2/8/2005

Board Members present: Ron Farmer, John Simpson, Mel Menegat, and Patrick Lanning. Vice President Sandra Bishop participated by speaker phone because of illness.

Others present: Randy Berggren, Dick Varner, Debra Smith, Jim Origliosso, Roseanna McArthur, Jim Wiley, Mel Damewood, and Krista Hince of the EWEB staff; Eric Gunderson, WBGS Architecture & Planning P.C., and various members of the public. President Farmer convened the Special Board Meeting of the Eugene Water & Electric Board (EWEB) at 6 p.m. He noted that Commissioner Bishop was participating by speaker phone.

AGENDA CHECK

There were no changes to the agenda.

PUBLIC INPUT

Roy Orr, 2345 Parkview Drive, provided his testimony in writing. He stated that he was Chief Executive Officer of McKenzie-Willamette Medical Center of Springfield. He acknowledged that a great deal had been said regarding the hospital’s interest in the EWEB site over the past few months. He underscored that the interest in relocation was driven by a need to rebuild the aging hospital and the fact that it could not be built to a large enough standard at the current site, a similar situation to that which faced Sacred Heart Hospital. He said the interest in considering the City of Eugene as a location had come from a phone call by then City Manager Jim Johnson. He explained that the hospital board had reviewed a list of many sites suggested by Eugene City staff and narrowed it to only a few. During that time, he said, a member of EWEB’s management team suggested the EWEB site be considered. He noted that prior to that, the site had not even been on the hospital’s “radar screen.” He related that the hospital, after some consideration, had decided this would be the best site, but had to that point, been unaware that EWEB did not have a firm plan for moving. He reviewed the process by which the hospital’s offer had been arrived at. He reiterated the hospital’s willingness to work with EWEB to make the EWEB site a workable solution to Eugene’s need for a hospital and the hospital’s need to move.

Kevin Drew, Springfield, said he had worked for McKenzie-Willamette Hospital since 1991, currently working as a nurse manager on a floor that his grandmother had once worked in housekeeping on. He brought this up to indicate how old parts of the hospital were. He commented that, at first, it had not occurred to him that the EWEB site could house a hospital, but as he thought about it more, it seemed to be an excellent choice for a hospital site.

Doug Newton, asserted that the City was quick to create a crisis when it suited its purposes. He said EWEB had made a commitment to the site it was on and had invested a considerable sum of money. He felt the City Council had created a mess and it should not be up to ratepayers to clean up after them. He opined that the City of Eugene should have done more to negotiate with PeaceHealth to keep them in the City. He did not think the EWEB site was being accurately appraised as he felt it was worth more.

Mark Rabinowitz, 28549 Sutherlin Lane , opposed selling the EWEB site at a “fire sale” price. He felt EWEB should be concerned about energy efficiency. He asserted that relocating EWEB to the edge of town would cause people to use more energy to get to it.

Terry Allen, explained that his non-profit board, owned 20 percent of McKenzie-Willamette Medical Center. He expressed his appreciation for the due diligence work the utility had undertaken and for doing what was right for the utility as well as the people of the community.

Jim Hale (although Mr. Hale testified, his voice could not be heard through the microphones.)

At Vice President Bishop’s request, Commissioner Simpson clarified that Mr. Hale was not in support of the sale of EWEB’s property to McKenzie-Willamette/Triad Medical Center.

Russ Brink, director of Downtown Eugene, Incorporated (DEI), stated that he had followed all of the recent plans as Eugene conducted its land use planning process. He pointed out that this area of town had been slated for redevelopment by several of the planning processes. He thought a $100-plus million development on the EWEB site would benefit the area. He thought there were always complicated issues whenever a complex real estate transaction was undertaken and perhaps in this negotiation it would be possible to find a win-win situation. He was uncertain, as a ratepayer, as to what would benefit him more, a hospital on the site or EWEB remaining there.

Paul Chavin (although Mr. Chavin testified, his voice could not be heard through the microphones.)

APPROVAL OF CONSENT CALENDAR

MINUTES

Minutes of the December 7, 2004, Work Session.

Commissioner Simpson pulled the minutes and, given that there were no other items on the Consent Calendar, there was no vote.

ITEMS FROM BOARD MEMBERS

President Farmer reported on the Board Meeting held at the Vida Community Center on February 1 at which he had given the State of the Utility address for 2005. He noted that The Register-Guard would be excerpting a major portion of the address specific to the EWEB move and this would be in print on February 9. He stressed that the proposed move had been the result of a process that had been underway for some years. Should the utility not move, he explained that approximately $12 million would have to be invested in the current site to enable it to continue to be workable for the utility and this money would have to come directly out of the pockets of ratepayers.

CORRESPONDENCE

General Manager Randy Berggren reported the following:

An informational memorandum regarding testimony from Roy Pruitt, given in Vida at the previous meeting, was included in the Board packets. He conveyed the staff recommendation for no change in the current course of action. He asked the Board to provide direction if Board members wished to approach it differently.
A memorandum from Marty Douglass was included in Board packets on a suggested public process for property negotiations. Board feedback was desired.
An update on the MGT site investigation work and the status report was enclosed in the Board packet.
Public Affairs Manager Marty Douglass included a memorandum regarding the public meetings on Carmen Smith relicensing.
Assistant Secretary Krista Hince provided the Board with copies of the latest letter submitted by Arlie and Company expressing interest in purchasing the EWEB property. Absent direction from the Board, Mr. Berggren said he intended to take no further action
on the letter.

BOARD AGENDAS

Mr. Berggren provided an overview of the Eugene Water & Electric Board: Board Agenda Report; February 8, 2005. He related that he added several backgrounders, including the testimony from the fish guides given at the February 1 meeting. The backgrounder regarding Mr. Pruitt’s claim was covered and would come off the list. He expressed his and President Farmer’s intention to prioritize the outstanding agenda items and determine if there were any that did not need to become a full item for a meeting.

Mr. Berggren reviewed the upcoming meeting agendas, which included an item on the utility’s potential for a small rate decrease to pass through a small rate decrease from the Bonneville Power Administration (BPA). He reminded the Board that the planning retreat was scheduled for March 5.

Commissioner Simpson, in agreement with Commissioner Bishop, could not support any proposal to purchase the EWEB property if it included purchasing and then leasing the EWEB building back to EWEB.

GENERAL MANAGER’S 2005 GOALS

Assistant to the General Manager Debra Smith said copies of the draft General Manager’s 2005 Goals were before the Board. She reported that the biggest change, derived from Board input, was that staff had attempted to divide the goals into two categories: one built around the General Manager’s overall responsibility for running the utility, and the other around his personal responsibilities within the constructs of the utility.

President Farmer added that goal (e) contained some changes. He said there was an attempt to prioritize the weights given the General Manager’s goals. 25 percent of the weight was assigned to the goals built around the utility’s overall health, while the smaller issues in the day-to-day running of the utility were weighted individually.

Commissioner Menegat appreciated the work that had gone into it. He liked that the Board had set aside the “business as usual” parts and weighted them differently. He stated that the goals were acceptable to him and he would support them as written.

Commissioner Simpson was pleased that the goals had been split so that it was clear that operation of the utility on a day to day basis was an understood goal. He pointed out that Item 2 (A)(a) needed to have a dollar amount included.

Ms. Smith responded that the number he was speaking of had some relation to the Weyerhaeuser contract. Because of this, she said, the number was not finalized.

Commissioner Simpson related that he had submitted a “tall list” of items that he felt would enhance the function of EWEB, through increasing public input, education, and awareness by broadcasting meetings on the Web. He thought this would remedy concerns expressed by the McKenzie Valley residents about their lack of representation, as they would not have to drive to Eugene for a meeting.

Commissioner Lanning commented that Ms. Smith had addressed the issue of measurability and the need for more measurement in the goals. He thought the goals, as proposed, were overall a good approach.

President Farmer related that he had spoken with Mr. Berggren regarding success measurements. He suggested that the General Manager submit action plans prior to determining the measurements, or at least reserve the right to “tweak” the measurements after reviewing the plans.

Commissioner Lanning suggested, and the Board agreed, to reserve approval of the goals for 2005 until after the General Manager had determined what action plans he would employ.

ALTERNATIVE SITE PURCHASE (ROOSEVELT BOULEVARD & BELTLINE ROAD)

Master Plan Project Manager Mel Damewood briefly reviewed the proposed purchase, noting that a larger presentation had been given on this item at the January 18 meeting.

Commissioner Menegat said he had been present for the larger presentation and had read the backgrounder. He felt satisfied with his familiarity with it.

President Farmer stated that he had read the information, but he thought there would be some value in providing a little more information on the site. Commissioner Simpson concurred, as it would benefit the audience.

Mr. Damewood showed slides of the property.

Mr. Damewood stated that the price that EWEB had agreed to was $1.6 million, with $600,000 paid in a down payment and the rest paid in annual installments of five percent. He said there were provisions that allowed for the due diligence to be conducted.

Mr. Damewood reported that an environmental investigation and a boundary-topographical survey had been conducted. He said the environmental investigation included both on-site and offsite testing for contamination as well as an inventory of endangered species. Regarding the latter, he indicated that the only endangered species that could potentially reside on the property were the Fender’s Blue Butterfly and the Kincaid Lupine. He stated that the site would be surveyed again in the spring when the lupine would be blooming. He related that the flood plain determination came out fine, the engineering, soil, and earthquake hazard reports came out good. He said the utility availability analysis, the side work and construction analysis, the traffic impact analysis, and the land use and zoning analysis all came out clear.

Regarding wetland impacts, Mr. Damewood said wetlands cover 23 of the 46 acres on the site. He reported that the City of Eugene had no issue with this as it was in the West Eugene Wetlands Plan and EWEB could go through the mitigation process.

Mr. Damewood stated that eventually Beltline Road would be grade separated from Roosevelt Boulevard. He said this would impact nine or ten acres of the site. He encouraged the Commissioners to plan accordingly. He thought it could ultimately benefit the utility by providing easy access to a major thoroughfare.

Mr. Damewood summarized the report, stating that the property provided the utility with plenty of land, plenty of traffic access, and that EWEB’s use was compatible with surrounding uses and the price was reasonable. He said the negative aspects included a lack of access to Bertelson Street.

Mr. Damewood related that there could be some potential outside environmental impacts from the south, but they were low. He suggested that monitoring wells could work to monitor the impacts. He shared the development assumptions, such as the planned interchange at Beltline Road, removal of the log pond berm, and some wetlands mitigation through the Wetland Mitigation Bank.

Continuing, Mr. Damewood reviewed potential expenses: $300,000 for removal of the berm and $50,000 per acre of impacted wetlands, though the latter cost should come down as the utility refined its plans. He said a ten percent contingency had been added to non-property purchase cost, with an approximately $3.5 million look on this site. This turned out to be about $1.75 per square foot. He noted that approximately $625,000 for construction of access-ways to Beltline Road, Bertelson Street, and Roosevelt Boulevard, was included. He conveyed the staff recommendation to purchase the property.

Commissioner Simpson stated that this property was a prudent investment whether the utility moved, or did not move, or if it only moved one half of the utility.

Commissioner Lanning asked how many properties had been looked at. Mr. Damewood responded that the utility had considered many properties and taken a deeper look into eight of them.

Vice President Bishop asked when the utility had begun to look at property. Mr. Damewood replied that the process had begun in the year 2000 and an offer had been made and then withdrawn for a property on Seneca Street and 1st Avenue. Vice President Bishop wished it to be clear to the public that the purchase of this land was not related to the recent offer for the EWEB property. She stressed that the purchase of the property did not obligate the utility to move.

Commissioner Simpson moved that EWEB purchase the property on Beltline Road and Roosevelt Boulevard for the stated price of $1.6 million. Commissioner Menegat provided the second.

In response to a question from Vice President Bishop, Mr. Berggren reiterated that the utility was using current authorized borrowing capability to fund both the property purchase and the 30 percent design scope and this funding source was identified in the 2005 budget, approved by the Board.

President Farmer called for the vote. The motion passed unanimously, 5:0.

30% CONCEPTUAL DESIGN CONTRACT

Mr. Damewood said staff was asking the Board to approve the full scope of the contract and amend the existing limited scope contract that the utility had. He reported that staff had solicited proposals, received four, and of these four had chosen WBGS Architecture & Planning, P.C., a local architecture firm. He stated that, with the Board-approved limited scope contract, staff and the architect had the ability to work together and determine the final scope.

Eric Gunderson, Consultant for WBGS, gave a power point presentation on the proposed conceptual design contract. He explained that WBGS was the leader of eight firms altogether, including Balzhiser & Hubbard Engineers and Satre Associates among others, that had worked in the due diligence effort. He noted that WBGS had been working in the community for more than 50 years and had worked on some of the original EWEB buildings. He said though WBGS had years of experience in this type of project, they had added two team members, a firm from Kansas City called DNIM Architects, which were among the founders of the Leadership in Energy & Environmental Design (LEED) movement and had 23 LEED accredited professionals, and Parsons Brinckerhof whose expertise lay more in the functional side of things. He felt they had a diverse team able to handle a variety of issues.

Mr. Damewood said one of the goals of the project was to enable EWEB to be proactive with its current situation. He characterized the movement thus far as reactive. He said, unlike capital plans that were presented annually, facilities plans tended to languish for several years at a time.

Mr. Damewood stated that the question of whether to split the administration and operations arms of the utility would be revisited. He observed that things had changed since the initial phase of the scoping process, at which point it had been assumed that the whole of EWEB would be moving. He reviewed the schematic for the scoping process. He said as the utility moved forward it would be focusing more on architecture and less on engineering. He stated that one result of architectural programming would be an idea of what the utility would look like if it split and what it would look like if it stayed at one location. He recommended deferring that decision until the two possibilities were developed for presentation to the Board.

Commissioner Simpson asked what the 70 percent that was missing was comprised of. Mr. Damewood delineated the split; 30 percent for conceptual design and engineering, 30 percent for carrying forward the conceptual plan, and approximately 30 percent for final completion and specification, including finish work inside the building. Mr. Gunderson added that at the next juncture the Board would have a detailed site plan, an idea of the appearance of the building, and floor plans for each floor.

In response to another question from Commissioner Simpson, Mr. Damewood said total costs would include construction, inspection, and so on, and the design represented approximately 15 percent of the total cost.

Mr. Gunderson stated that the first part of the plan was development of the work plan and who would do what in what had come to be an approximately 50 step plan. He said they had reviewed previous master planning processes and now that the purchase of the site had been approved, they would undertake review of the due diligence work. He explained that the architectural term ‘programming’ meant helping EWEB envision its best future. He noted that they had examined the Board goals of minimizing operating costs, improving operational efficiency, enhancing the environment, and community values. He likened a program to a grocery list and conveyed the intention of the firms to speak to all of the members of EWEB staff to determine all of the working needs, in addition to broader program goals. The process for doing that would be through an interview process.

Mr. Gunderson wanted to meet with EWEB’s management and spend two days talking about broad goals, such as whether to build for growth ten years out or twenty years out or more and how far master planning for the site should go. Along with that, he hoped to begin a conversation about how aggressive the utility wished to be regarding sustainability. He noted there were some exciting natural environment challenges at both the current site and the new one.

Continuing, Mr. Gunderson conveyed his interest in speaking to all of the work groups and how the larger goals would fit with their level in the utility. He also would look into the information and data systems and security for the site. Once this was gathered, he said he would return to the Board.

Regarding sustainability, Mr. Gunderson wanted to help the utility investigate the various levels of LEED certification. He explained that the highest level of LEED certification was a “living building,” one that consumed no resources.

After determining at the Board level whether the utility would split its functions, checking codes, and investigating the site, Mr. Gunderson said his team would embark on a five-day design workshop. He likened this to locking everyone in a room to keep them focused on a project. He thought it presented a great opportunity for EWEB employees to drop in and check on the process and planned to hold the process at the EWEB site.

Mr. Gunderson discussed a project recently completed for Clean Water Services for Washington County. He said they chose to make their building a showcase of measures that affect their mission to clean storm water with the installation of porous pavement and bio-treatment areas and green roofs. He noted that DNIM had recently completed a utility building, with separate sites for administration and operations.

Mr. Gunderson stated that once the design was completed, the team would have the tools to arrive at a thorough cost estimate. This cost estimate would look ahead, as well, beyond the current value of the project and conduct some energy modeling in order to understand future energy savings, some life cycle costing to determine the payback, and to other soft costs such as moving costs and final engineering.

Mr. Damewood said a leadership meeting on the project was slated to occur later in the month of February. He indicated that they would bring the project back before the Board in late April and following this would embark on the five-day workshop. The team was scheduled to meet again with the Board at the end of June in order to present the ideas that resulted from the workshop. He stated that they would meet with the Board again toward the end of the project.

Mr. Berggren commented that the nature of the work was deliberative and though they had asked two members of the Board to participate on the leadership team, all Commissioners would be noticed and were welcome to participate.

Mr. Damewood outlined the structure of the different teams. He explained that EWEB would spread the word to the public through neighborhood meetings and all of the project workshops would be publicly noticed.

Mr. Damewood stated that the cost of the 30 percent conceptual design totaled $792,031.

Commissioner Lanning commended the work of Mr. Damewood and Mr. Gunderson. Mr. Damewood replied that Reid Hart was not the only staff member with the specialized training and listed several people including Steve Newcomb.

Commissioner Lanning asked Mr. Gunderson what the firm’s background in sustainability was. He underscored that EWEB had a strong commitment to sustainability. He noted that at most facilities conferences he attended, buildings were projected to last 50 years. He predicted that there would be national recognition both for EWEB and for the design team upon completion of the project if the project was done “the right way from the start.”

Mr. Gunderson said his firm had done quite a bit of sustainability work and was excited to be undertaking the project.

Mr. Damewood thought the project core team was very diverse in its outlook on this, with both skeptics of and proponents for sustainability.

President Farmer commented that there was some belief in the public that government entities state that they will spend a certain amount of money on a project and then end up spending much more.

Mr. Damewood said when the project went out to bid, it would likely get a high bid and a low bid and that staff would hope to accept a bid somewhere in the middle with a ten percent contingency.

Mr. Gunderson remarked that the key step was not just to set the budget and expect it to work. He said the team would continue to try to meet the utility’s goals in the most effective way.

In response to a question from President Farmer, Mr. Gunderson said when projects go out to bid; the range in bids tends to be approximately 15 to 20 percent.

In response to a question from Vice President Bishop, Mr. Gunderson said he would find out the cost per square foot of construction for the utility building in Kansas City that DNIM Architects had helped to design. Mr. Damewood recalled that when he was looking into building costs of other buildings, they had ranged between $140 and $210 per square foot, depending on the project.

In response to concerns expressed by Vice President Bishop, Mr. Berggren underscored that no contract had been signed for any body, but the utility certainly understood the hospital’s need for the entire site. He thought EWEB was conducting the “critical leg of the stool,” which was to determine the cost of the move. He stressed that the utility could not consummate any deal until it understood its funding requirements. He did not believe that EWEB was allowing its conversations with the medical center to influence the development of a decision process that would be “as robust as possible.” He said there was an assumption that the Board would make a decision one way or another in this scope and if this was not the appropriate decision, as numbers were firmed up another path could be chosen.

President Farmer remarked that he wished this step had been undertaken a couple of years earlier. He suggested Board members consider where the utility would be several years hence, should no movement forward be undertaken. He wanted the process done because he did not want this Board or a future board to be faced with a $12 million problem on the current site with no option to move. To some extent, he perceived the proposal to be a step in a direction to determine what it would cost to move regardless of whether the utility sold the current site or not.

Commissioner Lanning moved to amend the existing contract with WBGS Architecture & Planning, P.C., Contract Nos. 048-2004, for the full scope of work of the 30 percent conceptual design and cost estimates, for a total contract amount of $792,031. Commissioner Menegat provided the second.

Vice President Bishop asked if there was any idea how much it would cost to build a new headquarters building in today’s dollars. Mr. Berggren said there was not.

Vice President Bishop said she was uncertain where the $12 million figure had come from. President Farmer responded that the figure had come from a backgrounder provided to the Board on November 5, 2004, which outlined the cost of the three potential options, to move, to move only the operations arm, and to remain at the current site. $12 million was listed as the cost for the utility to remain at the current site and to construct the necessary upgrades to the operations facility.

Vice President Bishop indicated she would not support the motion, though she recognized it would likely pass. She felt the best people had been hired to work on this issue but opined that this point in time was not the best time to be looking into this. She opposed the use of ratepayer money to pursue a move.

The motion passed, 4:1, with Vice President Bishop voting in opposition.

President Farmer appointed Commissioner Menegat and Vice President Bishop to participate in the planning process, unless there was an objection. Commissioner Menegat indicated his willingness. Vice President Bishop asked, and Commissioner Simpson agreed, that Commissioner Simpson act as an alternate in the process.

ITEMS REMOVED FROM THE CONSENT CALENDAR

Commissioner Simpson provided the following correction to the minutes of December 7, 2004:

Page 4, third paragraph from the bottom: “…we asked Ms. Smith to capture the Board’s thoughts on paper while the Board focused on goals.”

Commissioner Simpson moved to approve the minutes from the Work Session of the Eugene Water & Electric Board held on December 7, 2004, as amended. Commissioner Lanning provided the second. The motion passed unanimously, 5:0.

President Farmer adjourned the meeting.

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Assistant Secretary President