MINUTES OF THE METRO COUNCIL BUDGET & FINANCE COMMITTEE

Wednesday, August 16, 2000

Council Chamber

Members Present:  Susan McLain (Chair), Bill Atherton (Vice Chair), David Bragdon, Rod Park

Members Absent:  Jon Kvistad, Rod Monroe, Ed Washington

Chair McLain called the meeting to order at 1:43 P.M.

1.  Consideration of the Minutes of July 24, 2000 Committee Meetings.

2.  Regional Parks

Chair McLain said the first discussion item was staff’s response to the Budget Committee’s request for a FY 1999-2000 Budget Note. She noted that the Committee was looking at the status quo of Regional Parks and Greenspaces rather than at the next step in the process. She reminded everyone that although Metro had bought over 6,000-acres to date, the program in place was not complete. This was a review of the status quo. Councilor Bragdon reinforced the Chair’s words. He had received several messages this morning that indicated some confusion among local jurisdictions as to what was to be discussed at this meeting. Local share policy and refinement completions were not under discussion today. Chair McLain said that if anyone in attendance had come in regard to those issues public testimony was always welcome.

Charlie Ciecko, Parks and Greenspspaces Director, reviewed the letter dated August 11, 2000 in response to Budget Note 3. A copy is included in the public record. Jim Desmond, Parks and Greenspaces Manager, reviewed a confidential map, one of 14 maps (shown only to the Committee) to refresh their memory) of properties staff had designated as essential or desirable Metro acquisitions to complete the regional plan. Chair McLain clarified that this plan was still in process of being completed. Mr. Ciecko agreed that the primary recommendation was to stay the course, at least for another 2-years in order to develop willing sellers on the targeted properties. The first and foremost goal is to deliver on the promises made to voters. If staff was unable to purchase these properties by the end of FY 2001-02, then staff would return to Council for further discussion and reevaluation. Chair McLain noted that staff would go before the Operations Committee for that dialogue. The discussion today was an overview for budget purposes.

Councilor Park asked for clarification of the property purchased by Gresham with Metro matching funds or from Gresham’s $10 million bond issue. Mr. Desmond responded that the funds were co-mingled. Gresham had two successive bond measures along with Metro’s bond were all used to buy the lands shown on the map. Councilor Park asked what the functional difference was between lands owned by Metro and City of Gresham. Mr. Ciecko answered that there was a difference. Currently properties outside the City of Gresham municipal limits were managed by Metro. To his knowledge all properties inside through the City of Gresham were managed by that jurisdiction, regardless of the funding source. Councilor Park asked if this management was done through an Intergovernmental Agreement (IGA) and if that was the adopted method used throughout the region. Mr. Desmond responded that it varied, some jurisdictions did not have the financial resources to take on management of properties.

Councilor Atherton asked what would happen to properties already acquired if, in two years, staff was unsuccessful in acquiring the additional properties needed to complete a targeted area. Mr. Ciecko said staff had had some success with difficult landowners through the negotiation and rapport-building process; he would not recommend the sale of any properties, but rather reevaluate the process and extend the time limit to bring in the properties. While he did not advocate using this strategy, the bond issue did say that in extraordinary circumstances eminent domain could be utilized in some extraordinary situation sometime down the road. Mr. Desmond added that he was confident that staff would continue to close deals. These past two quarters have been the busiest acquisition periods since the beginning of the purchase process. If Parks can keep its staff together and stay the course he was confident they could deliver. Councilor Atherton suggested another option might be to take a step-back position where the properties might be sold with diminished development rights. In effect Metro could protect other resource values. Mr. Desmond agreed that this might be an option.

Chair McLain asked what the staffing level should be from a budget perspective and if the type of staffing might be changing. Mr. Desmond said historically there had been a staff of four. There had been one resignation in the past year; and rather than replacing that negotiator, a property manager had been recruited to manage the 15-rental houses acquired with the properties. He believed that the current staff level of three negotiators worked well, since the shift of emphasis was towards natural resources management. He said it was difficult to find qualified people for short-term slots, but hoped to assure staff that their positions were expected to continue for another two years. Mr. Ciecko added that he hoped to be able to offer the expertise of staff to local jurisdictions that did not have their own real estate negotiators.

Councilor Park said there was a further option that had been discussed internally; to give the public the opportunity to decide if they wanted to continue acquisition beyond the targeted 6,000 acres, put money into operation or stop collecting on the bonds. He thought that option should be included. He asked what percentage of the remaining $34 million was interest. Mr. Ciecko responded that funds were co-mingled and interest was not noted separately. Jennifer Sims, Administrative Services Department (ASD) Director/Chief Financial Officer, said she could report on how much interest had been earned on the bonds to date. Chair McLain said that would be fine.

Councilor Park asked Office of General Counsel (OGC) if there had been any legal challenges. Dan Cooper, OGC, said bond money could not be spent on operations or maintenance. The bond measure as written did nothing for local governments except allocate $25 million with no interest earnings. It spoke only to Metro spending the rest of the money on acquisition of land. It was a clear statement that the intent was for Metro to acquire land. There was more ambiguity as to how to spend interest on the bond money. There were two problems; 1) validity of collecting the property taxes and 2) IRS regulations that state that if the money was spent incorrectly, the tax exempt status of the bond would be blown. Everyone who had bought the bonds would owe taxes to the Federal Government. Before any of the spending patterns set up in the beginning were changed, the first step was to ask the Bond Council for an opinion as to its legality. Often the Bond Council suggested a validation procedure through the Circuit Court. If the answer there was positive, then the change might be made with a high comfort level. Another alternative was to go back to the voters for direction if the first two answers were no. Even the voters could not approve anything other than capital expenditures.

Councilor Park thanked Mr. Cooper for a nice clear “maybe”. Chair McLain felt, as a member who had sat through all the discussion and votes on the two bond measures, that the original bond language was clear. Metro money would only be spent on acquisitions. Only local share money could be used for acquisition or a combination of acquisition and capital projects. She asked Mr. Cooper if he was saying now that the language was unclear. Mr. Cooper said no, he agreed with her statement, but if Council wanted to spend bond money in other ways the Bond Council would be the next step. He clarified that the measure was silent as to sending money back to local jurisdictions for their use. Chair McLain felt Metro should be very aware on the history of the bond issue and its literature before going to the Bond Council. The voters have not said buy less or change the spending to smaller pots.

Councilor Atherton asked if there were restrictions on spending the bond interest. Mr. Cooper said yes, interest was dedicated to the same purpose as the bond. In fact there was a federal cap on how much Metro could earn and remain tax exempt.

Chair McLain said that next item was possible revenue sources addressed in the second memo, System Development Charges for Regional Parks and Greenspaces, from Tony Mounts. A copy is included in the public record. Ms. Sims spoke to the memo in Mr. Mount’s absence. Chair McLain asked if Mr. Cooper was prepared to speak to the legal authority issue. Mr. Cooper said the issue was whether the statute was intended to allow overlapping System Development Charges (SDC) for parks where local governments have one in place. The answer had not been researched. There were some questions under the Charter as to whether Metro had the authority to do that. He would return to a later meeting with the answer. Chair McLain noted that this item was part of a list of possibilities.

Councilor Atherton said there were two parts to a SDC: 1). Impact and 2). Reimbursement to the community for investment in a facility. He understood that only actual costs expended for that facility could be collected e.g. if property was given to a community no SDC could be collected for the monetary appreciation of the property. So far he had found no SDCs that included interest cost. The concept of a SDC for parks was that people here would be investing in the community. Those holding unimproved land paid considerably less. The value of their land was propped up by the investment of the rest of the community. The theory was to reimburse those who had improved their land from those who did not. Chair McLain felt that any further question should be continued by the individual councilor. She did not see the Committee acting on this issue.

Chair McLain said that Committee staff had revised the calendar slightly. A copy is included in the public record. End of the year conditions of tonnage and actuals would be reported beginning September 13 and 27, and at the Council Informal September 26. Councilor Park asked if there would be two forecasts. Ms. Sims said the report September 13 was for the year-end report for FY 1999-2000, giving last year’s actuals, the beginning balance for this year and how that goes forward into the 5-year forecast,. At the September 27 meeting ASD would discuss the effect of beginning balances on Metro’s fiscal outlook, how this year’s budget was being managed and assumptions for the 2002 budget. She appreciated the Councilors participation in the process. Councilor Park said he was interested in what might happen if the Tax Limitation measure should pass. Ms. Sims agreed that all possible scenarios would be examined.

(Tape 2 was defective; the following discussion was created from written notes.)

Jayne Cronlund, Three Rivers Land Conservancy, said she was not here to talk to a specific property. She felt the Parks department had done an amazing job that was a model to the rest of the country. However, she said there had been changes since the bond issue was passed and in the past six years that there might have been opportunities where Metro could stand to gain by partnering that might have been overlooked. Chair McLain felt Council and staff were never closed to new opportunities. Councilor Atherton said her point of times having changed was an interesting one. He felt it was a valid point. Chair McLain agreed that in such cases staff would bring any opportunities to Council through the process already in place.

Craig Prosser, Three Rivers Land Conservancy, said there was a real opportunity to review the strategy and take it out to the public for further refinements as noted in the staff memo.

3.  Councilor Communications

None

Chair McLain adjourned the meeting at 2:40 PM.

Respectfully submitted,

Pat Weathers

Council Assistant

ATTACHMENTS TO THE PUBLIC RECORD FOR THE MEETING OF AUGUST 16, 2000

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

i:\minutes\2000\budget&finance/08160bdm.doc