MINUTES OF THE METRO COUNCIL BUDGET & FINANCE COMMITTEE

Wednesday, April 5, 2000

Council Chamber

Members Present:  Susan McLain (Chair), Bill Atherton (Vice Chair), Jon Kvistad, Rod Monroe

Members Absent:  None

Also Present:

Chair McLain called the meeting to order at 3:32 P.M.

1.  Ordinance No. 00-847, For the Purpose of Adopting the Annual Budget for Fiscal Year 2000-01, making appropriations, and levying ad valorem taxes, and declaring an emergency.

Chair McLain stated that the Committee would start in where it left off on Metropolitan Exposition-Recreation Commission (MERC) and the Enterprise Fund. Peggy Coats and Michael Morrissey, Council Analysts, began at Other M&S, page 12, in Council Analyst Questions Regarding the MERC Budget. The other document referenced was Analyst Recommendations Related to Proposed FY 2000-01 MERC Budget. Both documents are included in the public record.

Chair McLain asked for more information on cell phone usage and Commission use of phone conference calls. Mark Williams, MERC General Manager, said that MERC bylaws allowed meetings to take place via phone, typically when the Commission needed to meet on short notice. They were public meetings and duly noticed as required by Code and public meetings law. Regular meetings were usually held in person, with a Commissioner occasionally taking part by phone as the bylaws allowed.

Councilor Atherton said that Metro had approved a contract manager/general contractor (CMGC) process and asked how the co-project director fit into that system. Mr. Williams responded that in order to have solid coordination between staffs Metro's Scott Moss and MERC's Jeff Blosser served as co-project leaders on the Oregon Convention Center (OCC) expansion. They, in turn, supervised Carl Schultz, Construction Manager. On an earlier deconstruction project the Metro Auditor recommended that large projects would be enhance by having oversight of the contractor. For that reason MERC established the aforementioned system. Councilor Atherton asked what the benefits were. Mr. Williams said he couldn't answer that question until the project was done and costs could be evaluated.

Councilor Monroe said he was concerned with possible overkill of oversight and disagreed with this choice. He asked if oversight had been recommended by anyone other than the Auditor. Mr. Williams responded no, not to his knowledge. Chair McLain asked Jennifer Sims, Administrative Services Department (ASD) Director/Chief Financial Officer, where the portion of Scott Moss', Assistant ASD Director, salary for this work was allocated. Ms. Sims said that it included .1 FTE for oversight as part of the cost allocation plan. Chair McLain asked that it be noted that Councilor Monroe was on record as interested in reviewing this process.

Mr. Williams said that having Jeffrey Blosser, Oregon Convention Center (OCC) Director, and Mr. Moss working together on the project gave contracting, facilities management and risk management experience to the oversight process. MERC felt that it was crucial to have the actual facilities operator involved in construction decisions. He suggested that Councilor Monroe's concern was broader, in that when there was a CMGC contract there was a question of what level of additional scrutiny, if any, was required. Regarding the Portland Metropolitan Exposition Center (Expo) Hall D project, he felt that cooperation between MERC and Metro had resulted in getting it built on time and under budget. Additionally, some really good work was value engineered into the project. While that work was acknowledged, the audit criticized the lack of oversight of the manager. MERC's view was that this job was done by the contract manager, and included in the fee structure. He pointed out that in a more traditional set-up, there would be a clerk of the works whose job was to count every bolt and screw. The idea of the CMGC was to get away from that process. MERC felt that in a project of this size that a full time project manager was needed in-house. The allocation of portions of Mr. Blosser and Mr. Moss' salaries to the OCC construction project was appropriate given the amount of time to be spent on the project.

Council Monroe agreed that the process used for the Smithsonian Exhibit construction was excellent and Council had been very pleased with it. He felt that the CMGC process was appropriate, but the idea of hiring an additional outside individual to provide oversight to the person doing the oversight seemed to be dramatic overkill. There were people in place whose job it was to provide that oversight. He respectfully disagreed with the Auditor's recommendation and planned to pursue the issue. Chair McLain noted that this issue could possibly come back for further discussion when any MERC amendments came forward.

Councilor Kvistad said that two days had been spent reviewing MERC and the Committee had not reached the halfway mark in the document. There were nine areas where staff had recommended changes. He asked if the review could focus on the areas of disagreement. Chair McLain responded that she had been asked by Committee members to be thorough, but would try to go more rapidly. Councilor Kvistad felt that the Committee was spinning its wheels. Chair McLain said that there were amendments that were not yet in front of the Committee that related to some of these areas. Mr. Williams had requested more time to respond to some ideas the Committee had given him. She also felt that this was good information for the Committee.

Councilor Atherton said he felt the conversation and analysts' questions were educational for the Committee. He appreciated it and found it helpful. Councilor Monroe believed that the motion was out of order because the Presiding Officer had set up the Committee giving it the assignment to do appropriate scrutiny. To simply send the budget on to Council was to disobey that mandate. Councilor Kvistad closed by saying that Council had spent several years trying to give MERC more autonomy; what the Committee was doing now was micro-managing a budget set by the MERC Commission. He was fine with going through the questions, but found this process cumbersome, argumentative and personally disagreeable. He felt that the Committee had overstepped its authority in relation to MERC while many important budgets had not even been touched.

Chair McLain pointed out that the review had been done in accordance with Code and budget authority, but directed the analysts to try to go through the remaining questions more quickly for Councilor Kvistad. She said that the Committee appreciated the efforts of MERC staff in meeting this review.

Mr. Morrissey asked MERC for an update on management of Civic Stadium in the interim while a transition plan was being worked up. Mr. Williams responded that MERC was currently in negotiation along with legal counsel on the exact timing and conditions of turnover with the City of Portland and Portland Family Entertainment (PFE). PFE was required to obtain MERC's consent for license and play of the Rockies baseball team. The MERC Commission had directed staff to assume that the private operator of the facility would bear all transition costs. Technically there was no Civic Stadium fund balance, but any remaining funds belonged to publicly operated facilities. The goal was to negotiate an early turnover of the Stadium so that the next fiscal year would begin without operating the Stadium. This had not been resolved to date. He hoped to have a more definitive answer shortly.

Chair McLain announced that she would leave the Chamber for about 10-minutes in order to vote in another meeting running concurrently (TOD). Councilor Atherton would chair in her absence.

Mr. Morrissey commented that while he understood the ongoing negotiations, he was not clear as to the magnitude of impact of the changes on the MERC budget. He recommended that both MERC and ASD present plans, as quickly as possible, detailing contingency plans to cover that impact. Mr. Williams said MERC had made a conscious decision to base the budget on a whole year, rather than have to come back to Metro for additional funds. The MERC Commission had directed him to make further cuts to eliminate the overhead charged to the Stadium so that it would not be spread out to other MERC facilities. He presumed that the $100k of Metro overhead also would go away if it was not required. Also, the MERC attorney had been instructed to request a minimum $350k revenue guarantee if MERC were to continue to manage the venue during transition.

Councilor Atherton asked if the focus of discussion could be directed to areas in which there was disagreement. Mr. Morrissey mentioned that the travel and training budget was higher than past history, and in view of the pending Stadium transfer he had recommended a $7k cut. Mr. Williams responded that the transition assistance package had been included in that line item to assist Stadium staff when the changeover took place. Mr. Morrissey recommended that this assistance be budgeted elsewhere. Mr. Williams noted that the transition plan was a proper liability of the facility. In the past there had been litigation on a similar issue and MERC wanted to avoid going through the process again. Councilor Monroe agreed that it was important to take care of these long-time employees in an appropriate manner.

Mr. Morrissey suggested that the transition plan be presented to the Council.

John Houser, Council Analyst, spoke to Expo. Mr. Williams pointed out that MERC went in-house for cleaning services because the low bid was unacceptable, as it did not include workers compensation insurance. He added that MERC was putting more personnel in place to handle recent OCC parking delays.

Mr. Morrissey said that the bill from Metro to MERC for allocated costs was $1.7 million. It was up to Committee and Council to decide whether the full bill would be paid; if not, Metro would have to find the money lost elsewhere or make cuts. In prior years there had been negotiation to reach agreement on charges, but costs that were not paid for by MERC still were paid by Metro, out of the General Fund or the Risk Fund. That solution was no longer possible. Vice Chair Atherton said that today the Committee was reviewing budget, not policy, but he would like to discuss this further at another time. Councilor Monroe said that this was a long-standing issue that he was sure would be resolved with compromise over time. (Chair McLain returned to the Council Chamber.) Councilor Atherton asked if Mr. Williams believed that MERC excise tax helped pay for Metro services allocated elsewhere. Mr. Williams said that MERC looked at the total amount of payments, combining excise and support tax payments, and saw that figure as support of their parent government from the operation of MERC facilities.

Chair McLain thanked all three analysts for their hard work and thorough review. She announced that Mr. Williams had agreed to come back on Thursday, after Council, for further discussion of MERC issues and totry to work through any possible MERC amendments. This would take place after REM discussion had been completed. She felt it was important that Mr. Williams and the Committee work on the budget problems together. Councilor Kvistad asked if there was anything still to be discussed, other than the work being done between Councilor Washington and the Chair that could not be done now. Chair McLain said that she and Councilor Washington had agreed to allow Mr. Williams the opportunity to respond to that work before it was brought forward to the Committee.

Councilor Kvistad asked if it had to be resolved in Committee or could be done at Council level. Chair McLain said that the Committee was following the Presiding Officer Bragdon's mandate for the Budget Committee. Councilor Kvistad disagreed with that understanding of the mandate. He would like to finish now and not call all of the MERC people in for another session. Chair McLain said that Mr. Williams had agreed with this timeline. Mr. Morrissey asked if Thursday would be the appropriate time to discuss analyst recommendations. Chair McLain agreed that it would be, and asked that analysts' recommendations be brought forwarded as amendments.

The Committee considered REM amendments #2-14 next record (REM #1 was withdrawn from consideration). Copies are included in the public record. Councilor Kvistad said that he was concerned with the number of consulting contracts let out of Metro. The line item for professional services had increased dramatically and he asked for an explanation. Mr. Houser said that some of the contract work was recommended by a work committee, consisting of Metro and city/county staff. This committee suggested looking into commercial, C&D (construction and demolition) and organics recycling. Others were periodic contracts. Councilor Kvistad said that he found it difficult to find and determine what these line items were under the new accounting system. He felt that a solid review of consultant and outside hires was needed. Mr. Houser said that he had shared Councilor Kvistad's concern as to lack of detail and had asked specifically for it. He said he would be happy to share that information with the Councilor.

Chair McLain asked what the range of contract sizes was. Mr. Houser said that some were small contracts, e.g. cleaning or landscape services at the transfer stations, while others were 6 figures, e.g. the drums used for household hazardous waste disposal. Councilor Kvistad said it was not the contracts, but rather consultants that are brought in to consult with REM. He was not micro-managing, but it seemed to him that it had become easier to go outside and hire a consultant rather than deal with painful issues in-house. James Watkins, REM Manager, said that under that line item was the intern program, and armoured car, electrical, landscape and scale services. Councilor Kvistad said that when he asked questions in the department, he usually got the answer that a contract person was handling that item, rather than a REM employee. He requested staff to present an overview of current consultant contracts, the process, a budget note and/or something to take to the REM committee.

Councilor Kvistad said that this amendment included $75k for consultant assistance. He said that the note itself was fine, the the point he was trying to make was that this was just another case where a consultant was to be hired. Chair McLain asked staff to note Councilor Kvistad used this as an example of a consultant being utilized when he was not sure that there was a process for how and when a consultant was hired, rather than being handled by existing staff. She also noted that an internal committee had tried to put together this work first, and the committee felt that it needed assistance before suggesting any action. Councilor Atherton asked if there was a cost attached to this budget note. Chair McLain understood that the budget note directed that when the report was done it would be passed on to Council before action was taken. Scott Klag, REM Senior Planner, added that the $75k was not only for the consultant, but to do pilot studies in areas identified by the consultant. Mr. Houser said that the intent of the budget note was for Council to have an opportunity to evaluate the consultant's value and possible ongoing costs.

Mr. Houser said that this was a subset of REM #5. In past years 1 FTE in accounting was devoted to auditing solid waste facilities, primarily to ensure that they complied with Metro regulations and requirements related to fee payment based on tonnage. The scope had diminished until now with approximately .3 FTE dedicated to this work within REM. The system has grown from a few facilities to 43 facilities subject to Metro regulation. He felt that it was time to explore whether the current audit was adequate to ensure compliance. Chair McLain said that the other advantage she saw was that the question often was asked as to how often audits were performed. It was important to be able to point to a list of dates when individual facilities were audited. Councilor Atherton asked what the Auditor's role was in this. Chair McLain responded that this was a check of their books, essentially making sure that all facilities adhered to the Metro formula.

Mr. Houser said that REM #7 addressed concerns about the adequacy of staff assignment to run the events. This would provide a report back to Council as to how well the new system worked. Councilor Atherton asked what the Solid Waste Management plan called for in regard to the hazardous waste roundup. Mr. Houser responded that it was consistent with the plan.

Councilor Monroe said that he would like to modify the amendment to include a review of whether a fee should be charged as they currently were at Metro's permanent facilities. He wanted to maximize Metro's household hazardous waste program. Mr. Houser suggested the following:

"Prior to January 1, 2001, the Rate Review Committee and the REM Department shall report to the Council with a recommendation as to the fee structure at household hazardous waste roundup events and Metro's permanent household hazardous waste facilities."

Councilor Monroe asked if it would be accepted as a friendly amendment. Councilor Atherton agreed.

Mr. Houser offered a modification with just received data that staff had made the following changes: the travel line item would be reduced by $7.5k and the staff development line item would be reduced by $7k for a total of $14.5k.

Chair McLain wanted to note that the report should study the self-haulers; i.e. how far do they travel and how much work the self-haulers already did because the services they needed were not provided by the system. She wanted a thorough report. Councilor Monroe expressed concern that Metro did all it could to prevent illegal dumping. He wanted to be sure that fees did not discourage those who obeyed the law.

Councilor Kvistad said that this amendment would allow Metro to reinstate the small business recycler grant program and provide staff support if a revolving fund was developed. He recommended an aye vote.

Chair McLain said that a thorough discussion of a revolving grant fund was held at the REM meeting today. She, along with Councilors Park and Washington were interested in putting the full $500k into that fund this year. The amendment would be ready tomorrow.

Councilor Kvistad noted that this amendment was the vehicle to put the revolving fund in place. A further amendment would fill in the exact figures after all parties met. Mr. Houser said that this note gave the individual that REM had hired a chance to pull together a revolving loan fund with potential local partners and reminded REM to keep the Council informed of their progress in an expeditious manner. Councilor Kvistad asked that it be noted that it was very rare that he voted for adding staff or programs, but he made an exception for this amendment.

Chair McLain said that this amendment provided for full funding for an organics workplan. Councilor Kvistad said that he was not fully comfortable with the amendment at this time. Chair McLain said this amendment demonstrated the Council vision. Councilor Monroe noted organics was an area where Metro had fallen short of its recycling goals. Councilor Atherton asked if this was the most efficient way to do this work. Mr. Houser said that the workgroup had recommended $600k to improve delivery, collection and processing of organics. Approving half that amount, ($300k which had been funded), gave REM the authority to go to potential partners to help complete the funding. Without funding authority in place it would be very difficult to attract partners. Councilor Atherton said he was just trying to ascertain if enough thought had gone into this plan.

Chair McLain said that this gave Metro a good chance to diversify its waste reduction program by reducing funding for the commercial sector waste evaluation audits and reallocating $100k to other activities in the same area. This was another idea brought forward from the workgroups. Mr. Houser noted that a key factor of the amendment was that it had no additional budget impact; the money would be spent either way.

Chair McLain asked for any additional REM amendments in addition to the two mentioned (Councilor Kvistad's amendment on contractors and the one she had mentioned). There may be MERC amendments as well. She asked Kathy Rutkowski, Financial Planning Analyst, to briefly review the technical and substantive amendments which were scheduled to be acted upon April 12. Copies are included in the public record. Ms. Rutkowski said that technical amendments were contract carry-overs, corrections of typographical errors, or items or actions necessary to bring the budget into line with previous Council action. They were not new, but already included in the budget. The substantive adjustments were proposed by Regional Parks and were relatively straightforward. There was no excise tax impact with any of them.

Councilor Atherton asked about the technical amendment for $7k to open Territorial Park. Ms. Rutkowski said that the grand opening of Territorial Park would happen next year. Parks had included $7k FY 99-00 for promotion of a new event. No event was promoted so they asked to carry over funds to be used for this opening and capital improvements.

Councilor Kvistad wanted to discuss the Council budget now in a quieter moment. He asked the Committee to rethink $3.5k cut to travel and asked for the feelings of the other members. He said it had taken almost 4-years to get that money in place and he felt that it was a cut that would be detrimental to those in office in 2001. Chair McLain said that she appreciated his thoughts and how hard he had worked to upgrade the Council budget, but personally she felt that the money remaining was a reasonable amount. She was committed to Presiding Officer Bragdon's amendment. Councilor Kvistad said that while he knew that the amendment was meant well, he questioned its result on the Council in future years. Councilor Monroe thought that it was more efficient to leave the amendments as is, and revisit when it came before the full Council. Councilor Kvistad noted that County officials had a large travel budget; much bigger than Councils' budget. Councilor Atherton suggested leaving the budget as amended, but adding a common fund that could be tapped directly by all Councilors. Councilor Kvistad said that he would let his idea go as he had not persuaded the Committee. The Council had not stepped up to the plate on discretionary money for expenses. He noted that the result would not effect him; he was concerned for the future. Councilor Monroe said that he and Councilor Kvistad had worked together to increase the professionalism of the Council. He thought that any changes would happen before the full Council, if at all.

3.  Councilor Communications

There being no further business before the Committee, Chair McLain recessed the meeting at 5:19 P.M.

MEETING RECESSED UNTIL THURSDAY, APRIL 6, 2000 AT 3:30 PM (AT CONCLUSION OF COUNCIL MEETING)

Respectfully submitted,

Pat Weathers

Council Assistant

ATTACHMENTS TO THE PUBLIC RECORD FOR THE MEETING OF APRIL 5, 2000

The following have been included as part of the official public record:

i:\minutes\2000\budget&finance/04050bdm.doc