Board Members present: Susie Smith, Mike Dyer, Sandra Bishop, Dorothy Anderson, and Peter Bartel.
Others present: Randy Berggren, Ken Beeson, Cathy Bloom, Tom Buckhouse, Marty Douglass, Dick Helgeson, Garry Kunkel, Roseanna McArthur, Kris Middlewood, Jim Origliosso, Laurie Power, Dick Varner, and Krista Hince of the EWEB staff; Win Calkins, General Counsel; Kathi Wiederhold, Lane Council of Governments Consultant; Tom Bowerman, Doug DePriest, George Grier, and members of the McKenzie River Trust; and Daniel Lindstrom, Minutes Recorder.
Vice President Dyer called the Work Session of the Eugene Water & Electric Board (EWEB) to order at 5:40 p.m.
General Manager Randy Berggren stated that the Work Session was intended as a status report on work in progress regarding an EWEB donation to a land trust to benefit the McKenzie River watershed.
Environmental Manager Laurie Power introduced members of the project team and representatives of the McKenzie River Trust.
Ms. Power reviewed the history of EWEB's consideration of making a contribution to enhance the McKenzie River watershed. She described initial proposals to establish enhanced public access to the river as part of the application to re-license the Leaburg-Walterville Hydroelectric Project. She explained how the concept had been refocused on protecting watershed health when the Federal Energy Regulatory Commission (FERC) had not required such a donation in the license, but had supported its consideration. She reminded Commissioners of Board direction to study the use of an irrevocable land trust to enhance river water quality and fish and wildlife habitat in June 1998. She said the license application and study had assumed an EWEB donation of $500,000, with a commitment of an additional $500,000 being available to match other contributions.
General Counsel Win Calkins stated that he had been involved in the study of land trusts and had reached the conclusion that it was possible to conceptualize the use of such a trust to enhance the McKenzie Watershed to be reasonably related to EWEB's mission and provide EWEB and its customers with identifiable benefits related to the mission. He described a time line of decisions which would need to be made in the implementation of such a proposal and said he would be available to assist in it.
Commissioner Anderson asked if there would be advantages in establishing conservation easements along the McKenzie River, instead of making a significant contribution to a land trust. Mr. Calkins replied that similar legal and other actions and decisions would have to be made in either option. Ms. Power added that it was likely that contract terms would be used to protect the interests of EWEB in development of any donation to a land trust entity.
Commissioner Bishop asked if she was correct in assuming that a decision had been made for EWEB to make a land trust donation. Mr. Berggren replied the he believed the Board had given direction to study development of the concept of such a donation, provide a process to determine whether it would be possible, and to bring a proposal which the Board could accept or reject. Vice President Dyer added that the Board had approved incorporating the concept into the application for the re-licensing of Leaburg-Walterville, but that be believed another decision was required to enable it to proceed outside the application process.
President Smith joined the meeting at 5:55 p.m.
Vice President Dyer asked if a donation to a land trust could it be challenged as improper use of public funds if there was a legal opinion that it was within the mission of EWEB. Mr. Calkins replied that a law suit with such a challenge was possible, but that the study of his firm had so far determined that EWEB could legally make such a donation and that it was in keeping with its mission.
Lane Council of Governments (LCOG) Consultant Kathi Wiederhold stated that she was principle investigator and author of the report distributed with the agenda of the Work Session entitled "Survey of Technical Experts, Water Purveyors, and Land Trust Organizations Relating to Consideration of an EWEB Donation to a Land Trust in the McKenzie River Watershed."
Ms. Wiederhold reviewed principle findings of the report, as follows:
Ms. Wiederhold described land trust as flexible organizations which tailor land acquisitions to meet the objectives of landowners, the trust, and available funding. She said an EWEB donation could establish objectives and priorities. She reviewed three scenarios of ways a land trust donation could be structured, as follows:
Ms. Wiederhold referred to seven categories of recommendations made in the report, beginning on page 25. She emphasized that it was most important to clearly identify that the purpose of a donation was to protect land for purposes of watershed health; that a trust should be chosen based on a record of stability, local knowledge, and an ability to leverage resources; and that a donation should be structured with flexibility, include acquisition criteria, use matching funds and in-kind resources to increase its leverage, actively involve EWEB, set benchmarks, and provide an up-front stewardship endowment.
Ms. Power stated that staff recommended that the Board accept the report and consider proceeding with implementation of a land trust donation. She said direction was needed about Commissioner preferences for moving ahead, as follows:
Commissioner Anderson said she supported moving forward with implementation of a land trust donation and that she did not prefer to set its amount lower than the assumed $500,000, with an additional $500,000 available to match other contributions. She said she liked the "Integrated Scenario" of land acquisition described in the report.
Commissioner Anderson said that additional funds for watershed land acquisition could be available from the Bonneville Power Administration (BPA) and a program of the U.S. Army Corps of Engineers. Ms. Power said directions to leverage an EWEB donation could be established to encourage joint-ownership of properties with the agencies like those mentioned by Commissioner Anderson.
Vice President Dyer said he was concerned that EWEB could not make a sizable contribution to a land trust. He said that the financial condition of the utility had changed significantly since the proposal was initially considered and that he did not believe such a contribution was within current fiscal priorities.
Commissioner Bishop said she understood the concern of Vice President Dyer, but expressed her belief that the issues of protecting the McKenzie watershed transcended fiscal capacity. She said protecting the watershed through land trust acquisitions would increase EWEB's future ability to provide quality water to its customers.
President Smith said she also appreciated the fiscal concerns raised by Vice President Dyer, but that she felt a commitment to make a land trust donation had been made as part of the re-licensing application and did not want to give up the opportunity. She said her biggest interest was to provide riparian protection for the improvement of fish habitat and water quality.
Commissioner Bartel said he believed EWEB needed to do what could be done to support the McKenzie watershed, but that it was necessary to determine in advance what a donation would "buy." He said he felt it was important to receive a final legal opinion regarding a donation before commitment to the donation was finalized. He said he believed there were many ways to secure financial resources for the proposed donation. He said he was attracted to somewhere between the "leveraged" and "integrated" method of structuring a trust donation.
Mr. Calkins stated that no final legal opinion regarding a donation was possible until all of its parameters were determined. In general, he said, a donation to promote EWEB's water source could be within its mission. He offered to write a more formal "interim" opinion regarding the legality of EWEB making a donation to a land trust to protect the McKenzie watershed.
Mr. Berggren said it seemed clear that it would be legal for EWEB, as a water purveyor, to justify a contribution related to its mission. He said events surrounding Endangered Species Act listings amplified the opinion. He suggested that criteria for a donation would even more clearly make the connection.
Mr. Calkins said he would provide a formal legal opinion regarding the legality of an EWEB donation to a land trust when the Board had finalized its determination to do so and criteria for it had been set.
Vice President Dyer said his concerns about a donation to a land trust went beyond the fiscal and that he hoped criteria for the process of choosing acquisitions would have as strong a connection to EWEB's purpose as possible.
Vice President Dyer excused himself for the remainder of the meeting at 6:40 p.m.
President Smith stated that the legal advice of Mr. Calkins had been provided at many points during deliberations regarding a contribution to a land trust. Ms. Power added that Mr. Calkins had served as a part of the report project development team, would review the Request for Proposals to solicit offers from land trusts, was available to answer specific questions, and would participate in developing any proposal for Board action.
Ms. Power asked for Board feedback on the level of involvement EWEB should maintain in land trust property acquisitions after a donation was made. She suggested that possibilities included having a Commissioner be on the trust's board of directors; having a representative serve on a property selection subcommittee; and having the Board receive annual fiscal audits, annual performance reports, and benchmark evaluations.
Commissioner Anderson asked if it was feasible for EWEB to be required to approve individual land acquisitions. Ms. Power replied that she believed it was possible, but that it would involve a significant amount of additional work by staff. She suggested that such an arrangement could also reduce efficient, discretionary, and timely actions of a land trust. She suggested the Commissioners consider performance criteria in any donation agreement with a trust.
Commissioner Anderson suggested that there might be a role in acquisition criteria for the McKenzie River Watershed Council.
Commissioner Bishop said she believed the level of EWEB involvement in land acquisition decisions should be determined by the trust which was chosen. She suggested that one purpose for utilizing a land trust to manage the donation was that Commissioners would not need to be involved in acquisition decisions and that she preferred to have a trust be able to function in perpetuity without "political" influence by the Board.
President Smith said that a key to establishing a legal nexus between EWEB's purpose and a donation to a land trust was in the criteria which were established for its use. She said she did not believe the Board should be involved in the business of land purchases, management, or evaluation.
Commissioner Bartel said that he believed flexibility in criteria which were established needed to be maintained. He said he also believed there was a need for some Board involvement in the use of a land trust donations. He suggested that the enforceability of criteria could be determined by changes in the membership of the Board or trust managers.
Commissioner Anderson asked if the use of a dual land trust concept was feasible. Ms. Wiederhold replied that such an arrangement existed in other locations - the expertise of a national trust informing the actions of a local trust. She added that violations of trust criteria were subject to third-party legal action.
President Smith said she believed it would be important for the Electric Division to participate with the Water Division in providing the donation to be made.
Mr. Berggren said that he had questions about the appropriateness of overly specific criteria. He said that it was possible to argue that "adaptive management" worked best, which suggested that flexibility, rather than specificity was needed in criteria.
President Smith said she assumed criteria would need to be adjusted over time, which would be an ongoing Board function.
Commissioner Bishop said that she also had concerns about setting overly narrow criteria. She suggested it would be challenging to get specific enough criteria which had ample flexibility
McKenzie River Trust founder Tom Bowerman suggested that consideration be given to utilizing Internal Revenue Service practices to help the development of criteria. He said interlocking and inter-relating of a variety of criteria were permitted.
McKenzie River Trust Board of Director President George Grier said actions of the trust were driven by criteria established by donors.
Commissioner Anderson suggested that the Board and representatives of the trust which was chosen would need to discuss goals for a donation before criteria and other details of it were finalized.
President Smith suggested that it might be helpful for the Board to consider how other utilities were working to protect the watershed of their water supply. She said it would be helpful to "normalize" the action under consideration by EWEB.
Mr. Berggren suggested that coordinated responses to Endangered Species Act listings could lead to better acceptance of watershed protection plans.
Ms. Power said she believed the next step in consideration of an EWEB donation to a land trust was for a proposal to be prepared for Board action which might include potential criteria, but not its final design.
President Smith expressed appreciation to Ms. Wiederhold for her work in preparation of the LCOG Report.
The Work Session adjourned at 7:15 p.m.
_____________________________________ ______________________________________
Assistant Secretary President