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HomeMy WebLinkAboutApproved Minutes - 2009-03-24 LAr[oswt` ° CITY COUNCIL REGULAR MEETING 41, MINUTES March 24, 2009 q,GO$ Mayor Jack Hoffman called the regular City Council meeting to order at 6:30 p.m. on March 24, 2009, in the City Council Chambers, 380 A Avenue. Present: Mayor Hoffman, Councilors Jordan, Hennagin, Moncrieff(attending by phone for Oakridge hearing), Olson, Tierney, and Johnson. Staff Present: Alex McIntyre, City Manager; David Powell, City Attorney; Jane McGarvin, Deputy City Recorder; Jane Heisler, LOIS Communication Director; Guy Graham, Public Works Director; Erica Rooney, Engineering Services Division Manager; Denny Egner, Long Range Planning Manager; Debra Andreades, Senior Planner; Darin Rouhier, Finance Director; Brant Williams, Director of Economic and Capital Projects Mayor Hoffman announced that the study session on the business recycling ordinance has been scheduled for March 31 at 6:30 p.m., and the public hearing on the ordinance scheduled for April 21. 3. PRESENTATIONS 3.1 Distinguished Service Awards: Tia Ross, Bruce Pomazal, and Sarah C. Neitzel, Historic Resources Advisory Board, and Alison Webster, Planning Commission Mayor Hoffman presented a Distinguished Service Award to Tia Ross, and thanked her for three years of service on the Historic Resources Advisory Board, including service as the chair. Ms. Ross indicated to the Mayor that she helped save the house at 85 McVey Avenue. Mayor Hoffman presented a Distinguished Service Award to Bruce Pomazal and thanked him for his two years of service on the Historic Resources Advisory Board. He noted that Mr. Pomazal set up the properties database for the Cultural Resources Inventory and the Landmark Designation List. Mayor Hoffman presented a Distinguished Service Award to Sarah Neitzel, and thanked her for her seven years of service on the Historic Resources Advisory Board. He mentioned her work on the Oregon Iron Furnace Restoration project to restore the only iron furnace left west of the Mississippi. Mayor Hoffman presented a Distinguished Service Award to Alison Webster, and thanked her for her eight plus years of service on the Planning Commission. He noted the many projects completed by the Planning Commission during her tenure. 3.2 Neighbors Helping Neighbors 3.3 Children's Center of Clackamas County Projects Tonya Hunt, Executive Director, explained that the Children's Center was a non-profit organization that provided services to children suspected to be victims of abuse. She mentioned providing medical assessments and allowing forensic interviews by trained staff. She noted that they worked closely with the Clackamas County Sheriff's Office and also received referrals from the Lake Oswego Police Department. She indicated that the Children's Center was in a building phase, as they served over 300 children last year but had to turn away an additional 100 children due to lack of space. Therefore, building City Council Regular Meeting Minutes Page 1 of 27 March 24, 2009 the Center's capacity was the current goal of the organization. She noted that their capital campaign depended on both public and private support. She stated that the Children's Center was the exclusive provider of these services in Clackamas County. She mentioned that most of the children they served were under age 7, and 70% were suspected victims of sexual assault. She said they were honored to work with this high risk and vulnerable population on behalf of the communities throughout the county. Councilor Hennagin mentioned that his wife produced a fundraising video for the Children's Center five years ago during the organization's formation. Both he and his wife had been impressed with the work done by the Center. 3.4 LOIS Update Ms. Heisler introduced Jon Holland from Brown and Caldwell. Mr. Holland noted that, although the bid opening date for the lake full project has been delayed one week to April 2, staff still looked for a Council contract award on April 14. He explained that staff delayed the bid opening in order to give bidders time to prepare their best bids, in light of the large amount of information with which they need to familiarize themselves. He indicated that another reason for the bid delay was the design change implemented by staff in the last 12 days. He explained that staff recently learned that the Lake Corporation planned to drawdown the lake deeper than staff had expected, which necessitated changing the design. He noted that the design change had no net cost change. He said that, while the design change had an increased upfront cost to it, the lake full contractor would be able to leave the project sooner and not have to stay to monitor the pipeline during lake drawdown and refill. He explained that the first design that the team developed put the buoyancy pipe on top and the sewer pipe below. While this system maintained its configuration during deep lake drawdowns, it did not provide sufficient safety clearance beneath the lake surface. The team next looked at putting the sewer pipe on top and the buoyancy pipe below. While this provided sufficient clearance, the buoyancy pipe (during deep drawdowns) wanted to rotate to the top, putting the sewer pipe below it. This required monitoring and the contractor restoring the system to the original configuration. He indicated that staff sent the second design out to bid because they anticipated only two deep lake drawdowns over the 100 year life span of the system. With the news that the Lake Corporation intended to more frequent deep drawdowns, staff returned to the first design concept. He described a system configuration based on the first design concept, which achieved the design objectives and had no fatal flaws, other than staff had thought it would be more expensive in the long run. He explained that as staff learned exactly what the contractor would have to do to monitor and restore the system during lake drawdowns and refills, this configuration became cost competitive. He indicated that, while this design had a higher materials cost, its inherent stability during a lake drawdown eliminated the need for monitoring and configuration restoration. Mr. Holland indicated to Councilor Hennagin that staff decided to go with cables to hold the bend in the pipe in place, as opposed to mitering the joints. He explained that, with the mitered joints having a +/-1 degree tolerance error, they could not know for certain exactly where the pipe lay over its length for accurate positioning over the ground anchors. The internodal cables allowed them to predict accurately where the pipe would be in relation to the ground anchors. He indicated to Councilor Tierney that, before sending the addendum out to the bidders, staff verified that this change would have no impact on the construction schedule. He indicated to Councilor Olson that, while staff had known that the Lake Corporation had an interest in dredging the lake, what had been new information to staff was how deep the Corporation wanted to drawdown the lake each time they dredged it. Staff had designed the City Council Regular Meeting Minutes Page 2 of 27 March 24, 2009 system to handle the routine drawdowns of 10 to 12 feet without monitoring, but not 16 foot plus drawdowns. He said that staff talked with the Lake Corporation about the buoyancy pipe on top design, and suggested that it re-examine its clearance criteria. He mentioned that there were only three or four spots in the lake that were only 8.5 feet deep, but staff had had some concerns about that. He confirmed to Councilor Jordan that the clearance between the lake surface and the top of the pipe was not an issue during drawdowns; it was only a safety issue when the lake was full (primarily for anyone diving into the lake). He explained that the issue during drawdown was whether the pipe system maintained a stable configuration and did not require monitoring. He indicated to Councilor Jordan that the brackets for the new design were all stainless steel, instead of the composite polyethylene and stainless steel bracket of the original design. The cost increase for the additional materials needed for this design came to about $1 million. However, the cost balanced out with eliminating the need to hire the lake full contractor to stick around for an extra year during the drawdown and refill operation and to mobilize his equipment to restore the system back to its original configuration. He explained to Councilor Johnson that they used two internodal cables instead of one in order to distribute the load so that the brackets and pipe wall anchors could be smaller and less susceptible to problems. He described how the yoke assembly for the original design and how the two internodal cables for the revised design worked, with the costs being about the same. He indicated to Mayor Hoffman that the pipes would sit on the lake surface during a 16 foot drawdown. He mentioned that, during a dam replacement drawdown of 28 feet, the pipe would rest on the mud. Councilor Johnson thanked staff for the good job they have done in balancing the issues. Ms. Heisler said that they have completed the work in Maple Circle. She indicated that they were 25% to 30% complete on Kelock, and have encountered very little water. She mentioned that they were not putting in any laterals along the initial stretch. She presented a photo of the boulders they have been encountering. She indicated to Councilor Moncrieff that the contractor either chopped up a boulder or carted it off. She indicated that they were still on schedule and budget. She referenced the statement on the front page of the LOISNews.com website, which stated the City's promise to the community and residents regarding communication. She noted that staff has said that they would minimize impacts to residents and to the environment during construction, while also constructing a fiscally responsible project and insuring no disruptions in sewer service. She said that staff planned to seek fair and equitable solutions with neighbors, while keeping in mind the project goals of timing and budget. She pointed out that this project had serious constraints on it. She mentioned the Good Neighbor Guidelines that staff has been working on with the Maple Circle, Alder Circle, and Allen Road neighbors. She observed that, while they could not change the schedule, they could discuss how the contractors did the work. She mentioned that staff incorporated into the bid specifications for the lake full work plans to address neighbor concerns, such as noise mitigation, safety and health issues, traffic control for emergency vehicles, no storage of materials in the roadway, and preservation of travel lanes to the greatest extent practical for residents. She noted the Ask LOIS section of the website where staff posted the answers to questions that came up at neighborhood meetings. She mentioned a frequently asked question of why the City was using any given road easement instead of the Lake Grove Swim Park. She explained that the City had considered the Swim Park as an access for the pipe operation and piles, and switched that to the McVey access. Alder Point had always been considered for anchor installation during lake full and for lake access during lake down. City Council Regular Meeting Minutes Page 3 of 27 March 24, 2009 She mentioned another question of why the work hours ran from 7 a.m. to 7 p.m., Monday through Friday, and 8 a.m. to 6 p.m. on Saturday. She explained that the hours reflected the constraints of the drawdown agreement with the Lake Corporation, and the Corporation's desire to avoid a summer drawdown of the lake. She pointed out that staff developed the schedule in conjunction with the community, DEQ, and the Lake Corporation; it was designed to keep costs down. More constricted work hours meant an increase in the timeline and costs. She addressed the question of Native American burial grounds in the lake. She said that the City had to have procedures in place to document any potential resources it might find, and a plan to address what happened to any artifacts found. 3.4 Introduction of the Engineering Services Division Manager, Erica Rooney Mr. Graham introduced Erica Rooney, a new employee to the City, who came from OTAK Engineering, with experience at the Cities of Beaverton and Portland. 4. CONSENT AGENDA Mayor Hoffman pulled Item 4.1.2, Boones Ferry Road Refinement Plan — Phase 1 Contract. Councilor Jordan moved the Consent Agenda as amended. Councilor Tierney seconded the motion. A voice vote was taken, and the motion passed with Mayor Hoffman, Councilors Jordan, Hennagin, Olson, Tierney, and Johnson voting `aye.' (6-0) 4.1 REPORTS 4.1.1 Resignation of Sarah C. Neitzel from the Historic Resources Advisory Board Action: Accept Resignation 4.1.2 Boones Ferry Road Refinement Plan — Phase I Contract Action: This item was pulled. 4.2 RESOLUTIONS 4.2.1 Resolution 09-15, requesting Council to endorse an application for a grant from the State Transportation and Growth Management Grant Program to update the City's Transportation System Plan Action: Adopt Resolution 09-15 4.2.2 Resolution 09-16, approving an appointment to the Historic Resources Advisory Board Action: Adopt Resolution 09-16, approve the appointment of Craig Foster to the Historic Resources Advisory Board for the remainder of a three-year term ending December 31, 2012 4.3 APPROVAL OF MINUTES 4.3.1 January 7, 2009, special meeting 4.3.2 February 10, 2009, special meeting Action: Approve minutes as written END CONSENT AGENDA City Council Regular Meeting Minutes Page 4 of 27 March 24, 2009 5. ITEMS REMOVED FROM THE CONSENT AGENDA 5.1 Boon s Ferry Road R fin m nt Plan—Phase I Contract Mayor Hoffman explained that he pulled this item in order to discuss a potential conflict of interest. He indicated that the subcontractor of an unsuccessful bidder on this project was a client of his law firm. Mr. Egner explained that this refinement plan would get into more detail about the types of improvements that would implement the Lake Grove plan concepts for Boones Ferry Road. He indicated that the plan would eventually show what the right-of-way requirements were and where the access points would be. He said that the first phase was the traffic analysis and establishing some roadway needs. He reviewed the composition of the interview team reviewing the three bids submitted in response to the RFP published last January. He explained that the team selected DKS Associates because it had a more systems based approach that looked at neighborhood and local street impacts in greater detail, as opposed to focusing solely on the corridor itself. He said that the interview team thought that the DKS modeling software, which graphically depicted those impacts, would be an excellent tool for communicate to the public what was happening in the corridor. He acknowledged that DKS Associates was the most expensive of the three proposals. He commented that, while both Kittleson and Group MacKenzie were excellent firms that have worked with the City before, the interview team felt that DKS's systems based approach was the best proposal, and the one that focused more strongly on the traffic analysis aspect. He indicated that the funding source was the professional services line item in the long range planning budget, which had about $180,000 left for this biennium. Councilor Jordan commented, as an interview team member, that the DKS modeling software could show what the traffic impacts would be if the Lake Grove Village Center Plan built out completely as proposed. Mr. Egner mentioned that the engineering staff had also been impressed with the software. Councilor Olson stated that she liked the idea of the modeling showing the impacts in the neighborhoods beyond Boones Ferry Road. She asked if there had been a specific budget for this study. Mr. Egner indicated that staff had estimated a ball park study cost of around $100,000. Councilor Jordan indicated to Councilor Hennagin that, as an interview committee member, she did support the recommendation. She noted that, in addition to the modeling software, a benefit to using DKS was gaining a fresh set of eyes to look at the project. Councilor Hennagin expressed his concern that the staff report did not provide him with sufficient information; had Mr. Egner's explanation been in the staff report, he would not have asked to pull this item from the Consent Agenda. Councilor Tierney asked if all the bidders complied with the detailed scope of work. Mr. Egner indicated that the key differences between the three bids were that both Kittleson and DKS looked at how the modeling worked and at how far off the corridor they would assess the impacts; Group MacKenzie did not place as much emphasis on the traffic analysis component. Mr. Egner concurred with Councilor Jordan that DKS providing a fresh set of eyes to look at the project was another deciding factor; Kittleson had worked on the original Boones Ferry corridor plan in 2001 and the first phase of the Lake Grove Village Center Plan. He noted that DKS did the Foothills study and the Downtown traffic management plan, and that Group Mackenzie has also worked in Lake Oswego. He stated that all three firms were reputable and did good work; the decision came down to the details within the scope of work. Councilor Tierney commented that usually a public bid went with the lowest bidder responding to the specifics of the proposal. Mr. Egner explained that, while staff provided specifics in the RFP, it City Council Regular Meeting Minutes Page 5 of 27 March 24, 2009 also invited bidders to suggest other ideas that would help the City reach the plan goals in a better way. He said that each firm provided a base line and optional tasks. Councilor Tierney concurred with Councilor Hennagin that the staff report should have had this information in it, especially why staff did not choose the low bidder on a straight dollar basis. Mr. Egner indicated to Mayor Hoffman that staff anticipated completing Phase 1 by mid-summer. Councilor Jordan moved to award a contract to DKS Associates in the amount of$112,479 for Phase I of the Boones Ferry Refinement Plan. Councilor Olson seconded the motion. A voice vote was taken, and the motion passed with Mayor Hoffman, Councilors Jordan, Hennagin, Olson, Tierney, and Johnson voting `aye.' (6-0) 6. CITIZEN COMMENT Mayor Hoffman stated that he talked with four residents of Alder Circle before the meeting to inform them that he, Ms. Heisler, and Councilor Johnson intended to meet with them next week to discuss their concerns. He indicated that he gave Mr. Moody permission to make a 12 minute presentation, unless there were Councilor objections. • Mike Moody, 16812 Alder Circle He read his letter (Exhibit 6, Mike Moody, 3/24/09) detailing the concerns of the Alder Circle homeowners regarding the interceptor sewer project. He stated for the record that the residents were committed to the LOIS project. He explained that the residents were here tonight to voice their anxiety about and opposition to the overwhelming burden that the City was trying to force the Alder Circle homeowners to endure during this project, as well as the homeowners' growing displeasure at the City's failure to provide them with basic compromises, concessions, and respect to their requests. He renewed the homeowners' request for reasonable, definable cooperation and agreement regarding this project in relation to Alder Circle. He mentioned that the City did not notice the residents regarding the role that Alder Circle would play in the project. The City developed the Good Neighbor Guidelines in response to the residents' written and verbal concerns. He described the Guidelines as "a cavalier, indifferent, and overreaching reply" that did not address safety issues, and, which "claimed previously undisclosed discretionary powers that contradicted or materially exceeded what the City had said in other forums." He mentioned the potentially damaging material consequences of the project on their homes and families in terms of safety, property values, and quiet enjoyment He emphasized the homeowners' current position: it was unreasonable and unfair for any neighborhood to be subjected to these City-dictated conditions and restrictions for potentially twelve hours a day, six days a week for two years. He listed the homeowners' rights, which the homeowners argued this project compromised or restricted (p. 2). He discussed the reasonable conditions requested by the homeowners with respect to the project. He mentioned prior notice and notification, an Alder Circle representative at the project planning and meetings tables, and homeowner access to a live operator at the City during construction hours to address any concerns. He asked for specific weekday and Saturday construction work hours, and no Sunday or holiday work. He asked, aside from occasional requests to move a resident's vehicle, that there be no parking restrictions on the Alder Circle residents, guests, and service workers at the homes. He requested provision of a shuttle between a residence and wherever the resident was asked to park his car temporarily. He mentioned the Police Department enforcing the agreed upon parking rules. He asked that the City pave Alder Circle within 30 days of the end of the LOIS project, in order to repair the road damage caused by the heavy equipment, without payment by Alder Circle homeowners. He insisted that the City provide a plan acceptable to the neighbors that would provide unencumbered emergency vehicle access to every house during all construction hours. City Council Regular Meeting Minutes Page 6 of 27 March 24, 2009 He cited the perpetual access through Alder Circle agreed upon by the City and the Lake Corporation for the Corporation's dredging projects as another example of the City and the Lake Corporation choosing a course of action lacking transparency, fair notice, and open discussion of issues impacting the residential character of the neighborhood, the value of the homes, and the homeowners' rights as citizens. He argued that none of the homeowners' requests measurably impacted the project budget or timeline. He stated that the language in the Guidelines provided no comfort and committed the City to nothing, as well as providing the homeowners with warning that the City could change the LOIS project rules at any time. He contended that the homeowners deserved fair dealing, honesty, courtesy, and consideration from the City regarding their issues of safety, privacy, quiet enjoyment, and reasonable safeguards against property value loss due to the disparate impact of the LOIS project and the pending dredging project. He insisted upon a formal agreement between the City and the neighborhood. He stated that it was the City's responsibility to advise each contractor of the obligation to comply with the agreement. He indicated that the neighborhood was prepared to meet with decision makers. He suggested that the Council members try to imagine what it would be like to live under the conditions that the City was asking the Alder Circle residents to live under for two years. He indicated to Councilor Olson that all Alder Circle residents were shareholders in the Lake Corporation. • Rose Deggendorf, 16876 Alder Circle She indicated that the Alder Circle residents were assuming the best about the City's plans to date and the City representatives' effort to implement the plans. She noted that they also believed in constructive criticism, which was what she was providing tonight. She pointed out that the plans as currently proposed (and confirmed by Mr. Komarek) indicated that Alder Circle was considered a primary location for access to the lakebed. She begged to differ that any other street in the City used for access in the LOIS project shared the same level of access burden that Alder Circle did. She concurred with Mr. Moore that the Guidelines committed the City to nothing. She acknowledged the City's desire for maximum flexibility, but argued that that meant maximum flexibility within the bounds of the law. She questioned whether it was reasonable for the City, at the discretion of the City Manager, to declare the project behind schedule, and be able to run the project 24 hours a day. She asked why could the Guidelines not say that the equipment would not run 24 hours a day if the City did not intend to do so. She referenced the Sunday work mentioned in the Guidelines within the hours proposed. She argued that this was not simply a quality of life issue, but also a flexibility within the bounds of the law issue. She acknowledged that plans changed. She pointed out that the City's plans were still fluid and subject to amendment by mutual agreement between the City and DEQ or between the City and the Lake Corporation. She argued that it was not reasonable or fair for the City to say that it needed such an open-ended agreement that it could do whatever it wanted to do without consequence to the rights of the neighbors. She observed that the neighbors were trying to go beyond the City's good intentions to obtain opportunities for reasonable input on ways to tackle these problems. She held that it insulted the neighbors' intelligence not to commit the City to anything. She stated that she did not believe that this was a useful way for the City to interact with its citizens. She argued that if they could get past the City's insistence on saying things in a certain City Council Regular Meeting Minutes Page 7 of 27 March 24, 2009 way, and instead work to figure out what would work with the Alder Circle neighborhood, that would be a better method. She said that they were not asking for fiat authority or a vote; they were asking for a seat at the table to voice their concerns as the City made these plans that greatly affected them. • Jack Lee, 16969 Alder Circle He pointed out that the undue hardship this project placed on the fulltime residents of Alder Circle was only part of the picture. He spoke of the negative impact that this project would have on the six rental properties; the property owners, who depended heavily on the rental income, faced a real problem in renting these properties during the construction phase. He mentioned that his tenants have already asked to terminate their lease once the work began. He commented that the residents bought into Alder Circle because it was quaint, untravelled, and quiet; now they were faced with everything but that. He asked if the City was willing to reimburse the rental property owners for loss of revenue or the potential of losing the properties entirely due to lack of income. He did not think so. He stated that the City putting these hardships on one small part of the city and saying that it was for the good of all was not working for the neighbors. He indicated that, to date, all their appeals have been ignored. Therefore, they were no longer asking for concessions during the construction period, they were demanding that the City put certain controls on the construction in order to maintain livability within the neighborhood, quality of life, and security for investments. • Peter Garcia, 16852 Alder Circle He expressed his appreciation for the meeting with the Alder Circle neighborhood next week, and his hope that they could find a solution to the problems. He expressed concern about the compressed time left to create an agreement that the neighborhood would find satisfactory. He spoke in support of neighborhood input and representation in meetings between the City and project contractors. He held that the contractors needed to be responsive to neighbor concerns during the course of the project. He speculated that contractors might be able to offer creative solutions to problems that the neighbors felt have not been properly addressed at this time. He stated that his residence was at ground zero on this project, sitting directly due east of the Alder Point easement. His family would feel the construction impacts more acutely than the neighbors further away. He commented that, while the City was addressing the technical aspects and needs of the project, he felt that it had yet to address satisfactorily the concerns of the neighborhood. He said that he testified not just as an individual affected by the project, but as someone whose family would be adversely and acutely impacted for two years. He expressed his hope that the Council would make final decisions on the project with due consideration for those people making the most sacrifice for the greater good. Councilor Johnson assured the neighbors that their concerns were not falling on deaf ears. She indicated that this Council was very aware of the access issues and the impacts on the neighbors. She said that she looked forward with optimism to the discussion with the neighbors next week. She noted that the Council put extra staff on this project to make sure that the neighbors' concerns were heard and that the City was working with the citizens to achieve an effective project that solved the raw sewer spillage in the lake problem. She stated her conviction that a solution could be created, while acknowledging that she could not stop the trucks going down Alder Circle. City Council Regular Meeting Minutes Page 8 of 27 March 24, 2009 7. PUBLIC HEARINGS 7.1 Resolution 09-08, a resolution of the Lake Oswego City Council approving a work program to update the Lake Oswego Comprehensive Plan and directing the Planning and Building Services Department to submit these items to the Oregon Department of Land Conservation and Development for State approval consistent with the requirements of periodic review. PP 08-0012 Councilor Olson moved to continue PP 08-0012 to May 19, 2009 for further staff work. Councilor Tierney seconded the motion. A voice vote was taken, and the motion passed with Mayor Hoffman, Councilors Jordan, Hennagin, Olson, Tierney, and Johnson voting `aye.' (6-0) 7.2 Appeal of a Development Review Commission (DRC) Decision to deny a development application, following remand from the Oregon Land Use Board of Appeals (LUBA), for a 45-unit Congregate Housing facility. The site is located at 4255 Oakridge Road (Tax Lot 400 of Tax Map 21 E08 CB) The testimony portion of the hearing was completed on March 10. Mayor Hoffman recused himself from the Council deliberations, and handed the gavel over to Council President Jordan. He mentioned that Councilor Moncrieff would participate by phone. Mayor Hoffman recessed the meeting at 7:58 p.m. for a break. Council President Jordan reconvened the meeting at 8:06 p.m. Councilor Moncrieff was on the phone line. QUESTIONS OF STAFF Councilor Jordan noted that this was the Council deliberation portion of the public hearing of the appeal of the DRC decision to deny a development application following a LUBA remand. She stated that, although she did not attend the public testimony portion of the hearing, she did watch the hearing on TV and studied all the papers in the record. She indicated her belief that she could participate fully in the Council deliberations and decision. Mr. Powell asked if any Councilor had ex parte contacts, bias, or conflicts of interest to declare. There were none. Mr. Powell noted that the Council did not take any additional evidence during its deliberation phase. Ms. Andreades indicated that staff did receive written argument from both the appellant and the opponents within the period allowed by Council. Ms. Andreades explained that staff also received three letters on Monday, following the Sunday deadline, which the writers submitted in the belief that they had until Monday because the deadline fell on a Sunday. She said that she had copies available for the Council, should it decide to accept those three letters. Council President Jordan observed that the article published in the Lake Oswego Review might have led people to think that they had until Monday to submit their arguments. Councilor Hennagin commented that, while he did not want to be influenced by what the Lake Oswego Review published, he did think that it was the normal conclusion that, if the deadline for filing legal documents fell on a Sunday, then the filers had until Monday to file documents. He noted that there was legal precedent for such a practice, and therefore, he supported allowing them into the record. Councilor Tierney pointed out that the Council extended the deadline in order to be inclusive. Councilor Tierney moved to accept the three letters into the record. Councilor Olson seconded the motion. Mr. Powell noted that the letter from Dan Vizzini appended a large compilation of minutes from meetings leading up to the adoption of the congregate care definition and other long term care City Council Regular Meeting Minutes Page 9 of 27 March 24, 2009 housing ordinances. He reiterated the ruling that evidence not before the DRC was not admissible at an appeal hearing. He stated that Ms. Andreades separated those appended documents from Mr. Vizzini's letter. Councilor Moncrieff indicated that she could read the letters via e-mail, per Mr. Powell's suggestion. A voice vote was taken, and the motion passed with Council President Jordan, Councilors Hennagin, Moncrieff, Olson, Tierney, and Johnson voting `aye.' (6-0) Council President Jordan asked Ms. Andreades to review the four key issues that she had identified at the March 10 hearing. Ms. Andreades said that the first issue related to the 'due to' clause in the definition. The appellant argued that the causative relationship in the LUBA opinion did not necessarily mean 'directly caused by.' The question was whether the appellant showed a sufficient correlation between a person's age and whether they would have a disability or not. She indicated that the second question related to what was the actual definition o disability. The third question asked whether the internal design of the building and the support services to be provided by the applicant met the requirements under the definition of congregate housing. The fourth question asked whether the definition required 100% occupancy by people with disabilities. Council President Jordan asked Mr. Powell to review his remarks regarding the argument that the DRC's findings were not in compliance with federal law. Mr. Powell referenced the appellants' conclusion that the DRC decision violated the Fair Housing Act (FHA) and the American with Disabilities Act (ADA) in creating a discriminatory circumstance. He reviewed the appellants' arguments. The first was that the DRC's action violated these laws because it would require an inquiry into the nature or the severity of the disability. He pointed out that there was nothing in those two laws that prohibited such an inquiry if what was being provided was an opportunity and services to people with disabilities. He indicated that their second argument was that the DRC decision discriminated between disabled people based on the cause of the disability. He disagreed that the decision did so, as it was all right to fashion services and facilities to serve particular needs with disabilities. He noted that the DRC read the congregate care definition literally and broadly in the sense that the definition allowed housing for people who had disabilities due to mental or physical conditions or due to age. He discussed the third argument that the DRC decision segregated disabled people from non- disabled people. He stated that he has found no case stating that providing additional special housing or a special treatment facility for people with disabilities created illegal segregation. He mentioned that illegal segregation cases dealt with situations in which people with disabilities were not allowed to reside in similar housing to those without disabilities or were required to be segregated somewhere else. He pointed out that the DRC ruled that there was a special opportunity in Lake Oswego, called congregate housing, which was specifically for people with disabilities. He held that this was not a segregation situation. He said that the fourth argument was that the DRC decision would add individual proof of a disability as an additional criterion to senior only housing. He agreed that if the application had been for senior only housing, that would be a problem. However, the application was for congregate housing, which the DRC interpreted as housing only for people with disabilities, and not for seniors only without any connection to disability. He indicated that he was not certain what the appellant's fifth argument was getting at with respect to the DRC decision making a presumption about people that might be regarded as disabled. He pointed out that people were considered disabled who had disabilities meeting the definition of disability. If people were discriminated against because of their disabilities, that could be problem. However, the DRC's ruling clearly interpreted this as housing for people who actually had disabilities; therefore, this argument did not come into play. City Council Regular Meeting Minutes Page 10 of 27 March 24, 2009 He reviewed the arguments made in the Legal Aid Services of Oregon's letter. He noted that he already discussed the contention that the DRC ruling violated federal law by adding proof of disability as a criterion for a senior only building. He disagreed that specifying age as a cause of disability would result in two persons with identical disabilities being treated differently. If a disability was directly caused by age, then it was a different disability, and there was no discrimination. He reiterated that creating disabled only housing did not segregate disabled persons from non- disabled persons, but rather it created an additional opportunity. He held that the DRC decision did not deny a project providing housing for people with disabilities, but rather it denied the project because it was not limited to people with disabilities. He referenced the letter from the AARP. He noted the reference to a case in the District Court of Puerto Rico that held that people at a certain age had disabilities, and therefore they had the protections provided for in the FHA, Section 202. He explained that this case related to a lawsuit over whether a restrictive covenant prohibiting disabled senior housing on a certain property was discriminatory. He noted that the case did not hold that seniors were automatically considered to have disabilities. He indicated that the general thrust of the appellant's arguments was that the DRC's decision did not reasonably accommodate people with disabilities in that it found that this applicant did not meet the criteria. He explained that the reasonable accommodation standard applied to situations where it was necessary. It was necessary where people with disabilities would have housing on the same terms as those who did not have disabilities. He pointed out that that was a different situation from the City providing an opportunity specifically for people with disabilities. He stated that, while he respected the work done by the appellant attorneys, he did not believe that they have established that the DRC decision was illegal, or that it violated the FHA or the ADA. COUNCIL DISCUSSION Council President Jordan suggested working through Ms. Andreades' four points one by one in order to resolve each question. She commented that the third point, relating to the internal design and support services, might be the easiest to tackle first. Councilor Hennagin commented that he has already reached a conclusion that did not involve an analysis of those four questions. He asked the Council's indulgence to discuss an issue, which he acknowledged was irrelevant to the issue at hand, yet it had caused him some concern when the opponents raised it. The issue was the size of the project as inappropriate for the lot. Council President Jordan acknowledged Councilor Hennagin's desire to discuss that issue but held the deliberations to the one item before the Council. Ms. Andreades indicated that the application did meet all the zoning requirements. Councilor Moncrieff asked what assurance the City had that Lake Grove Presbyterian Church would be providing the support services to the residents. Ms. Andreades stated that there was a memo of understanding in the record between the Church and Northwest Housing that the Church would provide those services. Council President Jordan asked if the application was out of compliance if that did not occur. Mr. Powell explained that, because the application stated that those services would be provided, an approval of the application assumed provision of those services. Should they not be provided, then the applicant was in violation of the application. He indicated that the Council was free to impose conditions, but he did not think it necessary for the Council to specify any guarantees respecting provision of services. Councilor Hennagin stated that he believed that the prior Council erred in reaching its initial decision on this application, in so far as it focused upon the language of'due to' and the description of disabilities, instead of reading the definition as only descriptive of the kind of housing City Council Regular Meeting Minutes Page 11 of 27 March 24, 2009 intended to be created. He argued that the Council's initial error led LUBA to focus on that part of the definition also. He explained that his analysis was colored partly by his education. In a Municipal Law course at law school, he studied zoning ordinances—those approved and those ruled unconstitutional. He noted that the definition of zoning has changed over the years from once being defined as a means of separating uses, one from the other, to controlling the things that made life less healthful (traffic, noise, etc.), and allowing mixed uses within a single zone. He said that the only zoning ordinance in Lake Oswego that specified what kind of people could live in a residential facility was the ordinance allowing group care facilities in single-family residential neighborhoods; all residents must be disabled. He pointed out that regulations applying to daycare, nurseries, and pre-schools applied to people who were not residents but only temporarily in the zone. He argued that the Council did not have the legal authority within a zoning ordinance creating a congregate care facility or an assisted care facility to tell the operators to whom they could rent or not rent units in their facility. He noted that the City did not restrict who could live at the Avamere facility. He spoke to focusing on whether the application met the zoning ordinance requirements, and whether the inside elements of the facility created a congregate care facility, but not who could live there. He acknowledged that the financing used by the operator might specify the residents, but he reiterated that it was not within the power of the Council to restrict private property owners with respect to whom they could rent their facility. He reiterated his conclusions that the DRC's interpretation was wrong, that the Council made the initial error, and that that error led LUBA to review the decision based on a record that was wrong in the first place. He spoke to instructing staff to make findings that the definition in the ordinance was never intended to restrict to whom the owner of the congregate care facility could rent his/her facility. Councilor Tierney said that, while he was not disagreeing with Councilor Hennagin, he did not think that line of reasoning got them to a conclusion. He pointed out that the issue of life function disability due to age came to LUBA's attention primarily through its inclusion as an appeal item to LUBA. He argued that LUBA's language did not give the Council the latitude to dismiss their requirement that there be a causative relationship. He held that if they did not satisfy LUBA per its written remand, then they accomplished nothing. Councilor Moncrieff concurred with Councilor Hennagin that the code language referred to the disability and the use, and not to the user. She said that she felt that Northwest Housing Alternatives did satisfy the code's physical and service criteria for this use; it would be a facility to serve people with life function disabilities from whatever cause. Councilor Johnson stated her opinion that the appellant has satisfied the requirement in the definition of congregate housing to provide self-contained apartments containing cooking facilities. She pointed out that the definition of congregate care housing did not define a particular level of service with respect to the services provided, only that the services be provided. She said that she was also satisfied that the design of the building met the congregate housing definition in terms of design. She noted that the bottom part of the definition stated that the services provided would be less than what was normally provided for in a residential care facility. She indicated that she was satisfied that the design met the definition of congregate care housing. She said that she would support adopting findings stating that the application met the third point. Councilor Olson said that she agreed with Councilor Tierney that they needed to focus on the narrow issue on remand from LUBA. City Council Regular Meeting Minutes Page 12 of 27 March 24, 2009 Councilor Tierney argued that the four points were so intertwined that they could not be decided independently of one another. He agreed with Councilor Johnson that the design elements included in the facility, and the services provided, supported an independent lifestyle. He indicated that he was comfortable that the appellant has satisfied the third point. Council President Jordan said that, if the Council had some consensus that the facility itself met the definition of congregate housing, then she would like to discuss whether LUBA's decision required the appellant showing that either all tenants were disabled or that there was a causative relationship between age and disabilities, or both. Councilor Tierney commented that he needed to first define what a life function disability was. Councilor Hennagin asked if the Council attempting to make a concrete, airtight definition of disability was legislating. Councilor Tierney clarified that he was not thinking in terms of a concrete, airtight definition. Councilor Tierney stated that he did not see in the record a definition of life function disability, for either the Lake Oswego code or for the federal and state laws. He concurred with Mr. Powell's written comments in Exhibit F-20 (and expanded on by the appellant in Exhibit F-22) that the definition had to essentially meet the current ADA definition. He referenced the information that the 2002 Council adopted the code change with an awareness of the ADA definition, and that the term 'life function disability' covered a broad range of things (pp. 263-264). Councilor Hennagin pointed out that Congress changed the ADA definition of an ADA-complying disability, effective January 1, 2009, to read "a substantial impairment of a major life activity." He noted that Congress changed that definition because the courts were ruling that conditions such as diabetes or epilepsy did not qualify as disabilities. He commented that the Council would need to adopt the new ADA definition, and not the one understood by the 2002 Council, or it might create more problems. Councilor Moncrieff commented that one could not pin down a concrete definition of disability based upon the written and oral testimony. She indicated that it would be effective to go with the ADA definition, yet the change made that problematic. Council President Jordan asked if the ADA information in the record was the same information used by the Planning Commission when it adopted the congregate care housing code. Mr. Powell referenced p. F-44 in stating that the record showed some intent to follow federal regulations with respect to fair housing and disability. He indicated that the intent of the Planning Commission several years ago would not have been identical to the new ADA definition. He noted that the current ADA definition was on p. F-20. He commented that the core definition did not change much—it was still about affecting major life functions—which staff thought tracked with life function disabilities. Councilor Olson questioned relying on the church to provide the support services consistently over the long term, whatever its current intent was. She expressed concern about the application qualifying as an adequate provider of services. She pointed out that Avamere was low income senior housing, as defined in the HUD grant. Councilor Hennagin countered that that was a restriction by the financier, and not something that the Council restricted. Council President Jordan pointed out that the congregate housing code simply required that there be some types of services; the City did not require specific services. She noted that the applicant was stating that it would provide some type of service over the length of time that the facility remained congregate housing, regardless of who provided it. Mr. Powell discussed the distinction between approval and enforcement. He indicated that the Council approving the bundle of services described by the applicant permitted the facility under the congregate housing code. However, the question of whether the church would continue to provide the services related to enforcement. He explained that the Council did not need a condition of approval stating that the facility should continue to be congregate housing, any more than it City Council Regular Meeting Minutes Page 13 of 27 March 24, 2009 needed a condition of approval to say that a restaurant facility should continue to be a restaurant. Once the required services ceased, then the facility was in violation and the operators could be cited with violating their permit. Mr. Powell pointed out that the staff recommendation regarding the definition of disability was not that the Council necessarily find that life function disability in the congregate care definition be identical with the ADA definition. Rather, staff recommended that the definition include the ADA definition in order to provide housing opportunities that could be federally funded. Council President Jordan recalled that, while the Palisades neighbors had raised design and physical issues related to the conditional use in the zone during the Avamere application, this issue of'due to' relating to age never came up. She speculated that the Avamere residents would be surprised to know that they had to have a life function disability in order to live at Stafford. She commented that nothing in the new ADA definition, or in this Lake Oswego case, said that a disability had to be diagnosed by a physician or some other party in order to be considered a life function disability. Therefore, an individual could self-nominate to go to congregate housing because he/she could not do a lot of the things that he/she used to do. She held that if an individual decided, for one reason or another, that he/she could not live independently on his/her own, then that individual should be allowed to move to a facility offering a lower degree of support than an assisted living facility. She argued that, in Lake Oswego, that was what congregate housing was for. She commented that now they were trying to redefine what the initial purpose was for congregate housing. However, the only example they had of congregate housing in the city was a facility without any of the restrictions placed on it that the Council was now trying to redefine. Councilor Hennagin suggested, at a later time, instructing staff to bring back a revision of the definition of congregate housing. He stated that, in his mind, there was no doubt that aging at certain stages did cause a disability. He commented that he did not believe that there was anyone over the age of 60 who did not have some arthritic changes. He held that the Council could justify a broad definition of the concept of the effects of aging on individuals. He commented that he would rather challenge LUBA because he thought that LUBA was also wrong. He indicated to Councilor Tierney that the time to do so was not yet past, although it would take the applicants on a long journey, during which they might lose their funding. Councilor Tierney argued that the definition of life function disability should be broad, as suggested in the record and in the definition itself. Councilor Johnson argued that the definition using the phrase 'life function disability due to age' created the assumption that such a thing existed. Councilor Moncrieff concurred. She indicated that the testimony convinced her that there was a correlation between disability and age. She mentioned a broad definition of life function disability. Mr. Powell confirmed to Council President Jordan that LUBA was not telling the Council how to define its own code; it was saying please make sure that the Council addressed this issue in its code. He explained that the language from LUBA said that the Council was ignoring disability due to age; the Council could not absolve an applicant from demonstrating that tenants would have disabilities, or that there was a causative relationship between disability and age. He discussed how strictly did the Council read the LUBA language. He pointed out that LUBA's concern was that the Council was ignoring the express language in the ordinance. They were directing the Council to address the issue, but not how the Council should address the issue. He said that the Council needed to define the phrase 'disabilities due to age' in some way. Councilor Johnson explained that she interpreted the congregate housing definition language about life function disabilities due to age as having to do more with defining what congregate housing needed to look like and its design rather than spelling out what the actual disabilities were. City Council Regular Meeting Minutes Page 14 of 27 March 24, 2009 She referenced Ms. Uchida's letter stating that the facility was an apartment building meeting the minimum ADA requirements, and nothing beyond that. She asked for staff confirmation that the facility did meet the ADA requirements and provided additional services. Ms. Andreades reviewed the services that the church proposed providing. She noted that the facility had a community room and a medical consultation room. She indicated that multifamily housing, as she understood it, would not provide those rooms or services. She described congregate housing as one step above multifamily housing because it provided something more, even though it looked very similar to multifamily housing. Mr. Powell confirmed to Councilor Hennagin that an appeal from LUBA went to the Oregon Court of Appeals, and not directly to the Oregon Supreme Court. Therefore, there was the potential for both courts to review the case. Mr. Powell indicated to Councilor Olson that congregate housing was a conditional use in medium and low density residential zones and an outright use in high density zones. Ms. Andreades noted that it was a conditional use in the GC zone. Mr. Powell indicated to Councilor Olson that, even if the applicant proposed building the facility where it would be an outright use under the zone, the language about disabilities would still be an issue. He explained that conditional use allowed adding conditions to the application in order to insure compatibility with the rest of the neighborhood. The application still had to meet the definition of congregate housing. He indicated to Councilor Olson that Lake Oswego did not have a category called low income housing, but it did have multiunit housing that would not require a showing that it was catering to the independent lifestyles of people with disabilities. Councilor Olson observed that the difference between this facility and Avamere was that all the services comprising congregate care were located physically at Avamere, while similar services at this facility were brought on site by the church. Councilor Johnson summarized Councilor Olson's point as anybody could build an apartment building as a multifamily housing unit in an R-0 zone, provide these same services, and not have to get a conditional use permit. Such a building would not be called a congregate housing facility. Councilor Olson held that that would take the disability issue out of the equation. Councilor Johnson pointed out that the issue was that the City had a conditional use process that people could use to build congregate housing (per the definition) in areas like GC zones. She agreed that they could build the facility elsewhere, but this case was before the Council because the City had a conditional use process. She acknowledged Councilor Olson's point that the root question in deciding whether the facility met the congregate housing definition focused on its design and what services it actually provided. Did a facility designed as congregate housing have to provide services within the walls of the building, as Avamere did? She said that she read the congregate care housing definition as not saying that services had to be provided on site, just that the facility had to provide variable levels of support. A facility providing on-site services provided a higher level of support, while Northwest Housing proposed a different level of support. Council President Jordan pointed out that multifamily housing did not have to have ADA accessibility features. She noted that here they were discussing a specific facility seeking people with life function disabilities, and built to ameliorate the disability issues. She said that one could call it multifamily housing with ADA accessibility, but it truly was a different level from multifamily housing. Councilor 01 on acknowledged Council President Jordan's points. She commented that Northwest Housing could take their plan, their grant, and everything they were doing, and put it on City Council Regular Meeting Minutes Page 15 of 27 March 24, 2009 another site and avoid this issue. Councilor Tierney pointed out that the reality was that Northwest Housing chose this site, went through a process, and received approval from the DRC, which the Council affirmed and the opponents appealed to LUBA. Councilor Tierney asked what the implications would be for the existing congregate housing in the city if the Council upheld the DRC decision. Mr. Powell indicated that the existing use would become non-conforming. He noted staff's recommendation that, whatever decision the Council made, it refer the definition to the Planning Commission to get some clarity on issues such as what parking standard should apply, or what zone should this use be in. He mentioned that, while he has not surveyed the code, he believed that more zones allowed congregate housing than allowed multifamily housing. He noted that the GC zone required commercial on the ground floor and housing up above, per the Lake Grove Village Center Plan. He commented that the City Code currently did encourage congregate housing for seniors and for seniors with disabilities. He confirmed that one could build multifamily housing, ADA accessible and with all the services, but it would have different parking standards and more restrictions on location. Councilor Hennagin asked if the Council could define everyone 62 and over as being in the stages of disability. Councilor Olson concurred with Councilor Tierney that that was what the Council did the last time. Mr. Powell commented that he thought that what the Council said has been misinterpreted to a certain extent. He explained that the Council had been trying to say that this facility qualified as senior housing. Therefore, being of a certain age qualified as a disability under the definition. He said that the Council had not been saying that everyone who was 62 had a disability. The Council agreed by consensus that the definition of life function disability should be broad and not limited to but including the ADA definition. Council President Jordan noted the next question of whether the definition required that 100% of the tenants have a disability. She observed that the DRC interpreted that literally. Councilor Hennagin commented that, since he interpreted 'life function disability' as a descriptor to help define what was intended for congregate housing, his logical conclusion was that having 100% occupancy by disabled tenants was not required. Councilor Tierney commented that, while the LUBA decision was challenging in going beyond the one for one relationship, he did not think that that was the intent of the code. He cited Ken Sandblast, Evan Boone (Exhibit F-20), and Dan Vizzini's testimonies discussing the intent of the ordinance at the time it was changed. He acknowledged the need to be very specific and careful in the findings, given the LUBA language, but he did not think that the Council did the community a service if it made a 100% occupancy required finding. He mentioned that he also thought that there was evidence in the record to support defining 'due to' statistically. Councilor Moncrieff agreed with Councilor Tierney. She pointed out that the City had conditional use permits because there were uses that did not fit perfectly into any category. She argued that this development fit best into the congregate housing code, She stated that she did not see anywhere in the code language requiring 100% occupancy by disabled tenants. Councilor Johnson concurred with Councilor Moncrieff regarding the 100% occupancy issue. She referenced the definition, which said that congregate housing was supposed to support independent lifestyles. She argued that prohibiting a spouse without a life function disability from living with and caring for a spouse with a life function disability did not support an independent lifestyle. She held that if that were the intent of the definition, then that would have been expressly stated. Council Pr id nt Jordan said that she concurred in not seeing where it said that only people with disabilities could live in congregate housing. She questioned whether some people in this City Council Regular Meeting Minutes Page 16 of 27 March 24, 2009 income-restricted facility could even have an independent lifestyle without help from a spouse, especially if they had to pay for the care that their partner could provide. The Council discussed the question of whether the language required only one member of a household to be disabled. Ms. Andreades noted that the age limit required that at least one resident in each household be 62 years old. Mr. Powell asked for clarification, as he was hearing two different things: 100% occupancy by disabled tenants was not required, and at least one resident in each unit must be disabled. He reiterated that LUBA said the Council could not absolve the applicant from showing that tenants would have disability or that there was a correlation between age and disability. He asked whether the Council thought that both those requirements had to be met, or whether they were alternatives. Did the applicant have to interview each tenant to establish disability? Or could the applicant show a correlation statistically between age and disability, which would allow in those meeting the age limit? Council President Jordan indicated that that was why she brought up that the proposal said that at least one resident in each unit had to be 62 years old or older. She pointed out that if the Council went with the broader definition of life function disability, and it established that there was a causative relationship between life function disabilities and age, then it has set the criteria. She confirmed to Mr. Powell that a causative relationship would use certain percentage. Mr. Powell indicated that a Council discussion of what the bar was for the percentage would be helpful in crafting findings to address LUBA's concerns. Council President Jordan commented that having the broader interpretation of life function disability meant that the Council was looking at a multifunctional type of building with multiple levels of abilities among the tenants. Councilor Hennagin argued that, based upon the record created before the DRC, the Council did not have to conclude that a specific percentage of tenants had to be disabled within the ADA definition. The Council could find that there has been a sufficient demonstration that there was a relationship between age and disability to satisfy the ordinance in this situation. Mr. Powell commented that that was one of several ways to make a finding. He agreed that the Council did not want to put out number parameters. He indicated that, with respect to this application, Council would say that the applicant has shown that the facility would have on average 70% people with disabilities (per the statistics). That created substantial occupancy by people with disabilities without stating what the high and low end percentage was. Council President Jordan asked if there was consensus to overturn the DRC finding and demonstrate through the Council's findings that it believed that this project met the criteria in the code. Councilor Moncrieff said yes, there was a correlation between age and disability. Councilors Tierney and Johnson also said yes. Councilor Hennagin held that there was evidence in the record to support the conclusion that there was not merely a correlation, but that there was a substantial correlation between age and disability. He reiterated that he disagreed that they had to make that finding under this ordinance, although he believed that there was evidence in the record to support the Council reaching that conclusion. Councilor Johnson stated that, while she supported the correlation between age and life function disability, the heart of the issue for her was the definition of congregate care housing as related to the building design. She said that this building was designed to meet the congregate housing definition of providing additional services that went beyond regular multifamily housing but not as far as residential care facilities. She reiterated that she accepted that there were life function disabilities due to age because the definition expressly said that there were. Council President Jordan observed that the Council would like the Planning Commission to dev lop language more clearly directed to the zoning relationship between congregate housing and conditional use only, without addressing the user. City Council Regular Meeting Minutes Page 17 of 27 March 24, 2009 Mr. Powell summarized the Council discussion. He said that he heard two Councilors saying that the Council was addressing LUBA's concerns by finding that the applicant did not have to show that every tenant had a disability, but rather that there was a correlation between age and disability. Therefore, with the applicant limiting the age to 62, and the statistics showing that on the average 70% of seniors had disabilities, the facility would be substantially occupied by people with disabilities. Thus, the application met the definition. He said that he heard two other Councilors saying that they supported the correlation but they believed that the findings should say that that correlation should not be necessary because all that was required was that the building be physically designed for people with disabilities. Councilor Olson commented that this whole case has pained her because she was an advocate for affordable senior housing and encouraging senior citizens to stay in Lake Oswego. She said that this case once again demonstrated the consequences of a confusing and conflicting code. She noted her long time vocal criticism of LOC Chapter 50. She asked if they could find a stronger argument for a complete audit and/or rewrite of Chapter 50 in order to provide clear and consistent policy for the community. She urged the Council to make a code rewrite a top priority in order to resolve all the problematic language in the code. She explained that her personal conflict came in with the code as currently written being the law of the city. She argued that they could not make decisions based on a convenient interpretation of the code to accomplish their objectives, which was what they were doing here. She spoke to following the code until they modified it. She commented that they knew what they wanted to accomplish but the law was the law. Council President Jordan observed that congregate housing was obviously an issue that was not as well defined as the Council would like to see. However, this hearing focused on the very narrow issue remanded by LUBA. She indicated that she thought that the Council has been clear that their findings would show that the building conformed to the internal design and support service requirements of the Lake Oswego congregate housing code. In addition, the findings would show that the Council believed that a definition of a life function disability should be broad enough that it encompassed, not only ADA requirements, but also other areas that could be thought of as life function disabilities as one aged, because there was a causative relationship between age and disability, which the appellant has demonstrated to occur at age 62 and beyond. She described a third finding that the Council did not believe that there was anything in the code stating that 100% occupancy by tenants with disabilities was required. She said that the findings should reflect that the Council did not concur with the DRC finding, and that the Council believed that the project reflected the Lake Oswego code. Councilor Tierney agreed with Councilor Olson that this was a huge challenge to the community, noting that it resulted from well-intentioned language. Council President Jordan mentioned another concern that, with the code not defining what level of services were required for congregate housing, they were looking at two different types of facilities (one with onsite services and one with services provided by an outside provider) supposed to both fit under congregate housing. Councilor Olson suggested writing the findings so that Avamere would not be out of compliance. Council President Jordan commented that the broad definition of life function disability allowed Avamere to be considered as congregate housing. Mr. Powell asked if there was consensus that the Council was going with the idea that the statistical evidence in the record, which used the ADA definition, was sufficient to show substantial occupancy by people with disabilities. He mentioned that he was particularly concerned as to whether what he said went beyond where Councilors Hennagin and Johnson wanted to go. City Council Regular Meeting Minutes Page 18 of 27 March 24, 2009 Council President Jordan said that she thought that there was a sense on the Council that the zoning code should deal with the structure being built, and not with the user. She indicated that there was a considerable desire on the part of many of the Councilors that the design and function of the building be the emphasis of congregate housing, and not who used it. She commented that, even so, for this applicant, the Council believed that there were causative factors that have been demonstrated statistically showing that age was a factor in life function disabilities. Councilor Johnson indicated to Mr. Powell that the findings as outlined were acceptable to her. Mr. Powell summarized Councilor Johnson's comments. The Councilor wanted a strong statement about how things should be structured in the code and how the code should focus on the building. However, for this applicant, a showing has been made that met LUBA's directive to interpret the words 'due to,' which satisfied that directive. He commented that the Council's findings would give direction to the Planning Commission to clean up the definition. Ms. Andreades asked if the Council was saying that the correlation can be shown for anybody who applied for congregate housing under the definition, or that only this applicant has shown the correlation. Councilor Hennagin pointed out that only this applicant has created the record showing the correlation. He indicated that he thought that a new applicant filing before the Council changed the definition would have to make the same showing. Mr. Powell pointed out that the findings in this case would set a precedent for any new applications. He commented that the findings also helped with the potential non-conforming status for Avamere. Since Avamere had an age limit of 62, and it offered even more services, it was unlikely to be in violation of the Council's interpretation. Councilor Olson indicated to Councilor Johnson that she did not support the findings. She said that, while she wanted congregate housing in Lake Oswego, she could not reconcile that need with the narrow point of law remanded by LUBA. Councilor Johnson moved to tentatively approve the application and overturn the DRC decision, and to direct staff to return with findings and order finalizing that decision. Councilor Tierney seconded the motion. Mr. Powell indicated to Councilor Olson that, while the Council procedures discouraged abstaining, she could do so. A voice vote was taken, and the motion passed with Council President Jordan, Councilors Tierney, Moncrieff, and Johnson voting `aye.' Councilors Hennagin and Olson voted 'no.' (4-2) Council President Jordan recessed the meeting for a break. Mayor Hoffman reconvened the meeting. 8. REPORTS 8.1 Resolution 09-13, a Resolution of the Lake Oswego City Council Authorizing the City Manager to Sign an Intergovernmental Agreement between TriMet, Metro, Clackamas County, City of Portland and the City of Lake Oswego for the Portland to Lake Oswego Transit Corridor Project Mr. Williams explained that the primary purpose of the IGA was to develop a funding plan for the next phase, which included the refinement study, the draft Environmental Impact Statement (EIS), the final EIS, and the beginning of the preliminary engineering. He discussed the benefits that each of the five partners would receive through this project, such as regional connections and redevelopment in Lake Oswego. He discussed the details of the funding plan for$6 million, which would be split between local ($2 million) and federal ($4 million) funds. He indicated that Portland would put up $1 million, City Council Regular Meeting Minutes Page 19 of 27 March 24, 2009 Clackamas County $850,000, and Lake Oswego $150,000. He said that the first $57,000 of Lake Oswego's portion would go to Metro to fund the refinement study; the current budget had a little under$100,000 for that type of work. The City would have to program the remaining $93,000 into next year's budget; and send it to TriMet as the lead agency in this next phase (pp.60-61). He reported that last Thursday Metro approved $4 million of MTIP funds (Metro Transportation Improvement Program) for this project. This met one of Lake Oswego's conditions in the IGA. He discussed how Portland and Lake Oswego staff members resolved the problem of this $4 million not being available until 2012, yet needing the funding for this phase in 2009. Portland would re-allocate $1 million to this project from a program already funded through MTIP and postpone that project. Lake Oswego would advance $1.5 million of general fund money to TriMet this year, and TriMet would repay the City $1.8 million by September 30, 2012, after the MTIP money became available. He indicated that TriMet has approved the IGA. Metro, Clackamas County, and Portland were scheduled to approve the IGA in the coming weeks, but they would follow Lake Oswego's lead on it. Staff would bring back to Council approval any amendments to the IGA made by the other jurisdictions. Mr. Rouhier described the $1.5 million as an advance for which the City expected to be repaid. He explained that he would not call it a loan, because 'loan' implied that this tactic fit within the City's investment policy, which it did not. He mentioned that the only negative was the reduction of the City's flexibility in having these funds in 'restricted reserves' for three years, after which they would revert to 'unrestricted reserves.' He said that this minor change would not, under normal circumstances, restrict the City's bond rating. He held that, even though, there were changes in the bond market affecting the ratings categories, it was unlikely that this change would have any significance. He indicated to Mayor Hoffman that the City's bond advisor, Chip Pierce, agreed that it would not be significant. COUNCIL QUESTIONS Councilor Hennagin asked if staff could predict what the added cost would be to the City if it slipped from a triple AAA to a double AA. Mr. Rouhier explained that it would only affect the City in terms of bond issues; there would be higher borrowing costs for GO bonds. Councilor Hennagin mentioned hearing about the Build America bonds at the National League of Cities Conference in D.C. Mr. Rouhier discussed another factor that could result from a drop in the City's bond rating, although he did not believe that it would be significant. He explained that the second phase of the City's wastewater bond issue might use a general fund pledge to back the revenue bonds. Since the pledge was as valuable as the strength of the general fund, a drop in the bond rating could diminish the general fund pledge. He indicated to Councilor Olson that this minor change would probably not increase the interest rate on the pledged bonds or the sewer rate to the customers. He indicated to Councilor Tierney that he estimated $21.5 million in general fund reserves by the end of the year. He noted that this represented a growth in the reserve of approximately $1.5 million over the course of the year. He mentioned looking at this advance in the context of the Council having less flexibility to address whatever needs might arise. He clarified to Councilor Tierney that if TriMet failed to repay by September 30, 2012, then, at that time, the 9% interest rate on the $1.8 million kicked in. He indicated to the Councilor that TriMet had a triple AAA bond rating. There was no doubt of their ability to repay the advance. He confirmed to the Council that TriMet would repay the advance by using the $4 million in federal MTIP money promised last week. In 2012, $1.8 million of that $4 million would go to TriMet as City Council Regular Meeting Minutes Page 20 of 27 March 24, 2009 surface transportation program funds for general maintenance purposes, which would free up their general funds to repay Lake Oswego. He clarified to Councilor Tierney that staff applied for $4 million in grant funds from the FTA 5339 program in hopes of getting additional money to support the project. Councilor Olson pointed out that the IGA did not say that the $4 million in grant funds were in addition to the MTIP funds. Rather, the IGA implied that the MTIP funds and the grant funds would pay for the same work (p. 3 of 10). Councilor Olson wondered whether that the paragraph in the IGA giving that impression should be deleted. Mr. Rouhier said that he would have to check on that, as he knew that the partners were looking at finding other federal money to help fund the project in its entirety. He commented that, when the IGA was written, potentially staff thought that the 5339 funds might help supplant the MTIP money. Mr. Rouhier mentioned that there was little chance that this project would receive 5339 funds, since in the past, most awards from this fund have been in the $500,000 range and not for this type of work. Mayor Hoffman commented that he understood from talking with Mr. Williams that, should the project receive 5339 funds, that money would slide in at the DEIS stage, and push the money further down the line for the different items, resulting in perhaps a little more money for the final engineering. Mr. Rouhier concurred with Councilor Olson that those funds could also pay Lake Oswego back sooner, as they were not supposed to be used for final engineering. Councilor Olson spoke of her discomfort in saying in the IGA that, if the partners obtained the grant money to use for this phase (instead of using the MTIP money), then they would use the MTIP money for final engineering when that was not what the MTIP money was for. Councilor Jordan described this as leveraging money. She spoke to moving the project forward through this financial strategy devised by staff. She held that if they should receive additional funds from another source, then they should keep moving the funds into the project in order to keep it moving forward. Councilor Olson acknowledged the Councilor's point, but reiterated that the IGA under consideration asked the Council to approve advancing money to TriMet for the DEIS and preliminary engineering, and nothing else. She stated that that was all she was willing to agree to at this point. Councilor Tierney described this as an investment. He asked where the money would come from for the actual construction. Mr. Williams indicated that staff did not have a final financing strategy for the final engineering and construction phases yet. He mentioned initial preliminary estimates in the $300 million range. The majority would come from federal funds, with the local match coming from two primary sources: the value of the right-of-way, and contributions from Portland and Lake Oswego. He explained that each jurisdiction would possibly contribute $6 million, with Lake Oswego's funds coming from urban renewal funds. He discussed the federal programs that funded these types of projects: New Starts and Small Starts. He said that New Starts funded larger transit projects, while Small Starts funded projects $250 million or less. He explained that staff wanted to jumpstart this streetcar transit project in hopes of being included in a new $400 million program to fund streetcars only, which the Federal Transportation Administration was considering for the new Transportation bill. He indicated that if that program was included, and this project was one of the six to ten projects funded, then they would apply to fund first phase of the project, and look to either New Starts or Small Starts for the remainder of the funding. Mr. McIntyre commented that this was the message that they tried to impart to the congressional delegation in D.C. Councilor Jordan indicated that JPACT also brought this message to the same congressional delegation. In addition, JPACT talked about increasing flexibility in federal programs for streetcars, City Council Regular Meeting Minutes Page 21 of 27 March 24, 2009 as the current criteria favored bus rapid transit programs. She said that her report on her JPACT/NLC trip included both the appropriations request from Metro for $4 million, and the authorization request from Metro, including $240 million plus for the Lake Oswego streetcar. She said that both JPACT and Metro supported this project. She argued that Lake Oswego's willingness to enter into this agreement would show its determination to Portland that it wanted the streetcar to come all the way to Lake Oswego, and not to stop at a midpoint. She asked if the City got any credit for restricted funds earning a higher interest rate than the current market rate. Mr. Rouhier indicated that possibly the City might because the interest would come in as additional unrestricted revenues. He pointed out that the math worked out to a 6% return on the money advance to TriMet. Mr. Williams indicated to Councilor Olson that the steering committee mentioned on p. 2 of 10, paragraph 4, would ideally be comprised of the top elected officials from each agency. He confirmed that there would be representation from each partner on the committee. Mayor Hoffman reported on his conversation with Mayor Adams of Portland today. He indicated that each mayor would sit on the Steering Committee. Mayor Adams also reaffirmed that this was a Portland to Lake Oswego project, which might be done in phases. Mayor Hoffman said that he emphasized in no uncertain terms the importance to Lake Oswego of the streetcar coming to Foothills, and not stopping at the Sellwood Bridge; Mayor Adams acknowledged the point. Mayor Hoffman pointed out that this was a Lake Oswego-driven project desired by the community for 20 years. He spoke of the need to move forward now or be left behind without another opportunity for an unknown number of years. He emphasized that now was the time for Lake Oswego to get involved and act. He declared a potential conflict of interest in that Oregon Ironworks, which was mentioned in the contract, was a client of his firm. Councilor Tierney moved to adopt Resolution 09-13. Councilor Jordan seconded the motion. A voice vote was taken, and the motion passed with Mayor Hoffman, Councilors Jordan, Hennagin, Olson, Tierney, and Johnson voting `aye.' (6-0) 9. INFORMATION FROM THE COUNCIL 9.1 Councilor Information Councilor Jordan announced the Clackamas County Cities Capital Day on April 17. She said that they would visit the state legislators in Salem from 9 a.m. to 4 p.m., and try to make sure that the needs of Clackamas County were addressed by the state legislature. 9.2 Reports of Council Committees, Organizational Committees, and Intergovernmental Committees 10. REPORTS OF OFFICERS 10.1 City Manager 10.2 City Attorney 11. STUDY SESSION 11.1 Wastewater Revenue Bonds Chip Pierce, the City's bond advisor, joined the meeting by phone from Phoenix, AZ. Mr. Rouhier reviewed the revised schedule (Attachment A, p.122-124). Mr. Pierce mentioned that the funds would be wired to the City at the close on May 13. Mr. Mclntyr introduced Gr g Blond , Orrick Harrington, a member of the City's legal counsel/bond counsel team. City Council Regular Meeting Minutes Page 22 of 27 March 24, 2009 Mr. Blonde discussed the draft ordinance (Attachment B, p.117-121). He noted that the proposed ordinance to authorize an additional $24.5 million (as drafted) looked very similar to the ordinance that the previous Council passed last July to authorize $100 million worth of sewer revenue bonds. He pointed out that these bonds would be payable strictly from sewer revenues, and not from the City's general fund. He noted that ordinance also delegated all the documentation necessary to issue the bonds to the City Manager and the Finance Director. He pointed out that this ordinance also delegated to the City Manager and Finance Director the task of preparing and executing a master sewer declaration, which set forth procedures for sewer revenue bonds. He explained that this was the same sort of declaration that the City already had for its water bonds. Mr. Rouhier observed that the question at hand was the amount of authorization that was prudent at this point in time. He explained that, in discussions with the City's bond counsel regarding funding the debt service reserve within the bond issue, staff realized that an authorization for more than the $24.5 million originally contemplated in this draft ordinance would be necessary. He presented a slide showing the three components of the bond authorization: the original $100 million, $24.5 million to fund anticipated project expenses, and an additional $5 to $8 million to fund the debt service reserve. Mr. Pierce explained that the reserve fund was money controlled by the City and not intended for use; the City would put it in place solely as a security feature for bond holders. He indicated that, unlike the other project costs, the City would not spend it on additional project costs, but rather hold on to it and invest it. Mr. Pierce clarified to Councilor Hennagin that the debt service reserve prevented a default by the City, and bought it time to do whatever it needed to do to avoid defaulting on the bonds. Mr. Rouhier confirmed that if the City used the reserve to make the final payment, then it would make that up from subsequent user payments. Mr. Rouhier clarified to Councilor Hennagin that completion bonds, in this situation, were needed towards the end of the project to make sure that there were not authorization delays that might jeopardize the completion of the project. Mr. Blonde explained that bondholders did not want half- completed projects; the bond documents would state that if, for some reason, there was a shortfall (by a specific amount), the City would issue completion bonds to complete the project. Mr. Blonde indicated to Councilor Hennagin that change orders increasing the project cost beyond the bond funding were one reason the City might need to issue completion bonds. Mr. Rouhier noted that the costs would have to be more than the project contingency funds before needing completion bonds for that reason. Mr. Rouhier indicated to Councilor Tierney that either the City funded the debt service reserve out of its reserves or it borrowed the money. He explained that the $6 million available in the wastewater fund right now (subtracting contingency and ending fund balance policy requirements) was likely not enough to fund the debt service reserve in full. Mr. Pierce mentioned, given that it was becoming more difficult to obtain surety from a bond insurance company to provide the reserve, the practice was returning to the traditional method of bond issuers borrowing the reserve funds. Councilor Jordan asked why the draft ordinance showed the $24.5 million figure if staff was intending to ask for the $40 million figure. Mr. Rouhier explained that it was a question of tactics: either staff assumed that the Council would authorize the $40 million figure, or staff drafted the ordinance for the $24.5 million and argued for something higher. Mr. Rouhier confirmed to Councilor Jordan that if the Council authorized up to the $140 million in phased bonds, then staff did not have to keep coming back for authorizations to fund the individual phases of the project as they occurred. He explained that staff would likely need to bond the full amount needed, preferably in two phases, within the first two years because of the project's cash flow needs. City Council Regular Meeting Minutes Page 23 of 27 March 24, 2009 Mr. McIntyre clarified that right now staff was proposing a dual bond issue. The first year bonds would refund the $12 million in existing bond anticipation notes, the Kelock Road work, and the lake full work. The second issue of subordinate bonds (in approximately one year) would cover the remaining four project phases, whether or not staff obtained $6 million from the federal government for Phase 6. He explained that this discussion was about the authority under which the Council would authorize the City Manager to enter the bond market. He noted that they had solid numbers for the first project phase, but not solid numbers yet for the second project phase, although they knew that it would be a large number. He indicated that staff would issue bonds for what was needed for the second phase. Councilor Tierney pointed out that the Council has not yet decided on the policy issue of authorizing Phase 6. He said that he was not taking a position on it, but he did not want to incrementally creep into that decision without formal Council action. Mr. McIntyre stated that staff would obtain Council's explicit permission first. Councilor Hennagin asked for clarification on why staff was asking for the full authorization now, rather than asking for authorization when staff knew how much money would be needed for the various phases. Mr. Pierce explained that full authorization gave the financing flexibility that the City needed to go into the bond market, especially in situations such as this where there were uncertain project costs. He concurred with Mr. Rouhier that there was also value in having authorization for the full amount when meeting with the bond rating agencies San Francisco. He explained that they would present the $124.5 million with reserves as what the City expected to spend, and $140 million as the upper limit that the Council was comfortable authorizing for this multi-year project, although staff did not expect to issue bonds for that much. He indicated to Mayor Hoffman that he typically advised his other government clients to authorize more than strictly needed in order to deal with any unknowns that might arise during a project. He noted that, by the time of the rating agency meeting, staff would have the bid on the lake full phase, which would give staff more confidence on the actual number. Mr. Rouhier confirmed to Councilor Jordan that the $140 million was a not to exceed number. Mr. McIntyre recalled that Mr. Pierce had explained to him that one of the factors involved in rating bonds (and these bonds were not yet rated) was the level of political confidence that the bond holders would have with the extent to which the political body was supporting the project. Therefore, by authorizing up to $140 million, the Council was telling the rating agencies that it had confidence in the project. It projected a level of certainty that was important in the process. He emphasized that he would not issue bonds without the Council's full knowledge and consent. Councilor Jordan asked what happened if the Council authorized Phase 6 and the City received federal funds to pay for work for which it has already issued bonds. Mr. Pierce explained that one method for dealing with that potential situation would be to issue the bonds as term bonds with special call provisions for early pay off. While they would pay a higher interest rate, there were significant savings to the City if it could pay off the bonds early. Councilor Hennagin asked if the City could re-buy its own bonds. Mr. Blonde indicated that, although it was difficult for cities to buy their own debt and comply with federal security laws, there were ways to do that through the cumbersome process allowed by the Securities Exchange Commission. Mr. Rouhier clarified to Councilor Olson that the bond agencies would be rating the whole package, including the bond issue and the revenue stream. He confirmed that the City would not issue the whole $124 million at once. Mr. Pierc discussed the requirements for senior and subordinate bond issues. He described how using only a senior lien debt would cause the City to maintain high sewer rates in order to continue City Council Regular Meeting Minutes Page 24 of 27 March 24, 2009 to meet the bond requirement that its net wastewater system revenue cover the debt service by 125%. He indicated that staff was strongly considering recommending that the City issue a senior lien debt, secured solely by sewer revenues, and a subordinate lien debt, secured by other backing that did not require the 125% coverage. He explained that the City would need to raise its rates substantially less using this two-pronged strategy than it would if it went with a senior lien debt only. Mr. Rouhier gave a PowerPoint presentation discussing the factors influencing sewer rates. He mentioned that Angie Sanchez was preparing a proposal to develop potential options for the Council, in light of the substantial increases shown in the rate forecast. He presented a six year history of sewer rates in Lake Oswego, including what the typical homeowner paid, operating costs, non-operating costs, capital funding, and building reserves for the LOIS project. He projected the current rate information forward, demonstrating that, without a rate increase, the operating costs started coming up to the rate, and left less and less available for capital funding. He showed the effect of a 10% per year rate increase for the next 10 to 11 years. He confirmed to Councilor Hennagin that these figures were all rough estimates. He cited the increased costs of the long-term agreement with Portland to handle wastewater treatment for a segment of the city as contributing to the operating costs appearing to increase at a faster rate than they had over the last six years. He demonstrated the effect of adding in $10 million in annual debt service (on the original $100 million project) to an operation that has been running on $5 million for operating and capital costs: the rates increased dramatically. Mr. Rouhier concurred with Councilor Olson that, in hindsight, the inadequacy of a 10% rate increase per year became obvious. He indicated that he did not know the history of that 10% figure. He pointed out that another thing that became obvious in hindsight was that the City would be in a better position if it had started increasing rates several years earlier than it did. Mr. Pierce recalled noticing an assumption in the work sheets he reviewed that the first rate increases would generate $3.3 million in cash, which the City would deposit in a rate stabilization account to help smooth out the rate increases. It turned out that there was not $3 million in excess revenue, and consequently, no rate stabilization account. Mr. Rouhier mentioned another possibility that staff might have assumed that this would be a double AA rated bond, while the current assumption was a single A rated bond. Councilor Jordan asked if staff was anticipating that, by building the new system, the system maintenance costs would level out more. Mr. Blonde explained that operating costs were a function of staffing costs, which predictably rose in the 5% range. He noted the additional increasing costs of the payment made to Portland for wastewater treatment, and inflationary increases to the traditional maintenance costs. Mr. Rouhier mentioned other factors driving the rates. These included the recent increase in project costs, the dramatic drop in interest and SDC revenues over the last two years, and the effect of conservation. He pointed out that the less water people used, the less revenue that came in. Therefore, the 2% decrease in winter average water use this last year effectively made the 10% rate increase an 8% rate increase. He noted that the biggest factor was the timing, that the City needed funds in short order in order to pay the capital outlay costs. He reviewed a chart showing the potential rate increases over the next four years (30%, 30%, 27%, 13%) before it dropped back towards the normal 3% inflationary increase per year. He reviewed a chart comparing Lake Oswego's rates to neighboring jurisdictions today and in four years. Mr. Pierce pointed out that the rates would not stay stable because the financing used for infrastructure has changed profoundly from the 1960s and 1970s when the federal government participated through the Clean Water Act and other EPA initiatives. He explained that, while the City Council Regular Meeting Minutes Page 25 of 27 March 24, 2009 federal government used to pay 75% to 85% of the costs for a project like this, today, the federal government was no longer a meaningful player. He pointed out that across the country the infrastructure built in the 1950s, 1960s, and 1970s was becoming obsolete and needing replacement. Today the local jurisdictions had to pick up the tab of this massive investment in infrastructure. Councilor Olson speculated that, in addition to the figures not including the new tiered water rates specifically, they did not include any changes in the surface water rate coming out of the Clean Stream program. Councilor Jordan cited the mere $46 million coming to Oregon for infrastructure repair out of the American Recovery Act as evidence supporting Mr. Pierce's remarks regarding the difficulties faced by local governments in replacing aging infrastructure without significant federal funding. Mr. McIntyre indicated to Mayor Hoffman that staff would return with an ordinance asking for the $140 million authorization. He indicated to Councilor Olson that the lake full bid amount might affect the numbers. Mr. Pierce indicated to Councilor Hennagin that, if the subordinate bonds were secured solely by the sewer rates, then the City would pay a higher interest rate on them. However, if the City backed those bonds with its general fund, then the subordinate bonds might actually have a lower interest rate than the senior lien bonds. He stated that both issues had yet to be fully vetted. At Councilor Olson's request, Mr. McIntyre discussed a concern that she had raised about the impact of all the upcoming utility rate increases hitting the citizens at the same time. There was the 30% sewer rate increase (instead of the expected 10% rate increase approved by Council through the Master Fee Schedule last December), the water rate increase, and the change to the tiered water rate structure. He explained that the City needed to obtain a 15% net overall revenue increase from the water system very soon in order to avoid a similar steep hike in water rates down the road. He acknowledged that the Council could defer the change to the tiered water rate schedule, yet the net increase to Tier 1 users was $1.37 a month. He concurred with Councilor Olson that the problem lay with the Tier 2 and 3 users during the summer; approximately 50% of the ratepayers would fall into those two categories, and see a significant increase in their water bill. He reported that he tracked Mr. Komarek down on his vacation and learned that, if the Council did not approve the tiered water rate schedule going into effect on July 1, 2009, but waited until July 1, 2010, then they would have to add another 15% rate increase on top of the first 15% rate increase for a total 30% rate increase at that time. He indicated to Mayor Hoffman that they could discuss this situation at another time. 12. EXECUTIVE SESSION Mayor Hoffman recessed the meeting to Executive Session at 11:40 p.m. pursuant to ORS 192.660 (2) (e) to conduct deliberations with persons designated to negotiate real property transactions and (h) to consult with attorney regarding legal rights and duties of a public body with regard to current litigation or litigation likely to be filed. 13. RETURN TO OPEN SESSION 14. ADJOURNMENT Mayor Hoffman reconvened the open session and adjourned the meeting at 11:57 p.m. City Council Regular Meeting Minutes Page 26 of 27 March 24, 2009 Respectfully submitted, Robyn Christie City Recorder APPROVED BY THE CITY COUNCIL O June 2, 009 Jac . Hoffman, yor City Council Regular Meeting Minutes Page 27 of 27 March 24, 2009