March 31, 2004

12:00 Noon

Commissionersí Conference Room

APPROVED 12/1/04


Commissioner Bobby Green, Sr., presided with Commissioners Bill Dwyer, Don Hampton, Anna Morrison and Peter Sorenson present.County Administrator Bill Van Vactor, County Counsel Teresa Wilson and Recording Secretary Melissa Zimmer were also present.


Fair Board Members Present:Angel Jones, Warren Wong, Tom Hunton, Bob Zagorin, and Charles Warren 


1. ORDER 04-3-31-15/In the Matter of Amending Chapter 3 of the Lane Manual to Revise the Memorandum of Understanding Between Lane County Commissioners and the Fair Board and to Set a Term Limit for Fair Board Members (Exhibit "A" to LM 3.160; LM 3.558).


MOTION: to move to approve ORDER 04-3-31-15.


Morrison MOVED, Dwyer SECONDED.


Green noted the request from the Fair Board is to set time limits for members who are appointed to the Board by the Board of Commissioners.


Dwyer asked if the provision in the Lane Manual applied to these limits.


Wilson explained that the general rule, with respect to advisory committees, applies to all committees.She noted the Fair Board is not a true advisory committee; it has exclusive management authority.She said the Memorandum of Understanding is a way of making a commitment to the Fair Board and it would apply.She added it provides additional clarity.


Morrison noted this was done by the Boardís request.She said they accommodated that and adjusted the term limits.


Sorenson commented there were drawbacks to the term limit provisions.


Green supported the order.


VOTE: 5-0.


2. DISCUSSION/Financial Stability.


Warren Wong, Fairgrounds, explained the Board has a copy of a cover memo and background material that the Fair Board used to deliberate on this recommendation.††† He noted that financial stability had been their goal at the Fair Board.He added they have had operating deficits and had to draw on the operative line of credit to keep the doors open.He said their business philosophy is to provide a venue to meet their mission statement.He explained that events usually cover their direct cost, except there are some, such as 4H activities, that donít and are an output of the Fair Board and the Board of Commissioners.He noted some events generate room nights but the majority do not.He added most attendees are local people.


Wong noted the strategies they have used over the past few years include trying to increase revenue and activities.He said there was a constraint because of the quality of facilities they are trying to rent and the ability of the client to pay, given the competition in the market.


Wong reported staff count has been reduced by over one-third.He said they have done energy conservation and other cost-savings measures.He noted there were two costs they couldnít control, PERS and the health insurance package.He added his employees are Lane County employees and receive the same benefits as general County employees.He said the Fair Board recognizes that as a public entity they are required to fund those benefits.He noted that on the revenue side they are capped by competition and the clientís ability to pay.He added on the cost side, all of the costs--with the exception of PERS and health insurance--are the same as the private sector, but those two costs canít be overcome by the revenue they [the fairgrounds] generates.


Wong noted in other venues in Oregon and across the country, fairgrounds, convention centers and conference halls receive a general subsidy from their governing body.He explained most of the fairgrounds in Oregon receive transient room tax, some counties provide general fund monies.He noted the state fair gets general fund monies.He stated the proposal the Fair Board had deliberated on and recommended is using transient room tax as a general revenue source for Lane County.He stated the Board has the authority to allocate those resources to the Fair Board without a sunset clause.He said the Board would always be able to rescind that and allow the Fair Board to use part of the transient room tax up to the computed comparative differential disadvantage to go to the operating budget to mitigate the cost of PERS, health insurance and other costs due to operating losses.


Wong explained that if they were to approve the recommendation he would expect the Fair Board to move about $200,000 per year to the operating budget.He added about $125,000 would go initially towards establishing the cash reserve.He said the balance would go toward making sure the operating budget didnít end up in a deficit situation.He asked that if the Board is going to take action on the recommendation, it take place prior to the end of the fiscal year so they could effectuate some of the transfers.He commented that, given the current environment of the Fair Board, he saw no other alternative short of privatizing the fairgrounds.The Fair Board considered that and rejected the idea.He said what was before the Board was what they saw as the viable option.


Hunton commented that the Fair Board didnít take this lightly.He said they were proud of themselves and did not ask for an operating subsidy.He said they investigated all ideas and came to the conclusion that this was the best hope for the facility.


Warren recalled that in the past few years he came before the Board and stated how proud they were that the fairgrounds was one of the few facilities in the entire country that operated without subsidies.He said he came before the Board this past December stating they were not in a financial crisis.He said they had faced financial challenges and expect to face them in the future.He thought they should continue to pay their own way.He commented that these challenges had come sooner than expected.†† He reported that for the past three months the City of Eugene had increased their storm water run off fees from $8,000 to $58,000 per year.He added the ice rink had gone from a profit center to a financial liability.He stated they came to the realization they cannot compete with the private sector while having to pay public employee benefits.He reported they had problems for the past three years that were beyond their control including environmental, the economy and E-coli.†† He stated that without the Boardís help, the fairgrounds will be in financial trouble.He stated the fairgrounds is a unique facility and serves the people of Lane County.He said they have to do everything they can to preserve the situation.


Jones asked the Board for flexibility to use the transient room tax dollars to meet the needs of what they are trying to accomplish.


Zagorin indicated he had been through a number of meetings regarding these issues.He said they are now in a more competitive environment than ever before with other counties and cities in competing for some of the major events.He said they need to work with CVALCO to do a better job of competing for those events.


Hunton asked that the Board give them the tools and latitude to make the best use of the TRT funds for the viability of the facility.


Dwyer agreed with what they wanted to do.He thought they should change some of the terminology, including a perpetual commitment.He would word it ďa commitment until otherwise revoked.ĒHe thought they were doing the right thing.He thought that competitively they had their work cut out for them


Morrison commented that most events make money except for the 4-H Fair, which they knew about.†† She stated they have to address issues, and to ignore them is a mistake.


Wong said in order for them to plan for the future, they need to know that the transient room tax would be there for a period of time.He commented that because they are dealing with clients into the future, they need a five-year commitment.


Morrison stated she would agree with changing the funds from capital to operating, but she wanted to review that on an annual basis.She asked how they could track room nights and produce numbers.


Wong responded that for certain events at the Lane Events Center, he didnít know if CVALCO kept that information.He said it was hard to track the thousands of people who visit and normally drive in.He said they had not required their clients to do that record keeping because it was costly and difficult.


Warren commented they have some large conventions, but they have many other community events, and to base their room tax money toward operation (which was only one-third of their mission) was not rational.


Dwyer commented that transient room tax doesnít belong to CVALCO.He noted that they are in the industry and the money comes from their industry.He said it was a tax on people who use their facilities and that tax goes back to them.He said if they donít start to figure out what they are going to do for the future, they are going to continue to lose their market share.


Jeff Morton, CVALCO Board, said CVALCO agrees to giving the Fair Board the tools they need to run the fairgrounds.He said they want the fairgrounds to be competitive and are looking for a more appropriate link from where the money is coming from to get to the Fair Board instead of the comparative disadvantage formula.He indicated findings from their issues committee, and the Board, is what they think are critical.They are not looking to change the format.He thought the primary focus should be on overnight visitors and they want to protect the groups they have.He said they were looking for dollars to compete with other public entities.He said they had a meeting with the Fair Board and came up with ideas to work for business opportunity fund dollars to get those events and keep the ones they have.He said they were willing to bring the dollars into operations but they wanted it linked to a source of funds.He thought they didnít need to establish such a large rainy day fund and they could use some of that money.He added they also had problems with the long-term fixtures. He thought a possible solution could be a one-year allocation now, then come back with a task force with the right formula linking the funds back to the use.


Hunton concurred with Morton.He said the County has a great asset, but they need a better measure of the economic impact on the community.He added that the competitive fund to help entice groups is something they proposed that, if they are allowed the latitude, the Fair Board would support setting up a fund for CVALCO to help buy down their rates if that would make a difference in bringing events into Lane County.


Sorenson asked if they believed there was any upper limit on the percentage of TRT for operations.


Wong said by using PERS and the health insurance as the basis for determining that differential, it was easy to quantify.He said they were looking at $225,000 initially.He noted one of the difficulties the Fair Board has is they have no cash reserve and they are into a line of credit of $80,000.He said they need some working capital.He commented the dilemma was they had scarce dollars and the trade off is between replacing capital, equipment vs. keeping the place viable.


Warren commented that the people they compete with are public and are subsidized.That is making things difficult.He stated if they were a private organization paying the same salaries as the private sector, they would not need the subsidies.He commented there is a substantial difference between public employee benefits and private businesses.He explained that CVALCOís formula would force them to put a higher priority on booking room nights than community events.He didnít want to be in that position.


Green said the Board would be making a decision in a timely manner.He said he would be supportive of CVACLO and the fairgrounds in thriving, but not to the detriment of Lane County.He was supportive of changing language to provide the tools that are necessary.


Van Vactor commented that Wong was not talking about the Lane County general fund.He recalled the 2003 Legislature restricted the use of transient room tax.He explained from his reading of Terry Wilsonís opinion on this, is that they have a lot of activities in their Parks Division that would be eligible for use of transient room tax as they meet the tourism related category.He noted they currently have a car rental tax that raises over $1 million a year of which about $750,000 goes to the Parks Division.He thought they could take a portion of that car rental tax that is unrestricted; rededicate that to the general fund and backfill the loss to the Parks Division with transient room tax.He thought in that sense the transient room tax was comparable with the general fund.He requested an opportunity to meet with Wong to go through the spreadsheets so that when they go to the Budget Committee they have a common understanding.


Hunton didnít want to transfer more from the capital side to the operating side than they necessarily have to.He added they want this to be designed so they are not penalized.


Wilson recalled that last year as part of the annual budget process the Board authorized use of the sweep money for repayment of the planetarium loan and for the first disbursal into the rainy day reserve.She said they would need to do another order to do that again.


There being no further business, Commissioner Green recessed the meeting at 12:50 p.m.



Melissa Zimmer

Recording Secretary