Because the Humane Society of Central Oregon and the Humane Society of Redmond are both beneficiaries of the trust, both boards would have to sign off on this arrangement. The trust would have to guarantee first call of the Redmond funds to the County. The monthly payment on the Bank of the Cascades loan is about $3,000 per month and they are three months in arrears. Mr. Kanner proposed using business loan funds and do a promissory note to cover the amount in arrears and some other outstanding unpaid bills, with payment deferred until they are on more stable financial footing; then a payment plan can be put in place. Commissioner Luke asked if an audit is planned. Mr. Kanner said a procedures audit and financial audit are going to be done. He is concerned that unless they cannot catch up on the Bank of the Cascades’ loan, they could foreclose as they are in first position. Commissioner Melton asked where their operational funds are. She is concerned about the County relying on the trust. There does not seem to a plan in place even for operations. Mr. Kanner stated that they have committed to a new business plan by the end of the summer. If someone doesn’t handle the debt service for them in the short term, they cannot sustain. They did hire an interim director, working on a volunteer basis for sixty days. Minutes of Administrative Work Session Wednesday, July 23, 2008 Page 5 of 8 Pages Commissioner Luke said that even if the County pays off the other loans, Bank of the Cascades is in first place. If operations cease or the shelter doesn’t have enough cash flow to make the payments, they can take the buildings. If it is not operating, the trust will not distribute the funds. HSCO would then get all of the proceeds. Commissioner Daly suggested that the Bank of the Cascades also be paid off. Commissioner Melton asked what they stand to make from the trust. Commissioner Luke said that the County could make the debt service payments while the details are being worked out. Mr. Kanner stated that they would still be paying interest. Commissioner Luke observed that there are still a lot of unanswered questions. Commissioner Melton asked if they are working as hard as the County is to solve this problem. Sometimes this puts a nonprofit into a different mode if they think they are going to get rescued. Mr. Kanner thinks they have taken some prudent steps in getting someone in who has financial operations experience. They have some ideas for raising funds but have not yet planned an event. Commissioner Daly commented that this is a new situation. Commissioner Melton said this did not happen overnight. Commissioner Daly said that they would have more to show in two months. Mr. Kanner stated that Mark Pilliod meets with Mr. Karnoff tomorrow to discuss it further. Commissioner Luke stated that he has a lot of questions to answer before paying off the loans, although he would support paying debt service for a couple of months. Mr. Kanner said that the total debt service is over $10,000 per month, and are behind with the Bank of the Cascades by about $14,000. They are sixty days late on Community First Bank and regular payments have not been made to Sunwest. Commissioner Melton agreed that bringing them current and covering sixty days’ debt service will allow time for them to develop a plan. Mr. Kanner stated that this would come from the business loan fund. He thinks they can cover operational expenses through the end of August. Commissioner Daly would want to pay off debt to put the County in first position. Mr. Kanner stated that any previous lender would be ahead of the County. Minutes of Administrative Work Session Wednesday, July 23, 2008 Page 6 of 8 Pages Marty Wynne asked if the financial review is scheduled soon. He thought perhaps the County’s auditor could help with this work. He said financial reports showing projections could be explained to them as well. Jane Ohlemann, acting as spokesperson for the Humane Society committee, said that petitioners want to call a meeting on July 31. She is not sure of the agenda, but they want to remove the current board. There are 15 people right now who would like to join the board. Many are retired business people who are very involved with the shelter and have expertise. They contend that the current board does not have the confidence of the membership. Commissioner Luke stated that the County does not want to run the shelter, but it needs to be viable. Commissioner Daly said that changing the board at this time would upset things, and he feels comfortable with the current chair. They need to be allowed to move forward. There is lots of time to deal with this situation later. Donna Pfeifer noted that she doesn’t know about the by-laws, but the membership meeting of July 21 didn’t happen; it was canceled. Mr. Kanner said that he heard from the Department of Justice, and they feel that the by-laws say that at least ten members can petition the board to call a meeting. It would be a good thing to bring in some new blood and change, but the timing is important. There should not be a dispute over who is in charge that causes a problem in entering into any agreement. They say they want to get their tax return filed, have a membership meeting and elect a new board if desired. It might be time for some new blood. Susan Gray said that they can amend the by-laws and call by petition of the members. Bill Williams added that within the next sixty days they need to get current on bills and take care of the debt service, and work on agreements. There is a lot of confusion. Commissioner Baney stated that there needs to be an audit and a plan done soon. Commissioner Luke added that the County cannot continue to throw money at this problem. Pat Roden stated that it is in the interest of both shelters for both to be operating. HSCO will help if it does not affect HSCO financially. Minutes of Administrative Work Session Wednesday, July 23, 2008 Page 7 of 8 Pages Commissioner Daly said that the County can’t let them close down. They need to stay operational. There will be opportunities to change things later. They only have seven board members, and can have up to 15. Commissioner Luke pointed out that there was a similar problem with HSCO some years ago, and they got through it. Roni Bjorvik said that the people at the meeting today are prospective board members who are very interested in what happens. No one is in attendance from the current board. Mr. Kanner stated that the County could make them current and make payments through September 30. They will need to get an audit done and develop a business plan. Legal Counsel can work on an agreement and find out the status of the loans. Commissioner Baney pointed out that the County better be ready to do the same for others. Commissioner Luke replied that they are a direct partner doing what the County would have to do otherwise. Mr. Pilliod said that he anticipates they will fulfill the conditions. The note could be rolled into a larger loan. There should not be conditions put on internal arrangements. He just needs to know who has the authority to act on their behalf. Commissioner Baney said that the current board had no idea how bad things are, and are responsible. She does not want to see this happen again down the road. She is not sure they understand the situation even now. 4. Economic Development Grant Requests. ƒ Fair & Expo Center – Fair Bus Program – Commissioners Melton and Luke granted $2,500 each. ƒ Bend Spay & Neuter Project – Educational Campaign – Commissioners Luke and Daly granted $1,000; Commissioner Baney granted $500. ƒ Sisters Organization for Activities & Recreation – Scholarship – Commissioners Daly and Luke granted $500 each; Commissioner Melton granted $1,000. ƒ Fair & Expo Center – grants to nonprofits – Commissioner Luke asked for a report on who has received this benefit in the past.