June 11, 1997
BOARD OF COMMISSIONERS' REGULAR MEETING
Commissioners' Conference Room - 1:30 p.m.
Chair Cindy Weeldreyer presided with Steve Cornacchia, Ellie Dumdi, Bobby Green, Sr. and Peter Sorenson present. Zoe Gilstrap, Recording Secretary.
14. COMMISSIONERS' ANNOUNCEMENTS
15. OTHER BUSINESS
a. DISCUSSION/West Eugene Enterprise Zone.
Lew Bowers, Manager, Committee Development, City of Eugene, gave an overview of the West Enterprise Zone (see material on file). He said if criteria are not adopted before June 30, 1997, there will no longer be any opportunity to adopt local criteria.
Responding to Green, Denny Broad, Development Analysis, City of Eugene, stated that they first discussed changes to the Enterprise Zone in the summer of 1996. He said the council first heard it after the committee completed their work.
Bowers reviewed the issues that led to the decision for new local criteria. He explained that they felt that any exemption should be more closely tied to public benefit, that the focus should be on the quality of jobs created as far as wage and benefit of those jobs and that there should be an emphasis on hiring local residents and persons with employment barriers. Bowers noted that in the middle of the whole process, the entire tax system changed as a result of Ballot Measures 47 and 50 which had several major impacts with the most significant being that there has been an intensive search for revenue to fund local services that had been eliminated. He said that under Ballot Measure 50, new investment now equals new revenue for the local taxing jurisdictions which was not the previous case and changes the whole concept of providing a tax exemption. Bowers noted that, in addition, the local economy has changed and is more diversified with lower unemployment. He discussed the management study created by the City of Eugene and the emphasis on curtailing growth. Bowers remarked that there has been a debate over whether the enterprise zone was a necessary incentive to create investment or an unnecessary give away to firms who would make the investment anyhow.
Braud reviewed which investments would be affected by the new criteria and noted that there are three types of investments. He said the first type includes the existing, or those currently receiving, and investments that have already been pre-certified under the enterprise zone program, noting that these investments are not affected by any new policy that is being considered. He said there is no revenue during the first three years, however, they will go onto the tax rolls in year four and pay full taxes. Second, Braud explained, are the investments made by a grandfathered company which is the group actually affected by the new criteria. He used Hyundai as an example, stating that phase one would fall into the first category as an existing investment, however, phase two would be subject to additional criteria as an investment made by the grandfathered firm. Braud noted that as far as potential public revenue, part of the tax exemption in years one through three would be recaptured with the investment going onto the tax roll in year four. Braud continued, saying the third investment is a new investment which would not qualify for a tax exemption either because they have never participated in a program and are not grandfathered or that it is just a new investment that happened after the expiration of the zone. He stated that they cannot say to what extent new investments will be made after the zone expires. Braud explained that new investments would go onto the tax rolls in year one and pay full taxes, noting that under Ballot Measure 50, the projects going onto the tax rolls would result in new local property tax revenue.
Braud explained the new criteria, stating that a company under the statute receives a 100% tax exemption but based on 1995 legislation which allows a city local flexibility to adopt new criteria and is now able to recapture part of the tax exemption. He explained that the concept is recapturing the cost of providing services for new development in the form of a public benefit contribution. Braud stated that the actual net benefit to the company would be 100% tax abatement minus whatever is recaptured. He remarked that the public benefit contribution for every project that qualifies under the new criteria would require at least a 25% minimum public benefit contribution and may require more depending upon the level that the project provided. Braud stated that public benefit is defined by a point system that the committee helped put together, noting that public benefit points are awarded in various categories with different opportunities for companies to score points such as job quality, expansion of local small business, wages and benefits, redevelopment goals, etc. He said the formula for this point system is 100, minus the points that they score. Braud went on to say that, in addition to the points, there is also a cap which is part of the matrix criteria and no investment will receive a tax exemption greater than $15,000 per new job created over a three-year period or $5,000 per year over a three-year period. He commented that there is also a provision in the criteria for large businesses to provide customized job training. Braud summarized to say that the recapture public benefit contribution would be the greater of 25%, the amount under the point system or the amount under the cap.
Weeldreyer announced that there has been time set aside for public comment.
John Lively, Executive Director, Metro Partnership, 44 W. Broadway, Eugene, acknowledged the time crunch but said he supports the city for not going forward with renewing the Enterprise Zone. He stated, however, that he is concerned about the cap and said the presumption that there is always going to be investments is shortsighted and stressed the need to focus on the long-term effects. Lively remarked that the cap disregards the disproportionate high investments that have to be made by high technology in relationship to jobs. He commented that in this state, there has been an opportunity to reinvest in education because individuals and companies are paying more income taxes as a result of doing very well. Lively said the message being sent to local and outside businesses is a very strong message that we are only concerned about the short term. He stated that it was clear up front that Hyundai would be having multi investments and it was always made very clear that the exemptions would be available to them for multiple phases.
D. S. Shyn, Executive vice-president, Hyundai, discussed assurances and commitments made when he first came to Eugene. He stated that when Hyundai first considered building in Eugene, their decision was based on the fact that the Enterprise Zone would be available during the three phases of investment. Shyn said they had intended to have a long-term relationship but that is now dependent on the government keeping their promises. Shyn acknowledged that Ballot Measures 47 and 50 change things but urged that the current zone be kept in place and the City of Eugene to keep its word.
John Day, Corporate Controller, Hyundai, 1740 Willow Creek Road, Eugene, stated that the numbers submitted to them previously suggest that their property tax payments will not only eventually become a very large part of taxes but will be third largest for this area. He discussed the projected property tax revenues and current property tax payments with the abatement (see material on file). Day remarked that Hyundai is strengthening Lane County, stating that there is not an area in the County that hasnt been impacted. He urged the Commissioners to reject the proposed changes and continue with current rules.
Jim Hartman, President, Hyundai, 1740 Willow Creek Circle, Eugene, explained how the Enterprise Zone relates to Hyundai, stating that the zone is now and has always been an integral part of the organization. He stated that they have their own security, fire and protection system and have no plans of using local police or fire. Hartman noted that they have excellent health care, training and benefits for employees. Hartman commented that he is amazed how Hyundai has been repeatedly singled out, noting that any changes in enterprise zone requirements would have a major impact on them.
Alan Thayer, P.O. Box 11229, Eugene, stated that he supports Hyundai and if the investment will pay off in three years, he is willing to wait. He said when the benefit went to taxpayers and reduced payments, this program was fine but when it is taken from government, it is a different matter. He opposed the entire recapture concept.
Richard Steers, Vice provost University of Oregon, 4046 Normandy, Eugene, stated that he is opposed to the proposal because it is short sighted. He said the whole point is job creation and the company is doing just that, as promised. Steers stated that the cap is working against high-tech jobs which would lead Lane County to become a low-tech area. He remarked that the Citys proposal is unfair and is coming to Lane County two and half weeks before the deadline, noting that Hyundai was not invited. Steers stated that, "Hyundai trusted us and came here on information we provided them and, after a substantial investment, we changed the rules."
John Belcher, 1190 W. 17th, Eugene, said as far as the process is concerned, any member could apply because a public hearing was advertised. He stated that he looked at several studies on enterprise zones, noting that Portland has a $10,000 cap and a 25% public benefit investment. He suggested that a bad decision should not be made based on frustration.
Richard Dwyer, 895 County Club Road, Eugene, Director Prudential Preferred Services, said he supports businesses like Hyundai coming to the community. He stated that integrity is important and Eugene negotiated with the company in good faith. Dwyer urged the Commissioners to uphold that integrity.
Ray Wolf, 1473 Luellen Street, Eugene, referred to literature from American Planning Decisions which questions enterprise zones. He discussed the impact on taxpayers and the tax cost to property owners. Wolf suggested getting information from the Attorney General. He remarked that the enterprise zone is going to fill up sooner or later, therefore, we are just paying to speed up something that is going to happen anyway.
David Hinkley, 1308 Jefferson, Eugene, said a major change of rules happened when Ballot Measure 47 passed, that now when a company is given a tax abatement no one picks up the costs of the new development. He stated that between now and when Hyundai does pays full taxes, no one will be paying for services generated by the new business. Hinkley explained that Hyundai is bringing employees with children, requiring teachers, public safety and recreational services.
Dick Pfunder, 2052 S. Shasta Loop, Eugene, discussed the citizens on the committee who reviewed these criteria for the city, noting that the committee was a good cross section of Eugene, who held very interactive, lively debates. He remarked that after a lot of give and take, they reached consensus and passed it onto City Council. Pfunder stated that the citizens committee did vote not to extend the enterprise zone and did vote on per job caps. He commented that they did have unanimous decision with the committee that the matrix was interactive and proportional to each other and felt that should the matrix be modified it should go up and down proportionally.
Ken Tollenaar, 1522 Russet Drive, Eugene, stated that communications on this matter have been handled very poorly. He briefly explained why the council acted on the cap, stating that as data was presented, there was disparity evidenced in job exemptions. He said the most important factor was the impact of Ballot Measures 47 and 50 because every dollar is a dollar taken away from city services. Tollenaar addressed the objection to the cap because of alleged discrimination of a large firm and stated that the purpose of the enterprise zone is to create jobs. He remarked that the proposal of the council does not single out specific firms. Tollenaar stated that he is satisfied that there have been no violations of agreement in the Memorandum of Understanding and that the pledge of cooperation is still there. He commented that the proposed matrix, including the cap, is very sound public policy, noting that Hyundai would still receive $13 million in tax exemptions for phase two. Tollenaar stated that if the Commissioners do not go along with this proposal, he would like to set up a committee to include members of the Board and the Council to explore new ideas before June 30.
Gary Pierpoint, 2059 Musket Street, Eugene, referred to Pfunders presentation and said they took everything into account which concluded continuing with the enterprise zone. He asked that they not consider the job cap. Pierpoint stated that he hoped they take the advisory committees recommendation to heart.
Craig Smith, 180 E. 11th, Eugene, co-chair, said the constraint under which the committee was formed when the council said they were not going to continue the zone in its current form, was to make changes. He stated that they had no option other than to take action. Smith remarked that he believes the job cap is purely counting heads while the real purpose was to obtain additional revenue for the city and that the public benefit goes well beyond city and school districts. He questioned whether the city has maintained integrity. Smith recommended that zone be extended another ten years.
Lynn Feeken, 1060 Tyler, Eugene, apologized for the process issue and the bind it is putting the Board in, stating that the committee originally set out to examine the success of the zone. She said the focus of the enterprise zone was job creation and stimulation of investment. Feeken supported the criteria strongly and urged the Board to take standards under consideration, stating that it would be irresponsible to let this pass and let the zone go on with no standards set in place. She said rule changes are not unfair because there are always unforeseen circumstances.
Bern Johnson, 1290 E. 25th, Eugene, stated that the discussion about the trust, integrity and breach issue imply there was some prior written agreement. Johnson said no one can come forward with a contract that said either the City or the County had agreed not to change the enterprise zone. He observed that there was nothing put into the Memorandum of Understanding to exclude it and said this discussion is irrelevant. Johnson remarked that this company is asking for larger tax breaks at a time, when Eugene, as a community, went through Ballot Measures 47 and 50 and the long process of cuts. He stated that the city is recognizing these issues and that is why they are talking about cutting tax breaks to the large companies.
Ken Yee, 1815 Oak Avenue, Eugene, stated that no one can deny the condition of economy of Eugene today, noting that due to Ballot Measures 47 and 50, the first thing to get cut is police, fire and education which he felt was blackmail. Yee remarked that there were 26,000 houses built in two years and asked where those tax revenues went. He encouraged the Board to work together to make it work.
Neil Goldschmidt, 222 SW Columbia, Portland, stated it is absolutely relevant that businesses pay and found it amazing that no one in the city council process had noticed that by the third year, with the best tax incentives imagined, Hyundai would probably be the second highest property taxpayer in the county, not including what they pay in income taxes and system development charges. Goldschmidt referred to foregone revenue (see material on file) and said the school districts do not forego that money. He explained that the reason the SIP program was initiated, was because many places did not qualify for enterprise zones and big companies said they did not want to build in this state because the property taxes were too high. Goldschmidt remarked that high value tax businesses have a hard time functioning in a high property tax environment. He noted that Tektronics, Data General and Hewlett Packard all tried to come here and said it has been hard to get companies like these to come here. Goldschmidt stressed that it is not in Lane Countys economic self interest to force these companies to depend on the law to get what they were promised.
Weeldreyer asked if there was a majority of the Board to approve the proposal as presented and, if not, would they be interested in engaging two commissioners to be on a committee with two council members.
Cornacchia stated that he was not supportive of the cap and was prepared to act today.
Dumdi said she was also ready to act today, stating that she was not in favor of the cap.
Green concurred with Dumdi and Cornacchia.
Sorenson stated that there should be communication rather than acting. He remarked that he is inclined to see if two commissioners are interested in working with the city. Sorenson said both the City and the County have been remiss in keeping the Board informed on this issue.
Weeldreyer stated that she is uncomfortable with the cap and recommended that two Eugene commissioners be appointed to serve as liaison with the City.
Sorenson remarked that this is a good idea because of the huge impact on the city.
Teresa Wilson, County Counsel, stated that the enterprise zone will terminate on June 30 and that the City has made a decision not to extend it. She clarified that this it is not a question of extension of the zone, it is a question concerning businesses already qualified for the exemptions. Wilson explained that if there is not agreement, there are no new criteria or matrix and the benefits for the companies that are already pre-certified would continue for the remaining life.
Cornacchia suggested that Sorenson spend a week working with the City and come back with a report and recommendation.
Dumdi reiterated that she is ready to make a decision and has no problem with the zone not being renewed. She expressed concern about the message that it being sent to the company.
Green stated that he is fine with the idea of Sorenson going to the City to develop criteria. He commented that the proposal reeks of discrimination and that the company has undergone a higher level of scrutiny than any other previous company. Green stressed that these are family wage jobs.
Cornacchia stated that he is concerned about credibility. He said when timber jobs were lost, the Board made a commitment to recruit family wage jobs. Cornacchia commented that the issues of principals and honor and integrity are not for sale in Lane County. He said when taxpayers were paying the load, no one was concerned, but now that there is money that could be used by government to spend, it is now time for a change. Cornacchia stated that this is really about keeping the City of Eugene from making budget cuts. He remarked that he is ready to make the decision today based upon his principals and his understanding of what they have tried to do for the last seven or eight years and what they have agreed to with Hyundai Corporation.
Sorenson said he would meet with members from the City and come back with a report next week
Weeldreyer offered to attend these meetings with Sorenson.
There was consensus that Sorenson and Weeldreyer will meet with the city and this discussion will be concluded next Wednesday, June 18 at 1:30 p.m.
16. PUBLIC HEARINGS
a. PUBLIC HEARING AND FINAL ORDER 97-6-11-6/In the Matter of the Vacation of the Roadway Between Lots 11 and 12 in Porter Acres as Platted and Recorded in Book 5, Page 6 Lane County Oregon Plat Records and Adopting Findings of Fact (18-03-30).
Bob Ezell, County Surveyor, gave a staff report (see material on file). He noted that all required notices have been sent. Ezell illustrated the affected areas using a map. He stated that staff recommendation is denial of the vacation.
Cornacchia asked if there were any findings to support the option of allowing a variance to the road width requirements of the Lane Manual.
Ezell read the private access definition of Lane Manual, noting that there could be a situation to provide for a lesser width. He also referred to the fire and life safety regulations which require that the road bed be at least 16' with a 20' area cleared of vegetation.
John Goodson, Public Works, Director, stated that the primary reason it was not in the best interest of the public to vacate the road was that this road was part of a road system that is two and half miles in length and, that by vacating this portion, there will be a gap in the middle of this road section. Goodson noted that this road does provide legal access to a number of other lots. He remarked that he believed major additional development will occur and the area will be short changed with a narrower road.
Responding to Dumdi, Ezell stated that the residents in the area would be satisfied with a narrower width if the Commissioners determined that a 16' width would be okay. He stated that the Board has the option of waiving the road standard.
Cornacchia stated that given the choices, he could support a 16' width if the applicants are reimbursed for the vacation fee.
Weeldreyer opened the public hearing.
Anna Groat, 85150 Spencer Hollow Road, Eugene, stressed that timing is very important to her and expressed concern that her son would lose a considerable amount of money used for a down payment on a mobile home if he cannot use the road.
Steve Barton, 34127 El Manor, Eugene, stated that he is a part owner of tax lot 600 and also represents the owners of tax lot 700. He expressed frustration because he came down early today and asked from materials that were not provided. Barton said it has been very difficult to get any information from the County during this process. He remarked that it seems like the County is imposing a hardship on citizens and feels frustrated by the treatment the Groats have received. Barton stated that it would be better not to vacate the road but to allow the Groats to develop the road in a reasonable fashion. He said a 16' road would be more than adequate.
Jim Groat, 8550 Spencer Hollow Road, Eugene, noted that a fire truck cannot make a turn on the current access road. He stated that he would be happy to have a narrower road. Groat explained that his son has been waiting to move in a modular home and has his loan approved and has provided a down payment and stands to lose a tremendous amount of money if they run out of time.
Cornacchia asked if they could do a contract annexation or a performance agreement to allow him to move the mobile home.
Don Nickell, Public Works, said he will talk to Legal Counsel to see if that would work.
Carl Burkdorfer, 8501 Spencer Hollow Road, Eugene, stated that there is no other road in there, except for Groats road. He said Groat does an excellent job in maintaining that road even during a severe winter and is in better condition than other roads such as Spencer Hollow. Burkdorfer stated that he is a public employee, works for Springfield and would think that if a citizen offers to put in a road that Lane County would jump at that offer because it is a money saving option in light of Measure 47.
Nell Caroway 3162 Spencer Hollow Road, Eugene, stated that Mr. Groat has done a fine job with his road and does not want to see the road vacated. She remarked that she likes the suggestion of an agreement to allow Groat to complete the road at a narrower width. She said she has seen lots of development and noted that there is the potential for more development.
Weeldreyer closed the public hearing.
Cornacchia stated that the vacation is not in the public interest, however, he supports a variance and suggested that staff work with legal and the applicant to provide the appropriate findings necessary to support decision for a variance. He stressed that the vacation fee should be reimbursed since the applicant came asking for approval of a narrower yard in the first place. Cornacchia also suggested that Nickell talk with legal counsel about a performance agreement.
Nickell suggested that improvements made by Groat be up to his dwelling and that he keep the road as is for the building permit but improve it to 16' prior to being issued his occupancy permit.
MOTION: To deny the vacation and direct staff to work with Mr. Groat regarding the 16-foot roadway and processing of a facility permit to occasion the placement of the home with a road width no greater than 16' , create appropriate findings and refund the vacation fees.
Cornacchia MOVED, Sorenson SECONDED. VOTE: 5-0.
There being no further business, this meeting adjourned at 5:45 p.m. into executive session.
Zoe Gilstrap, Recording Secretary
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