Newport, Oregon

January 7, 2002

7:30 P.M.

The Common Council of the City of Newport, Oregon, met in regular session on the above date, at the Newport Recreation Center, Mayor Jones presiding. On roll call, Allen, Jones, Sabanskas, Updenkelder, Hammond, and Belloni were present. Miller arrived momentarily.

SPECIAL COMMITTEE REPORTS

There were no special committee reports.

PUBLIC COMMENT

There was no public comment.

CONSENT CALENDAR

The consent calendar consisted of the following item:

1. Approval of minutes from the regular meeting of December 17, 2001.

MOTION was made by Sabanskas, seconded by Hammond, that the consent calendar be approved, as presented. The motion carried in a voice vote.

PUBLIC HEARINGS

Public hearing on amendments to the City of Newport’s Comprehensive Plan Map and Zoning Map for Tax Lots 500 and 12800, Tax Map 11-11-8AC (Corrine Murray, Applicant, Kurt Carstens, Authorized Agent). Jones noted that a continuance had been requested from the applicant at the noon meeting. MOTION was made by Miller, seconded by Sabanskas, that this hearing be continued to January 22, 2002. The motion carried unanimously in a voice vote.

Public hearing on the proposed Lincoln County Events Center and Fairgrounds. Jones stated that Council elected to hold a hearing on this matter after a study and presentation by the Chamber of Commerce. He noted that the hearing would proceed as follows: the organized proponents, the Chamber of Commerce, would make a fifteen-minute presentation. Individual proponents would then speak no longer than three minutes each. The organized opponents, the Greater Newport Lodging Association, would make a fifteen-minute presentation. Individual opponents would then speak no longer than three minutes each. The Chamber of Commerce would have five minutes to recap their position. The Greater Newport Lodging Association would have five minutes to recap their position. The hearing will be closed for Council deliberations.

Allen declared an actual conflict of interest, stating, “All public officials in this state are subject to certain state laws regarding conflicts of interest. These laws are known as the Government Standards and Practices Laws. An actual conflict of interest arises when any action, decision, or recommendation taken by a public official acting in that capacity would be to the financial benefit or detriment of that official, certain relatives of that official, or any for-profit business which that official or official’s relative is associated with, for example, as an owner or employee of that business. The law firm I am associated with as “of counsel” represents the owners of the South Beach property that the Chamber of Commerce has recommended for the site of the proposed events center and fairgrounds facility. Thus, I am declaring an actual conflict of interest regarding the City Council’s consideration of the proposed facility because any action, decision, or recommendation taken by the City Council regarding the acquisition of this property for the site of the proposed facility would be to the financial benefit of the law firm. This conflict arises regardless of the amount or nature of any such financial benefit. As a result of this conflict, and pursuant to the Government Standards and Practices Laws, I will have to refrain from participating in all hearings and any action, decision, or recommendation taken by the City Council in this matter.”

Jones opened the public hearing at 7:42 P.M. Don Lindly, 69 NE 20^th Place, Newport, president of the Chamber of Commerce, gave an historical perspective of the quest to build an event center in Newport. He stated that studies indicate that a combined event center/fairground complex is wanted in Newport, and recommended that an 85,000 square foot event center/fairground complex be constructed on the Bunn Property in South Beach. He stated that the complex should provide 276 full-time jobs in Lincoln County, as well as improve the October to May business in the City.

T.C. Caldwell, 283 SE 2^nd Street, Toledo, tourism director for the Chamber of Commerce, highlighted the success of the Seaside Civic and Convention Center and the Pendleton Convention Center. She noted that there are five other stand alone convention centers in the state. She stated that conferences have been turned away from Newport due to the inability to accommodate the numbers of attendees. She reviewed other possible sources of business for the proposed facility. She stated that the event center would not be able to comp meeting space, so the smaller conferences will continue to go to the local hotels and resorts. She suggested that the event center could be used for other types of special events, i.e., car shows, sporting events, concerts, etc. She concluded her remarks stating that the demand for the facility is there, and to build a Class A Convention Center will make Newport a year-round tourist destination.

The following people spoke in support of the facility:

Carol Rehfuss, 2525 NE Big Creek Road, Newport, stated that she is in favor of the proposed event center/fairgrounds complex.

Neal Henning, 1276 NE Benton Street, Newport, manager of Mariner Square, stated that the time has come to move forward on economic development.

Terry Gillies, 915 SW 11^th Street, Newport, a member of the Lincoln County Fair Board, stated that the Fair Board wants to go on record as supporting the event center/fairground complex. He noted that the current fairground facility is too small, and the only other option for expansion is to go to the voters for tax help.

Gary Williams, 1083 NE Newport Heights Drive, Newport, stated that he is a small business owner who sponsors a contractor appreciation dinner that he must hold outside the City due to the lack of a facility. He suggests that this function could be held at the proposed event center.

Bob Jacobson, 2225 NW Oceanview Drive, Newport, stated that the Port Commission supports growth and economic development in the greater Newport area. He stated that the fishing industry is strong, but encourages the expansion of business and creation of new jobs.

Wanda Henning, 1276 NE Benton Street, Newport, stated that she supports the Chamber’s promotion of economic development, and would use the hotel facility for conferences.

Jim Biggs, 580 East Graham Street, Toledo, stated that the Oregon Coast Home and Garden Show supports the proposal. He noted that this event has outgrown other area facilities. He suggested that the facility will serve more than conventions, by serving local events also. He recommended proceeding with the proposal.

John Forsloff, 2160 Deer Lane, Newport, stated that the proposal is a win/win for everyone, and that he supported it.

Esther Pinto, 5755 NE Hazel Court, Newport, stated that the Altrusa Conference, in May of 2000, usually has 350 to 400 attendees, plus spouses, but due to the lack of facility, folks had to double up and spouses stayed home. She noted that she is a member of the Chamber of Commerce Ambassadors, and on the 2006 conference committee, and supports the proposal.

Stephanie Linn, 1447 SE Marine Drive, Newport, a Fair Board Member, stated that she supports the proposal, as the facility will promote year-round business and help the Fair.

Patricia Patrick-Joling, 840 NE Iler Street, Newport, read a statement from Lil Patrick supporting the project. She noted that the facility could be used to host many events, be a permanent home for the Seafood and Wine Festival, and attract more winter functions. She suggested that it was time to take advantage of low interest rates. She stated that she is president of the South Coast Board of Realtors that has held functions at Salishan due to its size, but has since outgrown that facility. She endorsed the project.

Kim Norton, 3232 Crestline Drive, Waldport, stated that she and her husband were local business owners who support the proposal.

Larry Henson, 6090 NE Evergreen Lane, Newport, noted that competition is the cornerstone of society. He recounted a recent trip to Oklahoma where he saw the convention center in Muskogee, which is making money. He stated that no one, at a recent conference he attended, asked the hotels how much room tax they were charging. He stated that he is in favor of the proposal.

Fran Mathews, 556 SW 5^th Street, Newport, vice-president of the Chamber of Commerce and owner of Marine Discovery Tours, stated that she supported the project because of its ability to generate year-round income and family-wage jobs.

Evelyn Brookhyser, 253 NE Chambers Court, Newport, stated that she has been here for more than thirty years, working with 4-H youth who showcase their work at the Fair. She believes that a combined class A convention facility and fairgrounds is in the best interest of Lincoln County citizens.

John Baker, 2014 NE 20^th Street, Newport, noted that he has lived here for thirty years, and during that time, many dreams have come true. He suggested that the event center/fairgrounds is a dream that is worthy of pursuit. He stated that the local hotels and resorts do well with small events, but what Newport is missing is big conference capability. He urged Council to move forward with this project, suggesting that they would not want to look back and lament not having built this facility.

Don Mathews, 556 SW 5^th Street, Newport, owner of Marine Discovery Tours, noted that he had come to Newport ten years ago because of the tourism potential. He supports the project.

Corrine Williams, 219 NW Cliff Street, Newport, owner of the Nye Beach Hotel, stated that she strongly supports bringing more people to the City who may return later. She suggested that the proposal would be a good addition to the City.

Lisa Noah, 141 NW 57^th Street, Newport, stated that she had a petition with signatures of folks would could not attend this meeting, but who supported the proposal. She stated that a lot of focus has been placed on small convention groups that comprise only 22% of the proposed convention business. She inquired about the other 78%, and where they will go without this facility. She noted that the City of Portland is expanding its convention center, and hoped that the city Council will see the positive benefits for this community. She urged the City Council to take the risk and move forward with the proposal.

John Rehfuss, 2525 NE Big Creek Road, Newport, stated that many folks just think the proposal is a good idea, and asked Council not to forget the silent majority.

Jones inquired as to how many audience members supported the proposal but did not wish to speak. Fifteen people responded.

Steve Cockrell, 4044 NW Cherokee Lane, Newport, immediate past president of the Greater Newport Lodging Association, began the organized opponent’s statements. He stated that the GNLA consists of 705 of hotel/motel/B&B rooms in the City, 100% of existing hotel convention space, 90% of convention grade rooms, contributes approximately 75% of the room tax, has over 250 years combined experience in the hotel, hospitality, and tourism industry, employs approximately 800 full-time employees, and more seasonally, and are concerned citizens, property owners, and taxpayers. He stated that the GNLA disagrees with the proposal and the information contained in the Markin Report. He noted that the opposition began with the possibility of an increase in room tax for potential funding for this facility, as well as a concern for competition from public sources using public funding. He stated that the most important issue is the long-term negative impact of the events center. He inquired as to whether it will succeed, and when it fails, who will pay, and whether the public benefit is greater than the cost to the public. He suggested the project is not viable due to lack of demand. He stated that the revenue projections are overstated, and the public benefit is overstated. He stated that the lodging industry invests hundreds of thousands of dollars annually marketing their facilities, and while they are interested in supporting sound economic development to the community, this is not sound economic development. He noted that the GNLA is prepared to support a facility that could accommodate the Seafood and Wine Festival if the funding is available and if the facility can be self-sufficient. He suggested the timing is not right and the proposal contains too many flaws.

Ric Rabourn, 9775 SE Cedar Street, South Beach, vice-president of the GNLA, addressed flaws in the Markin Report. He stated that The Chambers Group had reviewed written reports prepared by Markin Consulting and Edcon. He addressed comments made particularly by the Markin Report. He noted that the results of the study’s survey do not seem to be consistent with the conclusions of the report. The survey results do not support the demand for larger events. A stand-alone facility is much less desirable than facilities attached to hotels. The Markin Report does not substantiate its conclusion that a convention center in Newport would perform as well as the Seaside Convention Center because it has a 30-year history, an established base of users, is closer to Portland, and there are nearly 1,200 hotel/motel rooms within walking distance. And, the Markin Report identifies the proposed convention center as competitive with area hotels and resorts for small to medium-sized groups, the revenues are overstated, and the expenses understated. He suggested that additional information is needed, and that the Markin Report cannot be relied upon.

John Clark, 197 NE Golf Course Drive, Newport, president of the Greater Newport Lodging Association, addressed Council regarding the proposed events center costs. He inquired as to whether the City is ready to foot the bill for the event center, noting that in 1985, the City couldn’t cover the losses, and if the current numbers are analyzed, Council will arrive at the same conclusions, leaving two options, general obligation bonds and/or hotel tax receipts to fund the project. He suggested that the recent Supreme Court decision in the Shilo Inn case might limit or prevent the use of Urban Renewal funds for this project, leaving the City to finance the project without any seed money. If a ten million dollar G.O. bond was used for funding, Newport property owners would pay $1.31 per thousand dollars of assessed valuation, in addition to current taxes, while a fifteen million dollar G.O. bond would cost taxpayers $1.97 per thousand dollars of assessed valuation. If transient room taxes were used as a funding mechanism, revenues would fall short, and a room tax rate of about 10% would place the City at a competitive disadvantage. If Destination Newport funds were used to support the event center, it would remove Newport’s visibility in the market place. He suggested that the proposal requires further study. He urged proponents to work with the City staff to analyze the project against the City’s current and future financial picture. He stated that once the issued is fully analyzed, it would become apparent that the event center is not feasible at this time.

The following individuals spoke in opposition to the proposal:

Mark McConnell, 4925 NW Woody Way, Newport, stated that a ten million dollar project at current bond rates would actually cost 16.6 million dollars over twenty years. He stated that expected losses and other costs, not in the Markin Report, could be over one million dollars per year. He noted that there would be an annual loss of tax revenue from 144 R-4 lots and 10 – 12 acres of C-1 land. He suggested that operating losses might be greater than expected. Other costs to the community will be the menial job quality and pay, impact on Social Services, transient student population in the schools, increased congestion and transportation problems, the impact on the tourist industry due to less marketing monies for traditional tourism business, and continued sprawl to the south. He noted that nearly half of the estimated impact is from business and events that already occur in the area. The direct payroll is estimated to be eight full-time jobs, but utilizing the sales and event staff of the Chamber can reduce this number. The number of indirect jobs is flawed because there are already jobs supporting some of these existing events. Full-time jobs are arrived at by extending hours of employed part-time people, or combining part-time jobs into full-time positions, rather than creating new full-time positions. He stated that the Economic Development Alliance survey done in December identified an improved educational system as the number one obstacle to overcome in stimulating economic growth in the area. He suggested that as public monies become tight, they be used for traditional municipal services. He stated that the South Beach monies are needed for infrastructure to pave streets, sidewalks, and bike lanes, improve drainage, and construct a park. He suggested that if the current tax increment can be used to borrow five million dollars, the City should consider building an Expo Center. He noted that all three studies state that the best location for an event center would be near existing hotel rooms and established shopping areas. He suggested marketing the unique aspects of Newport. He also suggested a reduction, or seasonal adjustment, in room taxes during the slow months, to increase tourism. He urged Council to continue to consider this proposal in some fashion, but that it be fine-tuned, and a public process be set up which will maintain fair representation of the tourism industry, taxpayers, and open meetings.

Alice Warner, P.O. Box 127, South Beach, thanked Council for their efforts to improve Newport’s economy. She stated that she does not believe this project is worthy of public funds and quality sites. She stated that the Urban Renewal funding is what pulls this project together. She suggested that this is not the time for a project such as this with the future of Urban Renewal funding up in the air, and no ability to commit these monies. She suggested that she wouldn’t want to see public funds used to compete with private business, noting that public funds had been used to replicate the YMCA’s services, thereby limiting its income generating ability. She urged Council to commit to economic development that brings skill-waged jobs to the community. She suggested that if money were used to pay for this proposal, there wouldn’t be funding available if a good project comes around. She stated that by removing the proposed parcel, land for skill-waged job facilities would be decreased. She stated that there were two advocates for the proposal, on the City Council, Miller and Jones, and urged them to step aide and let those who haven’t made up their minds decide this issue.

Miller stated that it is his involvement with issues that elected him to office, and he knows where to draw the line, and he has drawn it.

Jones stated that he had taken on this project to develop information. He stated that he has taken no position, and will make a decision when all the information is received.

Jan LeBrun, 520 SW 2^nd Street, owner of the Oar House Bed and Breakfast, stated that she has four guest rooms and benefits when nearby hotels host small conferences. She is a member of the Oregon Bed and Breakfast Guild, and when they organize conferences, they look for combined hotel/conference space. She further stated that she would oppose a general obligation bond.

Ken Peyton, 703 NE Eads Street, stated that he is opposed to the proposal in its present form, and urged the City Council not to support it.

Philip Hartog, 3317 SE Chestnut Street, South Beach, stated that he is not in favor of the event center at this location. He stated that the proponents are speaking of South Beach urban renewal dollars, and most South Beach residents are opposed to the plan. He suggested using that site for something that serves the people who live here, and that to put an event center at that location would be a continuation of low paying jobs.

Paul Haggerty, 1000 SE Bay Boulevard, Newport, stated that he would like to see the event center, but would like to know that the facility will make a profit, will stand on its own, will not need a tax increase, and that other programs won’t lose funds because of it. He suggested that the proposal, as presented, is unacceptable.

Bruce Durkee, 1215 NE Lakewood Drive, Newport, noted that one of the best things about living in a small community is working with friends and neighbors even if you disagree about an issue. He suggested that Miller and Jones appear to have a conflict of interest in this matter, and should recuse themselves.

Joyce Yassen, 251 SW 29^th Street, South Beach, stated that this proposal might not be a win/win situation. She stated that one of the accesses goes through a residential area of graveled roads, and the residents will lose. She stated that the natural habitat will lose, as the entire western part of the large dunes will have to be leveled, and the blue heron won’t visit.

Brendan Carmody, 729 NW Coast Street, Newport, stated that many folks in tourism are opposed to this proposal.

Sasha Richbord, 315 SW 29^th Street, South Beach, stated that she is opposed to the proposal.

Daryl Eldredge, 6935 SW 39^th Street, South Beach, stated that he is bothered by the use of Urban Renewal funds, and concerned about a comment he had heard regarding placing the event center in the proposed site so that ODOT will do something about the bridge.

Carolyn Watson, 232 SW Elizabeth Street, Newport, stated that she wants the Seafood and Wine Festival to be successful, but she is opposed to the event center in South Beach.

Pat Lewis, 1125 SE 36^th Street, South Beach, stated that she has mixed feelings about the plan. She suggested locating a community college campus at the site, and paying for it with Urban Renewal monies. She noted that the event center jobs would be low paying and without benefits, and that if it went in, something needed to be done to insure health care benefits for those employees.

Alice Warner, P.O. Box 127, South Beach, stated that when opponents speak, they are interrupted and corrected. Jones noted that this occurred only to correct misinformation, rather than to correct the speaker.

In summary, Steve Cockrell spoke for the GNLA, stating that the concept is good, but the details needed to be developed. He noted that the proponent’s testimony is based on the Markin Study that is flawed. He noted the plan, as presented, is just a bad one, containing misconceptions and poor conclusions. He stated that the GNLA would like to participate in a win/win situation.

In summary, Phil Hutchinson, 316 NE 6^th Street, Newport, and executive director of the Chamber of Commerce, spoke for the proponents. He asked Council to focus on the positives of the proposal. He reiterated that in 1984 the City had its first major effort to develop a convention center. Instead, the Performing Arts Center was developed. He noted that since the first study was commissioned in 1984, two additional studies have been completed which confirm a high demand from statewide and regional convention groups, trade organizations, etc., and that this interest predicts a high probability of success of this project. He noted that concerns center around competition, location, and funding. He urged Council to focus on the benefits of the event center and decide the matter on what’s best for the entire community. He asked Council to support the project.

Jones closed the public hearing at 9:30 P.M.

Jones stated that it is important to understand the Supreme Court’s decision in regard to Urban Renewal funds. He asked Sasaki to explain. Sasaki stated that no one knows the consequences of the Supreme Court’s decision, and that the matter had been remanded back to the Tax Court. He noted that it might go, again, to the Supreme Court. He stated that revenues will not come in as fast as before, and it is difficult to know how it will affect the City’s ability to do things. He stated that he does not anticipate a decision from the Supreme Court for at least a year.

Miller asked Council to decide whether they felt he could make an unbiased decision in this matter. He suggested that serving on the event center committee was no different than serving on the COG, OCZMA, bike, or any other committee, at which facts are gathered and decisions made later. Belloni, Sabanskas, Updenkelder, and Hammond all agreed that they did not have a problem with Miller’s ability to make a decision in this matter.

Jones stated that there is direct opposition to this issue. He stated that he would like to see City Council establish a committee to look at the numbers and deal with conflicting facts, and funding issues. He noted that Council needs time to digest the information, and look at what is there and what is coming.

Updenkelder agreed with the proponents that the community needs an economic stimulus, and the project has extreme economic value. He stated that the opponents have posed good questions in regard to funding. He stated that it’s easy to predict benefit from a facility like this, but difficult to predict how much benefit and cost. He stated that he is not prepared to deliberate the County’s participation in the fairgrounds. He acknowledged Urban Renewal funding issues, and concluded that there are still too many unanswered questions, noting the issue needs further study.

Jones noted that the City Council and City staff need to look at the funding issue.

Hammond agreed with Updenkelder, noting that he is excited by the prospect of an event center, but there are a lot of uncertainties.

Sabanskas stated that she cannot speculate on future expenses to the City, but would like to see how the project would stand on its own. She further noted that she doesn’t want to see the area burdened by additional taxes.

Belloni stated that he supports the City Council’s problem with the costs of the proposal. He stated that he would like the facility to be self-supporting in five years, and he suggested a committee be appointed of people representing both sides of the issue.

MOTION was made by Updenkelder, seconded by Belloni, that Jones propose a committee to study this proposal in greater depth so that the City Council can better weigh the costs and benefits. It was noted that the goal of the committee is to determine whether or not the project will fly. It was also noted that the committee should represent all interested organizations and the public at-large. Jones suggested that the committee might include representatives from the Chamber of Commerce, Greater Newport Lodging Association, citizens at-large, City Council, and City staff. Sasaki reminded Council of the 12-member wastewater treatment facility committee, and how it built consensus. Alice Warner inquired whether the intent of the committee is to get economic development ideas fast. Updenkelder noted that the intent of the committee is to discuss the proposal the Chamber of Commerce has brought forth, and that is the event center and its viability. There was no further discussion at this time. Those voting aye in a roll call vote were Updenkelder, Hammond, Miller, Jones, Sabanskas, and Belloni. Allen abstained. The motion carried.

Jones asked that anyone interested in serving on the committee leave his or her name with a Councilperson or call Cheryl at City Hall.

Mark McConnell asked that the motion be read. He inquired as to whether the motion meant that the formation of a committee be discussed, or whether committee members were to be appointed. It was noted that committee members would be appointed to review this matter.

Daryl Eldredge suggested appointing a couple of South Beach Planning Committee members to the committee. Jones reiterated that anyone interested should leave their name or contact Cheryl.

OFFICER’S REPORTS

Report of the Mayor. Jones noted that there were approximately 120 people in attendance this evening, and he thanked everyone for their patience.

Jones noted that the City Council goal setting session is scheduled for Saturday, January 12, 2002, at 8:30 A.M., in room 105 of the Recreation Center.

Report of the City Manager. Sasaki had nothing additional to report.

Report of the City Attorney. Minor had no report.

NEW BUSINESS

Resolution No. 3269 declaring default in installment payment obligation for systems development charges financed by the City of Newport, and declaring the whole amount of such systems development charges due and payable at once. Minor noted that this matter pertained to the South Beach Inn-Vestments, LLC, and that it had failed to pay its systems development charges. MOTION was made by Miller, seconded by Sabanskas, that Resolution No. 3269 be adopted, as presented. Allen inquired where the 10% interest came from. Winiger noted that this is the maximum interest allowed by ordinance. There was no further discussion. The motion carried unanimously in a voice vote.

COUNCIL COMMENTS

Jones noted that the next regular Council meeting would be held on Tuesday, January 22, 2002, due to the Martin Luther King holiday falling on Monday.

ADJOURNMENT

Having no further business, MOTION was made that the meeting adjourn. The meeting adjourned at 10:05 P.M.

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Margaret M. Hawker, City Recorder Mark D. Jones, Mayor