JOINT BOARD OF COMMISSIONERS and
FAIR BOARD MEETING
September 26, 2001
Commissioners' Conference Room
Commissioner Anna Morrison presided with Commissioners Bill Dwyer, Bobby Green, Sr., Peter Sorenson and Cindy Weeldreyer present. County Administrator Bill Van Vactor, County Counsel Teresa Nelson and Recording Secretary Melissa Zimmer were also present.
Dean Hanson presided over the Fair Board with Francesa Johnson, Tom Hunton, Mike Gleason, Bob Zagorin (representing CVALCO). Charles Warren and Jon Jaqua were not able to attend.
a. DISCUSSION/Refinancing the 1998 Outstanding Fair Bonds and Options Regarding Fairgrounds Capital Account.
Hanson recalled they reviewed the master plan and discussed future projects including the Planetarium. He noted they had requested operating assistance for the Planetarium and asked that the Planetarium be included in the their future business plan. He noted they met in December 2000 and at that time they presented the business plan for the Planetarium and the Board approved operating support. He said they met in July and at that meeting they reaffirmed the business partnership memorialized by the joint mission statement, joint capital improvement plan, and joint business plan. He asked for reaffirmation of their business partnership, including the capital improvement plan, the business plan and the mission statement. He stated they need authorization to refinance the bond and for pledging those dollars for capital improvement projects.
Mike Gleason, President, Fairgrounds, explained the Planetarium was not part of the bond refinancing. He noted there had been two policy discussions, the convention center discussion in the metro area and the Lane County Convention Center and Fairgrounds. He said there was a report in 1995 from Coopers & Lybrand on the convention center and the studies were commissioned by the County, and CVALCO and paid with room tax funds. He said that is when the City of Eugene wanted to add to the conference center because the Hilton Hotel did not enlarge their convention facilities. He noted that the fairgrounds could support 40,000 square feet, but the money was not in place to do it. He said there was a room tax study performed in 1996 showing revenues over a 20-year period of approximately $11 million. He noted that money would be a third of the capital or two-thirds of the operating costs. He stated in 1977 there was a report by Lane County, Cities of Eugene and Springfield and CVALCO, showing how they develop the remainder of the costs of the 40,000 square foot facility. It showed they needed to refinance the project with five separate sources.
Gleason noted in 1995 the Fair Board did a study about relocating the fairgrounds to another location but it couldn't be done, financially and operationally. He said in 1996 he met with the Board and it was determined the facility was underutilized in supporting economic development, the visitors industry and youth and children. He said he came to the Board in June of 1996 with a list to be completed before the fair. He said the fairgrounds were discharging gray water into Amazon Creek. He noted the health officer wanted to close three bathrooms because there was no hot water. He added their electrical system was declared unsafe and the fire marshal was not going to accept the layout. He noted at that time the Board was willing to give the fairgrounds $50,000 but they wanted a business and capital improvement plan integrated and brought back to the Board consistent with the master plan. He said they improved the problems and the Board then approved a one lump sum payment of $500,000 and continued discussion about what they would do after they adopted their master plan.
Gleason said they now have a seven year plan and they reapproved the document when they wanted to accelerate the reinvestment in the convention center. That is when they refinanced the bond and reaffirmed it to 2009 for the capital plan and the investments from the capital fund.
Gleason reported the Coopers & Lybrand study in the 1995 report, stated the operating subsidy would be $322,000, the capital subsidy per year, after they built would be $150,000, and the building would be about $25 million to $35 million based on 1995 dollars. He noted the total on the operating side would be about $472,000. He added if they projected the dollars from 1995 to 2001, it approximates $570,000 and that would be less than half the size of the facility they are operating currently. He said if the Coopers & Lybrand study were to come back in 2001, they would be looking at $1.1 million in subsidy for the convention side of the facility. He added in 2001 dollars, they were looking at $30 to $36 million for a 40,000 square foot facility or about $3.7 million in debt service and that was why they needed five sources to build and operate the facility.
Regarding the operating subsidy, Gleason explained the revenues come from three sources with $600,000 from the fair. That number had been going up. He noted that Lane Ice Rink attendance had fallen off due to the terrorist attacks. He said they used to receive $800,000 from the horse programs, which they no longer receive. He stated they get about $750,000 per year which operates the facility. He added they receive $300,000 in room tax from Lane County and they had been able to achieve a $2.1 million series of income from other capital sources: City of Eugene, road fund, EWEB, LTD and business partnerships.
Bob Zagorin reported that he had been on the CVALCO board since the early 90’s. He said that CVALCO looked at the possibility of building and operating a new convention center, but it could not be done in the current financial environment. He said more could be done on both sides, having hotels work more closely with the staff. CVALCO had been involved in instituting some of those programs to provide better coordination between the sales staffs of the hotels and the convention center. He said they were supportive of a new convention center in the Gateway area built with private funds. He noted the number one need in the area (aside from better facilities) was a destination attraction. He said they were working on a regional destination, attracting traffic off of I-5 and bringing people into their areas, extending their stays. He stated they saw potential in setting up the Planetarium.
Zagorin stated CVALCO did support the refinance and the business partnership at their last board meeting, but it was not a unanimous vote. He noted they wanted to review that periodically, but they see the Lane County Convention Center and the Fair Board as their best hope for the future. He added as part of the discussions of the refinance plan, the leadership of CVALCO stated if the refinancing went forward, the Fair Board should restore the special projects fund. He thought it would place their capital finance plan on solid footing and that money should be restored and not drawn down.
Zagorin believed the Planetarium could accomplish two goals at the same time with the same monies. With regard to the refinance plan, he said they could take a major step toward Lane County’s supergoal because the Planetarium would be a major benefit to school children in the area.
Morrison stated that Westlund had offered to prepare an industry indicator report about occupancy rates for the December meeting. Morrison wanted to have the report completed for October/November so they could review it.
Jeff Towery, Budget Analyst, explained that he analyzed the Fair Board’s proposal in the context of three policy decisions: whether or not to refinance the existing debt, what would be done with the additional revenues that are freed up as a result of the refinancing, and how often would they review the dedication of those additional revenues. He said they referred to this as the sweep. He said the numbers he generated in supporting his analysis support the Fair Board’s contention that refinancing over a 20 year period is an appropriate direction to go. His recommendation was to pursue that with Lane County’s bond counsel and financial advisors, bringing back a Board Order allowing the consultant costs to be financed
Towery noted the second part had to do with allocation of funds. His initial recommendation was to defer the decision on how to allocate the balance available until the December meeting. He said the Fair Board had been convincing with some of the imminent needs. He noted a companion recommendation was to authorize staff to create a board order to pursue the refinance, dedicating the balance available for capital improvements to the Fair Board for a period of five years from the date of the refinancing. He asked how frequently they wanted that reviewed. He noted the proposed Board Order that the Fair Board provided required a review every four years. His understanding was at the end of five years, they would review allocations for the next period.
Dwyer asked if there was consensus between the Fair Board and County Administration.
Hanson replied there was.
Towery noted the new board order that would be presented to the Board would rescind the 1998 board order that dedicated the sweep out to 2009 and it was specific about implementation of the capital improvement plan. He added the commitment to 2015 for the Florence site is incorporated into that analysis.
Green asked Gleason and the Fair Board (given the list they have for their master plan and use of these funds) what wouldn’t get done.
Gleason responded the Fair Board thought the business partnership and capital improvements plan, and mission statement and the 40% of room tax was an integral part of the relationship. He said by being able to present their capital improvement plan it gets funded back into the operating budget so there are two separate reviews on this topic every year but every five years, they should debate whether this was the right policy. He added if there were any money available beyond what they would need in their capital forecast the Board would have the ability to allocate it somewhere else.
MOTION: to move Towery’s recommendation with the understanding that the de novo review of their needs would not go to zero and in five years they would make a decision on the resource. He said this would give them the go ahead for the refinancing and to move on.
Dwyer MOVED, Green SECONDED.
Sorenson asked how the debt would be repaid after the five-year period.
Gleason responded the debt would continue to be repaid by the room tax that was available based on the bond sale schedule. He said the place where allocated monies are available would be a de novo fresh review from the ground up as to whether or not the supported commitment makes sense. He said it was important to them that there is a meeting of the minds with the Board of Commissioners each year and that the CIP, the business plan and mission statement are all integrated. He noted if the commissioners wished to change one of those, they would be happy to work through it.
Van Vactor stated they would contact their financial consultant, who would get estimates and a payment schedule.
Sorenson asked about the status of the tourism grants.
Tanya Heaton, Budget Analyst, replied that last year the Board agreed that they would support the Planetarium project with operations money. She noted the Business Plan presented by the Fair Board was that they would need about $330,000 over three years for operation of the Planetarium project. She said the Board directed that those funds be taken from the special projects tourism dollars over the three year period. She added this past year $100,000 was transferred to the Fair Board. She noted the business plan stipulates that the transfer would go for two more years up to $330,000 and that meant there would be little if any money for any additional special projects for two years. She believed that in the budget process the Fair Board could direct that the sweep money (through an annual budget process) could go to tourism dollars.
Wilson recalled that there was a provision in the room tax ordinance that the Board can, on an annual basis, direct funds through the sweep funds. She stated if the Board was to choose to tell the Fair Board they could reduce the sweep one-year in order to pull money over for special projects.
Towery said if they wanted to direct a portion of the money to the special projects fund, they could do that. He didn’t think it was consistent with the motion that was on the table. He added the other way the funds could be paid would be through the refinance and dedicating the balance available for capital improvements to the Fair Board.
Morrison noted when they originally took the action last year, there was a repayment part that went back to the Board. She said they have to study the decrease in overall room tax monies because it is not a guaranteed funding stream
Green stated they made a commitment around $330,000 and the Board loaned the money to the Fair Board in good faith. He noted what was missing was when they would pay the money.
Gleason explained the intention was to pay back the unsecured loan and the initial payment over a three-year period, and start to pay back in the fourth year. He hoped they would be able to adjust the schedule of payments of the bond in such a way that they could make a quicker repayment pending the decision of the Board. He said the new forecast was to bring back experts to do some analysis on what they think would happen.
Van Vactor was concerned that if they reduced the payment early in the payment, they increase them in the out years and in a period of uncertainty that would be a risk.
Sorenson stated by having the analysis on the refinance and the agreement between County Administrator and the Fair Board is important and a positive thing. He noted the policy direction of the Board allowing the refinancing was a positive move for the community.
Morrison asked Van Vactor, Towery, Warren Wong and Gleason to come back as soon as possible with some type of recommendation on the payback of the special tourism dollars.
Gleason presumed the payback was five years from date of sale.
Wilson noted there would be a Board Order capturing the direction to proceed on the refinancing and the sweep and the review of the allocation after five years.
Morrison recalled that Zagorin would take back to Kari Westlund that the Board wanted a summary presented in December.
There being no further business, Commissioner Morrison recessed the meeting at 1:30 p.m.
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