Bank of the Cascades Cease and Desist Order

Obtained a copy, ran OCR on it so you can search it, download here: CACB C&D pdf

It's rather entertaining reading, as it makes clear that the state and federal regulators are rather appalled at the state of the banks management:

1. The Bank shall have and retain qualified management.
(a) Each member of management shall have qualifications and experience commensurate with his or her duties at the Bank.

Doh!

Read it, it is damning.

Now the part that is going to make it tough for CACB to survive starts with this:

5 (a) Within 30 days from the effective date of this ORDER, the Bank shall eliminate from its books, by charge-off or collection, all assets classified "Loss" and one-half of the assets classified "Doubtful" in the ROE that have not been previously collected or charged off. Elimination of these assets through proceeds of other loans made by the Bank to existing classified borrowers is not considered collection for the purpose of this paragraph.

(b) Within 120 days from the effective date of this ORDER, the Bank shall have reduced the assets classified "Substandard" and "Doubtful" in the ROE, which have not been previously charged off, to not more than 75 percent of capital.

"Not more than 75% of capital?

What percentage of capital are these bad loans now? The latest 10-Q filing states that as of June 30th CACB had $1.7 trillion in loans outstanding, of which $204 million was classified as non-performing. They had a $63 million loan loss reserve to try to cover this.

Oh, and the C&D also prohibits any further lending to anyone who has had a loan classified as "Loss" and requires any further lending to anyone with prior loans classified as "Substandard" or "Doubtful" to be approved by Board or entire loan committee. And then only if all past due interest has been collected in cash.

That kind of puts a damper on getting the party started.

The C&D is dated August 26th, just over 30 days ago. These next few weeks are going to be telling for CACB, Bend's flagship.

Local Economy Continues To Crater--UE Up To 17%

Quick post of the harsh numbers that just came out:

Bend MSA
Unemployment, unadjusted, March, 2009: 17%
Unemployment, unadjusted, March, 2008: 7.8%

Deschutes County:
Notices of Default, year to date through April 17th, 2009: 1037

Notices of Default, year to date through April 17th, 2008: 395

Notices of Default, all of 2007: 590

More later.

Response From Visit Bend

From Doug LaPlaca, CEO of Visit Bend:

Hi Bruce. Thank you for your thorough blog posting on Visit Bend’s proposed funding policy for the promotion of tourism. The posting was very well written and I had a couple of additional notes to help with your understanding of the issue.

First, your comment that the City has no responsibility to make up shortfalls in the tourism fund is absolutely correct. The shortfalls encountered in the Tourism Fund over the past two years were “made up”/reimbursed by the following year’s tourism fund, and thereby reducing the amount of money allocated to the promotion of tourism the following year. I certainly would not support allocating more than 30% of TRT collections to the promotion of tourism. The proposed funding proposal will eliminate shortfalls in the tourism fund altogether because the City will no longer be carrying the risk of fluctuations within the tourism fund. That will now be the onus of Visit Bend.

Second, your comment that event operators in Bend will now have to go “glad-handing” to Visit Bend to receive event funding is also correct, and I would like to convince you that this would be a good improvement. As a resident of Bend, I’m sure you are aware of the high number of special events in our community. Funding all of these events with tourism fund dollars would not create the maximum return on the reinvestment of the 30% for the community. The purpose of the tourism fund is not ambiguous. We need to reinvest those dollars into the promotion of tourism in a way that it will have the most beneficial return-on-investment for our community and economy. This is where Visit Bend comes in. We have over 60 years of combined experience in economic development through tourism. We hold our responsibility to the community of Bend in the highest regard and devote 100% of our energies to doing our jobs better than anyone else in the industry. We are residents of Bend, we love our City and our mission is to bring money to the businesses of Bend by bringing tourists to the City. Every decision we make is based on this mission.

Third, the debt repayment for the previous welcome center (now the ODOT building) is behind us. The final payment was made this past December so those payments will no longer be deducted from the tourism fund.

I hope this helps your understanding of the issue and I would be delighted to talk to you further about it. This kind of dialogue is very healthy and there remains a tremendous amount of misinformation in the community regarding tourism promotion. If you are interested in tourism, I would also be happy to share our Strategic Plan with you that we will be presenting to the City on April 14. We have several very exciting and impactful programs in place that will have a very positive impact on our economy.

Note: from followup email
One final clarification regarding your posting; in the proposed funding policy, Visit Bend would still pay the City's audit and overhead expenses associated with the tourism fund. This amount is approximately $25,000 per year (same as years past).

The basic premise of our proposal is 1) to eliminate "shortfalls" in the tourism fund altogether, thereby eliminating the tourism fund's dependence on short term loans from the General Fund. That's what has been happening and, as a citizen of Bend, I want this to end. 2) to entrust and empower Visit Bend with the full 30% of the tourism fund to maximize the impact of tourism promotion for Bend's economy. Visit Bend is the contracted specialist in this arena and we want to be held accountable. If the community does not think we are not excelling in our mission, I would certainly step down.

Again, I invite further discussion on this issue. I believe in this proposal and believe it is in the best interest of our community.
End of followup

Thanks again for engaging in the issue!

All the best,

______________________________

Doug La Placa
President/CEO
Visit Bend
(541)382-8048"

####

My response:

On most points I agree. Just wanted to clarify everything. It makes sense to fund Visit Bend with actual revenues after they are collected, although the cash flow and budgeting issues may be harder to overcome.

Who will fund motel audits? That was a separate item in the 08/09 budget memo from Sonia. Not much but a random audit of some is necessary.

I agree that giving one accountable organization the job and letting them do it is a good idea.

Visit Bend Wants "All" Its Money

A couple of months ago the Bulletin published the article "Visit Bend seeks new funding structure" detailing a proposal from the local tourism council Visit Bend to ask the City to change their funding formula. Currently 30% of the 9% room tax is earmarked for tourism promotion. About 5% goes towards related items, such as paying the debt service on the former visitor info center on the north side and to help promote major events like BendFilm, while 25% goes to Visit Bend.

Currently, the annual budget sets the level of overall tourism promotion funding at 30% of expected room tax revenues, and Visit Bend receives its share, in twelve equal monthly payments. The proposal is to simply pay Visit Bend the full 30% on a monthly basis, from actual revenues. The city will have to fund the old visitor center debt service and any other tourism promotion it wishes to do from some other source, like the general fund.

City staff and Visit Bend are promoting this proposal as a way to reduce financial risk if revenues do not reach the anticipated level, like is happening this fiscal year. The reasoning goes that in down times the general fund must make up the difference between expected and actual revenues, an amount that is anticipated to be up to $150,000.

As stated in the Bulletin:

“The percentage of funding from the city would go up, but overall, the amount of transient room-tax collections will likely go down,” La Placa said. “The end result should be pretty stable funding over time.”

For the fiscal year 2007-08, the city collected about $3.4 million in room taxes. Its funding for Visit Bend was $852,000, or about 25 percent of the room-tax collections, according to La Placa. If the city had allocated 30 percent, funding would have exceeded $1 million, giving the visitor bureau more money to attract visitors, he said.

If room-tax collections dropped 15 percent last fiscal year, using the new formula, the city still would have received $870,000 in funding, he said.

This simply doesn't make much sense-I think the writer meant that Visit Bend would still have received $870,000 in funding if revenues dropped 15%. There are a few other quotes from this article that ring some bells, like:

Under the new system, the onus of managing funding during slower room-tax collection periods would fall on Visit Bend, taking the pressure off the city if room-tax collections were less than anticipated, La Placa said.

“This would take the financial risk off the city and also satisfy the tourism and business community that the city is reinvesting 30 percent of the (transient room tax) collections back into the promotion of tourism — as stipulated by city code and state law,” La Placa said...

The new method of determining Visit Bend’s budget would give Visit Bend greater reason to promote tourism because higher room-tax collections would mean more funding, Bend City Manager Eric King said at Tuesday’s meeting.

Does Visit Bend need greater incentive to simply do their job? If so, perhaps we should find someone else to do the job. And I'm not clear on how providing a higher percentage of the actual revenues to Visit Bend takes any pressure off the City.

The council is taking up this issue in the April 1st Work Session. The proposal from Visit Bend states:

Consistent with Oregon House Bill 2267 and Bend City Code 7.012, the City of Bend currently allocates 30% of transient room tax (TRT) collections to the Tourism Fund to be used for the promotion of tourism as defined in Oregon House Bill 2934. The majority of these funds are transferred to the Bend Visitor & Convention Bureau (d.b.a., Visit Bend) through a pre-fixed budget that is established by the City prior to the beginning of each fiscal year and paid to Visit Bend in 12 equal monthly installments.

Since the budget is pre-fixed, the City carries the financial risk created by fluctuations in TRT collections throughout the year. Meaning, if the established budget for Visit Bend is greater than 30% of actual TRT collections over the ensuing year, the City absorbs the difference creating an unnecessary financial burden for the city.

Additionally, the current funding system does not allocate the full 30% of TRT collections to Visit Bend, but rather withholds a percentage of the Tourism Fund for internal City projects and expenses that the tourism industry and business community have argued do not fit the State’s definition of tourism promotion as defined in HB2934.

Proposed Solution
To resolve the negative impacts created by the current funding system, Visit Bend on behalf of the Bend tourism industry, is proposing that the current pre-fixed budget system is replaced by a percentage-based system, whereby 30% of TRT collections on a monthly basis are directed to Visit Bend for the promotion of tourism (minus the City’s pre-determined administrative and audit expenses). In this proposed system, the financial risk created by fluctuations in TRT collections is shifted from the City to Visit Bend.

In addition to removing the financial risk from the City, the tourism industry and business community receive the full 30% reinvestment into the Bend economy that they believe they are legislatively entitled to.

An additional benefit of this proposed system, is that is de-politicizes the allocation of the Tourism Fund. By allocating the full 30% to Visit Bend, the City is empowering Visit Bend to maximize the return on investment for the local economy, and holding them accountable to do so.

Additional benefits resulting from the proposed system are the following:
- The proposed system supports the legislative intent of City code 7.012 and Oregon House Bill 2267.
- The proposed system maximizes the positive economic impact of tourism in Bend, for area businesses and the City’s general fund.
- The proposed system fosters a strong and mutually beneficial relationship between the City of Bend and the Bend Business Community.

Proposed Contract Amendment
The proposed contract amendment will stipulate that City Council’s approval of Visit Bend’s business plan each year will activate a one year renewal of the contract (as it does currently), and a one year commitment to fund Visit Bend with 30% of the monthly TRT collections during the following fiscal year (minus City administrative and auditing expenses that will amount to approximately $25,000 in FY09/10).

Additional Note
In order to initiate the 2009/2010 fiscal year with a deficit-free Tourism Fund, Visit Bend will reimburse the City an amount equal to the 2008/2009 year-end deficit in the City’s Tourism Fund. This amount will be between $50,000 and $80,000 and will be paid by Visit Bend to the City at the end of the 08/09 fiscal year. If Visit Bend does not have sufficient funds to pay-off the deficit at the end of FY08/09, the City will withhold one-twelfth on the remaining deficit amount each month of FY09/10.

Note that there is no mention of where the 5% Visit Bend doesn't currently get goes, just that it goes to something that some people don't think promotes tourism. Yet, the Bulletin stated that this 5% goes to grants for ads for events like BendFilm and for debt service on a building that was used to promote tourism.

The controlling law from ORS 320.300 defines:

(7) “Tourism promotion” means any of the following activities:
(a) Advertising, publicizing or distributing information for the purpose of attracting and welcoming tourists;
(b) Conducting strategic planning and research necessary to stimulate future tourism development;
(c) Operating tourism promotion agencies; and
(d) Marketing special events and festivals designed to attract tourists.

(8) “Tourism promotion agency” includes:
(a) An incorporated nonprofit organization or governmental unit that is responsible for the tourism promotion of a destination on a year-round basis.
(b) A nonprofit entity that manages tourism-related economic development plans, programs and projects.
(c) A regional or statewide association that represents entities that rely on tourism-related business for more than 50 percent of their total income.

(9) “Tourism-related facility”:
(a) Means a conference center, convention center or visitor information center; and
(b) Means other improved real property that has a useful life of 10 or more years and has a substantial purpose of supporting tourism or accommodating tourist activities.

From the 2008 VCB Funding Memo we see that the only entity funded is Visit Bend. Grants to BendFilm, etc. were stopped in 08/09. The funds not going to Visit Bend now are used to repay the general fund for earlier shortfalls, city overhead, debt service on the Visitor Information Center, and for motel audits. These items totaled $231,000, while Visit Bend received $809,000 (not the $830,000 listed) after the council vote.

In its proposal Visit Bend wants all the tourism promotion money, a full 30% of room tax revenues instead of the 25% it currently receives, and full control of how the city promotes tourism. Event planners will have to go hat in hand to Doug LaPlaca at Visit Bend rather than approach the council for advertising funding. In return, Visit Bend pledges to pay any shortfall in the current years' revenues, but immediately backtracks by saying that if it doesn't have the cash at the end of June, it will simply agree to receive less of the monies it would be now entitled to next year. Note that it states this will make the current tourism fund deficit free, but the Issue Summary from staff states:

Based on current trends in room tax revenues, the Tourism Fund is expected to end the year with a cash shortfall of $100,000 to $130,000. This Visit Bend proposal provides for a reimbursement to the City of $50,000 to $80,000 (depending on level of reserves Visit Bend has) to cover the year-end deficit in the City’s Tourism Fund. The remaining cash shortfall will need to be covered by a loan from the General Fund and repaid with the following year’s room tax receipts.

The current overhead, debt service, and motel audit expenses would also have to be funded by another source, i.e. the general fund.

In any case, I have seen no evidence that the city must make up any shortfall. In fact according the contract with Visit Bend, more than funds actually received can NOT be spent:

2. Public sector funding will be limited to those sources set forth in Section IV. (Note: currently 30% of transient room taxes) The annual budget will be based upon a percent of tourism related taxes mutually agreed upon by February 1st of the proceeding year by CONTRACTOR and the CITY, and the annual budget will contain a reserve fund in an amount up to fifteen percent (10%) of the public funded portion of the annual budget. The reserve fund, if such is deemed to be necessary, may be used in the case of actual revenues being less than forecast revenues and in support of activities included in the approved Business Plan. CONTRACTOR may access the reserve fund upon request and approval by the CITY. In no case will expenditures exceed actual funds available for CONTRACTOR operations. Actual funds available shall consist of those funds provided in accordance with Section IV above (NOTE:"...shall be no less than 27%of the transient room tax revenues."), and any funds provided from private sector contributions. However, if CONTRACTOR assumes additional event sponsorships that are not funded by tourism related taxes, then CONTRACTOR may request additional funding from the CITY to support these additional events.

So the reality is that the the city not only does not have to make up room tax shortfalls, the contract itself specifically addresses the issue, stating that only the agreed percentage of room tax funds actually collected can be spent.


It is not up to city taxpayers to make up funding shortfalls, it is up to Visit Bend to adjust their budget.

And there is an element of Bend City Code that may render any such changes in VIsit Bend funding a moot point at this time, specifically:

7.036(1)(b) Amendment to Tourist Promotion Fund. A decrease in the percentage of the monies to the Tourist Promotion Fund, or a change in the definition of the Tourist Promotion Fund, shall require a vote of the people as provided in Section ___ of the Bend Charter.

The Code earier defines the "Tourist Fund" as:

A special fund called a Tourist Fund shall be established for the purpose of promoting tourism within the City of Bend...30% of the money shall be paid into the fund. The Tourist Fund shall be used for the promotion of tourism as defined in Section 1 of HB 2934 (Oregon Laws, 2001)(NOTE: Same as definition from ORS 320.300 quoted above), and the city is authorized to enter into contracts with the Bend Visitor & Convention Bureau, the Central Oregon Visitor’s Association or other entities deemed worthy by the City Council to carry out this purpose.

An argument could very well be made that such changes in revenue distribution constitutes a change in the definition of toursim fund, namely that the only defined use of tourism promotion funds is to finance Visit Bend. This is a significant restriction from current practice.

That is irrelavant in this case, as the current contract clearly shows that the "change" requested, to a percentage of the actual revenues, is already in force.

It just hasn't been enforced to date.

16.1% Unemployment in February

For January, we were one place in front of Flint, MI, tied for 356th out of 372 MSA's in the US:

356	Bend, OR Metropolitan Statistical Area	14.6
356	Monroe, MI Metropolitan Statistical Area	14.6
358	Flint, MI Metropolitan Statistical Area	14.8

The numbers for February just came out a few minutes ago, and we are number one in Oregon once again at 16.1% unadjusted, a stunning 1.7% increase from January. I wonder if we will actually surpass Flint and drop into the range of the Central Valley in California. It was grim and it's gotten even grimmer for anyone needing a job around Bend.

On a related note, I just talked to Trudy a little while ago, and she had a customer who works worked for Cessna come in and talk for awhile this morning. His last day was last Friday, and his comment about Cessna after this latest round of layoffs is that "...it's like a ghost town out there." Not good. He is single and doesn't have much for expenses, so he figures he is going to hang out and play for a while. Those with families to support are probably not that lucky. Every day I see more For Rent and For Sale signs. And more people like the "Single Father, Needs Rent Money, Anything Helps" guy with his two kids at the intersection of Reed Market and 3rd St. the other day.

I'm not sure what the solution is, but it's going to take a long time to get back to where we were even twelve months ago at 8.1% UE. We are now in the top 5% of unemployment in the entire United States.

That's really grim. Let's hope our Councilors don't decide to spend too much more of our precious tax dollars as things get worse. No more unanticipated $400,000 expenses to be paid out before June 30th, please.

Councilor Clinton's Response

In full:

The contract we voted on was for $387k to redo all the standards & specs for the public works dept. I voiced my misgivings: (1) this work should be done in-house (2) it should be paid for out of the SDC fund rather than by ratepayers and (3) cost is too high. I received semi-reasonable answers from the staff so decided that on balance, the importance of the work overrode my misgivings.

I have seen numerous cases where the City has ended up paying through the nose for patching up projects that were not done right the first time. ADA compliant curb cuts and ramp work is a good example. Part of the reason was often that the standards and specs were ambiguous. In the long run, I think that getting all this on a more professional basis will save the City way more than it costs.

Facing huge cutbacks, Council approves $687K building standards update

This just flat out astounds me. An expenditure, at this time in this economic climate, that will total almost $700,000, and it's not even reported in the Bulletin. The only Councilors voting against it were Capell and Eager. I asked Clinton about his vote and will update when I receive an answer.

From the summary of yesterday's City Council meeting:

After discussion about the cost and timeliness of this action Council authorized (by vote of 5 to 2 with Councilors Capell and Eager opposed, but noting that they may support the agreement with additional information) a professional services agreement with CH2M Hill for Phase 2 of the new Construction Standards and Specifications in the amount of $387,041. These documents are the foundation for all designing, contracting and construction of public infrastructure. Legal and contracting requirements that protect the City have changed dramatically over the past 10 years. In addition, construction methods and practices continue to improve. New standards and specifications are needed to better meet the needs of the community, properly protect the City, and provide clear and consistent requirements of the development community. The cost of this will be split equally between operational budgets in the Water, Water Reclamation, Stormwater and Street Operations Divisions

Of course, there is no mention of the concomitant additional $300,000 next year.

I was up until 4:30 in the morning a few nights ago, talking with Trudy about "should we stay or should we go?". Luckily the patent licensing fees I have been receiving make moving a possibility.

And after this, it's done. Time to move on...

PS from the Bulletin reporter, Erin Golden: "I didn't write about it because unfortunately, there's only so much that can go in one meeting story. The focus of the evening was the budget discussion..."

Local Economic Indicators

Did a little research on the trends, to see if it is really that bad. Here are some numbers and trends:

Bend single-family home sales

• 2009, through March 19th 25 sold, $210K median, includes 15 REO/3 short sales
  
• 2008, through March 19th 57 sold, $289K median

Bend real estate listings with a dwelling-current numbers

• Active listings 1813
• Number of these vacant 618

Deschutes County “Notice of Default and Intention to Sell” recordings

• 2009, through March 17th 671
• 2008, through March 17th 264
• 2007, through March 17th 75

Bend single-family housing building permit numbers

• Feb, 2009 7
• Feb, 2008 34

Bend room tax collections (best measure of tourism)

• July 1, 2009-June 30, 2010 Projected 15% decrease
• Jan, 2009 20.1% decrease from Jan, 2008
• Dec, 2008 28.6% decrease from Dec, 2007

Unemployment rates (not seasonally adjusted)

• Bend, Jan, 2009 14.6%
• Bend, Dec, 2008 11.9%
• Bend, June, 2008 6.8%
• Bend, Dec, 2007 6.1%

Oregon, Feb, 2009 10.9% (21,700 jobs lost in February, most since recordkeeping started in 1977; highest unemployment rate since July, 1983)

• Oregon, Jan, 2009 9.8% (13,000 jobs lost)
• Oregon, Dec, 2008 8.8%
• Oregon, June, 2008 5.8%
• Oregon, Dec, 2007 5.3%

Partial list of recent Central Oregon layoffs

• Cascade Healthcare Feb. 10, 2009 74
• Cessna Nov. 12, 2008 165
• Cessna Jan. 28, 2009 120 (only 200 employees left working)
• Jeld-Wen Jan, 22, 2009 51
• Les Schwab HQ Jan. 27, 2009 25

Major job increases

• iSky/TRG March 15, 2009 350 @ $10/hour

###

Walking the dog this morning, I counted six for rent signs in one block of Garfield just off Summer Lake. Definitely reality check time.

City May Spend $687K "Updating" Construction Standards

On the agenda for the upcoming Wednesday, March 18th City Council Session is an unbudgeted request for almost $400,000 to:

Authorize the City Manager to enter into a professional services agreement with CH2M Hill for Phase 2 of the new Construction Standards and Specifications in the amount of $387,041

Why? Because according to staff:

The City needs updated and modern standards and specifications. These documents are the foundation for all designing, contracting and construction of public infrastructure. Legal and contracting requirements that protect the City have changed dramatically over the past 10 years. In addition, construction methods and practices continue to improve. New standards and specifications are needed to better meet the needs of the community, properly protect the City, and provide clear and consistent requirements of the development community. The total budget impact to the Public Works Department for Phase 2 of the standards and specifications project is $387,041. This amount will be split equally four (4) ways and paid for out of the operational budgets in the Water, Water Reclamation, Stormwater and Street Operations Divisions. This is an unbudgeted expense, so each division will be reallocating money from other areas in their budget to cover this expense.

In this time of severely constrained resources all budgeted items are being intensely scrutinized, there have been three rounds of layoffs, and revenue shortfalls may force the city into another round of budget cuts and layoff later this spring.

Any new spending items, especially unbudgeted ones, need to be carefully scrutinized. This item is placed on the Consent Agenda, where it will be voted in along with seven other items. The Consent Agenda normally sees virtually no discussion. Yet, even though little discussion is expected, the request is supported by a 50-page report and an additional 2,156 pages of appendices. Such a significant dollar amount would normally be viewed with much more scrutiny. Especially since staff anticipates spending another $300,000 next year to implement these new guidelines.

Just yesterday the Bulletin reported only seven building permits were issued in February, an unprecedentedly low number. Last February, when 34 permits were issued, was considered a disaster. Current economic conditions, especially with upwards of 30 months inventory of homes on the market, indicate the construction industry will be severely constrained for the foreseeable future. The Stimulus Package will provide several millions in forest thinning, deferred road and bridge maintenance, and other public projects, but the private sector is flooded with inventory, both commercial and residential. And that is not even counting the dozens of started and currently abandoned subdivisions littering Bend.



So what exactly is staff proposing to implement for the taxpayers $387K? According to the Issue Summary:

The City needs updated and modern standards and specifications. These documents are the foundation for all designing, contracting and construction of public infrastructure. Legal and contracting requirements that protect the City have changed dramatically over the past 10 years. In addition, construction methods and practices continue to improve. New standards and specifications are needed to better meet the needs of the community, properly protect the City, and provide clear and consistent requirements of the development community....It is anticipated that there will be an additional phase of the current Standards and Specifications project. An additional $300,000 has been included in the 2009-10 budget for phase 3 of the work (split equally between Water, Water Reclamation, Stormwater and Street Operations). In the future, the City’s standards and specifications will be reviewed and updated approximately every two years.

So the real total is $687K, with $387K this year and $300K next. Reading through the 50-page "Final Stakeholder and Alternative Format Report" provides some details. First, the report lists CH2MHILL, DVA Advertising and Public Relations, and Crane & Merseth Surveying and Engineering as its authors. The Executive Summary states:

The purpose of the City of Bend Construction Standards and Specifications project is to prepare an updated and modern version of Construction Standards and Standards and Specifications to be the principle document for design and construction of all public infrastructure in the City of Bend. This report summarizes the results and recommendations of the first phase of the project (Phase 1 – Assessment), which recommends a format for the updated documents. The second phase (Phase 2 – Implementation) will develop content for the documents based on the updated framework.

Phase 1 involved review of existing documents, broad research and compilation of standards used in other jurisdictions, internal and external stakeholder meetings and interviews, documentation of comments received in stakeholder meetings, and development of the recommendations included in this report. Following receipt and review of this report, an Alternatives Evaluation Workshop will be held with the City to evaluate these recommendations.

So if it has really been ten years since the Standards were updated, maybe this does make sense. It seems like there has been a lot of work already done, which a Google search of the City website should provide a little more information about. Unfortunately, the first ten pages of results show nothing regarding such a study. It does provide a link to the current Standards and Specifications, which indicates that they were last revised in January, 2007 with an accessibility addendum, which was an update to a thorough revision in June, 2006.

According to the City Engineering Division's Construction Management page:

The 2004 City of Bend Standards and Specifications follow closely with AASHTO (American Association of State Highway and Transportation Officials) and other publications regarding streets, water and sewer installations. Modifications to the City Standards and Specifications are made on a regular basis to keep pace with construction practices and needs of the City. The Construction Division is responsible for all standard and specification modifications.

So according to the City's own website these guidelines were actually updated less than three years ago.

According to the Report:

The stakeholder meetings were held on September 29 and 30, 2008 at City of Bend facilities. Subsequent meetings and phone calls were conducted with City staff and one external stakeholder, who were unable to attend the scheduled meetings. Input from those stakeholders was summarized and presented to the City and incorporated into this report.

These stakeholders consisted of 26 staff members from various departments, and three contractors, four developers, and five consulting engineers as the voice of external stakeholders. No other documentation of these meetings is found on the City website. It is anticipated more stakeholder involvement, as well as training for both staff and external stakeholders, will be needed in the future as this process moves forward.

Several questions come to mind regarding the timing and budget impact of this process. The first question that comes to mind is how did we survive the intense level of building from 2004 to 2007 with such apparently lousy standards and specifications? What exactly is wrong with the current Standards and Specifications, as compared to the OSS? How has this process proceeded under the radar for so long? How much has already been spent on the study? (No mention of a contract for this report with CH2MHILL is found in a Google search of the City website.) Is it truly necessary? At the current rate of construction, can it be slowed down and implemented over a longer time frame? All questions that should be publicly discussed by the Council before voting on such a significant expenditure.

City Trying To Reduce Developer Subsidies

In the last City Council Work Session on Wednesday, March 4, Community Development Director Mel Oberst presented several options to the City Council that are intended to reduce the subsidization of plan reviews, permits, and inspections by the General Fund. Mr. Oberst's intention is for the Building and Planning Divisions to become more self-funding instead of its historical reliance on millions dollars from the general fund to provide services to the development community. This subsidy rewards developers with lower fees while increasing the burden on the normal taxpayer.

According the the fee study by the FCS Group, current fees are far under actual costs in many areas. The Community Development Dept. will require a subsidy of almost $2.1 million from the general fund for Fiscal Year 2009. This will occur even though department staffing levels have been slashed in two rounds of layoffs, resulting in the anticipated FTE 89 jobs being reduced to 47 FTE's this summer.

Some actual examples from the study:

-Residential Subdivision-Base Fee:
Fee $4,156 Actual Cost $11,781 Subsidy $7,625

-Site Plan-New Development-Base Fee:
Fee $3,636 Actual Cost $9,207 Subsidy $5,571

-Site Plan-Major Alteration-Base Fee:
Fee $2,857 Actual Cost $7,720 Subsidy $4,863

-Tentative Subdivision Approval Modification-Base Fee:
Fee $1,650 Actual Cost$6,310 Subsidy $4,660

-Master Plan 21-40 Acres-Base Fee:
Fee $10,390 Actual Cost $27,616 Subsidy $17,226

-MR Zone Review Per Plan-Base Fee:
Fee $4,000 Actual Cost $26,859 Subsidy $22,859

-Refinement Plan/Dev Agreement per ORS 94-Base Fee:
$5,195 Actual Cost $36,532 Subsidy $31,337

Some fees actually are higher than their costs, although not by very much.

There are also costs for Long Range Planning, about $1.3M, and Fire Prevention Plan Reviews, about $54,000, that are both currently underwritten by general fund subsidies. A 14% LRP surcharge will recover about 50% of the LRP costs.

The intention of Director Oberst is to move towards a self-funding model and reduce reliance on general fund subsidies. He presented a spreadsheet showing several options, recommending the most aggressive option in Column G, along with a 14% surcharge to fund Long Term Planning. The subsidies expected to be needed even with fee and surcharge increases ranges from $1.2M to $874K, down substantially from the current $2.1M.

The department's operational reserve is currently under one month of funding, which is also a grave concern. The State of Oregon recommends a 6 to 18 month reserve. With another 14% surcharge it would take seven years to build up a 12 month reserve. However, this option was not part of Mr. Oberst's presentation.

With local builders association COBA already expressing concern, according to a KTVZ.com article, this will be a hot subject for the next City Council meeting. With the three new members all having received a high percentage of their campaign funding from COBA via the COAH PAC and the Realtor COAR PAC, many eyes will be watching to see if the Council decides it is time to make development come closer to paying for itself, or if the historical subsidy of development by the all Bend taxpayers will continue.

$4000 election ad? Still looking...

UPDATE: Friday I called Jennifer Peterson at the Bend Bulletin. During our initial conversation she stated that she had an archive of multiple copies of all issues and would find the Oct. 28th issue and give me a call back. She never did.

I called her back on Monday and she stated that she did not have any copies of that issue. She then referred me to Sean Tate, who is in charge of advertising. So I called Sean, who picked up on the first ring.

I stated who I was and what I was looking for, whereupon Mr. Tate suddenly informed me he was in a meeting and had to go.

So I called Bryan Iverson, of the Iverson Group that the amended Orestar filing now states actually paid for, produced and placed the ad. He stated that it was a single-sheet, two-sided ad that was inserted into the Oct. 31 issue. I said I haven't been able to find it and asked if he could produce a copy. He said he might still have one around and that he would take a look. I plan to call him again tomorrow.

On the ORESTAR election funding database the transaction has been amended from a single filing showing the Bend Bulletin as donating $4000 in ad space in which was placed an ad produced by the Iverson Group that featured the four candidates for City Council Kathie Eckman, Tom Greene, Jeff Eager and Don Leonard. The amended filing is two entries: the original #541503, now amended, showing a $4000 In-Kind contribution from the Iverson Group for a Bend Bulletin newspaper ad, and a second filing, #540613, that shows the purchase of a $4000 ad by Iverson Group, as an agent for BB PAC, from the Bend Bulletin. Both show a transaction date of 10/28/08.

I just can't seem to find an actual copy of this ad.

UPDATE 2: On Wednesday afternoon I was actually able to hold what seems to be the last copy of this ad in my hands, courtesy of the Bulletin's Sean Tate. He would not let me actually have the two-sided color full-page insert, but did make me a copy. I'll get a scan soon and update this story in a new post.

Mr. Tate was unable to discuss the funding of this ad in any way.

Where is that full-page Bulletin ad?

Updating the Bend Business PAC purchase of a full-page ad for the four "chosen" Republican candidates for Bend City Council, let's go over the basic issues as we understand them:

1) Someone bought a full-page ad in the Bend Bulletin for City Council candidates Kathie Eckman, Tom Greene, Jeff Eager, and Don Leonard, according to Bend Business PAC filing for the transaction and the filings of the four candidates at Orestar. The dates of the filings are from 10/28/2008 to 11/1/2008.

2) The first amended filing from Bend Business PAC stated that the Bend Bulletin donated a $4000 full page ad to them, which they passed on to the candidates

3) Follow-up from the Oregon State Secretary of State with BB PAC ended with a changed purchaser of the full page ad from a Bulletin contribution to an Iverson Group purchase and contribution. The Iverson Group is a well known local Republican advertising agency. The four candidates listed above spent over $50,000 with the Iverson Group during the last election.

Since then, both myself and H. Bruce Miller from the Source went to the library and looked for the actual ad. I went through the papers from election day back through the start of October. Neither of us found the purported ad. Both of us noticed that the local section was missing from the Oct. 28 issue.

Today I went to the Bulletin office and looked through their archives. I found that the last page of the Oct. 28th issue local section was missing. It did not look like a full page ad for anything from the little bit left at the top. The two receptionists expressed shock that something was missing from the archived issues just off the front reception area.

So my questions are 1) what does that ad look like and who is listed as paying for it in the ad itself, 2) who actually paid for it, and 3) simply, does this ad even exist?

We will continue to investigate this issue.

UPDATE: I forgot one thing--when I originally called the receptionist said sure, I can buy a copy of Oct. 28th. Then she went back to get it and said "We don't have anymore. Was there something really popular in that issue?". They have plenty of all other issues, but none from Oct. 28th. Really kind of strange.

Developer and Bulletin(?) Funding of Bend City Council Members Campaigns

Orestar, the database that tracks political campaign financing in Oregon, has campaign finance numbers from through and after the election now. I have queried the numbers to track the investment local development interests, specifically the Central Oregon Association of Realtors (COAR) and the Central Oregon Builders Association (through their PAC Central Oregonians for Affordable Housing aka COAH) have made in the election of new Bend City Council members Mayor Kathie Eckman, Tom Greene (who is also the President of COAR), and Jeff Eager. These numbers are now sorted, summed, and available in several published Google spreadsheets linked below.

As Ms. Eckman made a very public and determined successful effort to become Mayor and so have some control of the proceedings, along with the fact that the three new members plus Councilor Mark Capell made a surprise choice for a new Councilor to replace new State Senator Chris Telfer by picking Oran Teater in a last minute "emergency meeting" that had no public notice and little media notice on a Friday evening, the weight of any special interests in their campaigns is worthy of public notice.

These three new councilors held a invitation-only meeting with local business interests before they were sworn in. And as recently as Tuesday, Feb. 17, the City Council held an all day meeting discussing goals with absolutely no public notice, and what appears to be no minutes, with a single media person in attendance, Erin Golden of the Bend Bulletin. This all-day Council meeting is not listed even now on the City web site, including the list of MP3 recordings, although this list does have the recordings of the scheduled work and regular Council sessions held the next day, Wednesday, Feb. 18th.

We may never see any minutes or hear any recordings of this, the first meeting of the Council after the very contentious emergency meeting to install Mr. Teater on the Council, a meeting which was called "crap" by Councilor Jim Clinton. The only public record of the Feb. 17th meeting is "Councilors set goals, economic strategies" behind the pay firewall on the Bend Bulletin web site. An excerpt from this Bulletin article:

"In an all-day meeting Tuesday, the council outlined its goals for the next several months, noting both the projects it would like to see completed by 2010 and those that might have to wait because of the ongoing economic slowdown. Among the ideas put on the city’s list: maintaining or building up Bend’s reserve funds, assembling an advisory board for Mirror Pond, developing a long-term funding solution for Bend Area Transit and annexing the airport into the city limits to help boost economic development. Set aside, at least for the near future, were other projects, including work on the Central Area Plan, which would provide a framework for downtown Bend and other areas in the central part of the city....

The meeting was the council’s first since it appointed former councilor and mayor Oran Teater to fill an open seat on Feb. 6. Teater’s last-minute appointment came after a month of tension between the other six council members, who were split over the appointment of Kathie Eckman as the city’s mayor and over the process of filling the seat left open when Chris Telfer stepped down in January to join the state Senate.

...Before moving on to the goal-setting discussion, the council took more than an hour to address the divisions that emerged over the past several weeks. During the conversation, some councilors said they were disappointed with how Teater’s appointment had played out, but were ready to move forward.

“I agreed to run again for the City Council because I believe I can do a good job and I believe people supported me for that,” Eckman said. “But I feel like my character has been called into question, and I am extremely disappointed because it’s been on such a public level.”

Others, however, said it will take more time for council members to begin to trust each other...."

There is an obvious public interest in the relationships between those that decide how to spend our tax dollars, whom to hire, and what to zone. Holding such an unnoticed and unrecorded meeting is against the public meeting laws of Oregon. This growing tendency to leave the public out of the process is not in the best interests of the City of Bend. Unfortunately, the only recourse available to citizens of Bend is at the ballot box every other year, or by filing a costly lawsuit in Circuit Court.

Here are those campaign financing numbers with short summaries and links to the entire funding lists:

Mayor Kathie Eckman Contributions
TOTAL $38,484.47
Self funding $8,538.76
COAH/COAR $17,671.34

Councilor Tom Greene Contributions
Total $27,729.34
COAH/COAR $16,292.34

Councilor Jeff Eager Contributions
TOTAL $40,359.34
COAH/COAR $20,671.34

Also, here are details of funding and spending by our local development PACs:

COAH Funding
TOTAL $115,263.40
Miscellaneous Cash Contributions $100 and under TOTAL $27,350.00
Central Oregon Builders Association TOTAL $79,106.92

COAH Spending
TOTAL $152K

COAR Funding
TOTAL $37,102.80
All but $100 anonymous

COAR Spending
TOTAL $26,259.26

And a new one I noted, the Bend Business PAC:
BBPAC Funding
TOTAL $8,065.00
Bulletin in-kind $4000

BB PAC Spending
NOTE: $1625 to Eckman, Greene, and Eager is shown by the council members filings but not shown in the BB PAC filings. Filings by unelected candidate Don Leonard also show $1625 in contributions by the BB PAC

It is interesting to see our only local daily paper, the Bend Bulletin, has decided to fund some candidates in the City Council race as well as reporting on them. This would seem to be a major ethical violation by the elephant of local journalism. That's an interesting and somewhat troubling juxtaposition-our only daily newspaper funds a local political PAC that backs several candidates, editorializes for electing all but one of them before the election. It then editorialized for the last of the four, Don Leonard, to be appointed to fill the vacancy after the election--not once, not twice, but three times. In fact, if you read the pre-election editorial on the Bulletin's preferred candidates, you see that even before the election the Bulletin stated

"Clinton’s opponent, Don Leonard, is one of the better candidates in the race. He has the misfortune of running against Clinton. Not to worry, though. Should Telfer win her Senate race, her seat will soon become available. We hope Leonard applies."

And this was done without any acknowledgment of the Bulletin's financial interest in the election.

That's our Bulletin. And these are facts that need much wider knowledge in our currently financially challenged little city.

UPDATE: I have been communicating with the Secretary of State Election Office's Nancy Ferryon this subject. The latest communications from an hour and a half ago:

Dear Ms. High:

Re: Bend Business PAC (6024)

This is Nancy at State Elections. I spoke with Mr. Reinhart today concerning the political committee, Bend Business PAC. There are some issues that need clarification concerning past transactions and he did not have all the answers. He said he would contact you to call me, but I did not hear from you so I am writing this email. Here is a copy of the email I sent him yesterday:

"Dear Mr. Reinhart: A citizen in Bend has emailed questions to me pertaining the Bend Business PAC's financial transactions. He questioned the in-kind contributions to the four city councilors from Bend Business PAC for newspaper advertising in the amount of $1,000 each. I looked at all four of the city councilor committees and they have correctly reported the in-kind transaction from your pac. However, I am somewhat confused by how you reported the $4,000 transaction. You have reported this as a $4,000 contribution to Bend Business PAC (transaction 491087). Who actually paid for the ad? Did you write a check out to the Bend Bulletin or to the Iverson Group to pay for the ad? Did anyone pay for it? Did the Iverson Group pay for it and not charge your pac? Did the Bend Bulletin run the ad and not charge anyone? Please let me know what actually happened so I an ascertain whether this transaction is reported correctly. Also, I noticed that there have been no transactions in your committee since the end of October 2008. Is this correct? Has there been no activity, not even bank charges? Send an email to my attention or call me at 503-986-1518. Thank you. Nancy Ferry"

When I spoke to Mr. Reinhart today, he said that the Bend Bulletin did get paid for this ad. Therefore, it cannot be an in-kind contribution to your committee from the Bend Bulletin. I can help you amend the transaction but I need to know what happened first.

Also, I noted that you are not listed as an alternate transaction filer or a data entry person for this committee. That is something we need to fix as well and probably update the statement of organization.

Thank you for your consideration,

Nancy Ferry

### and ###

Bruce,

I just forwarded you a copy of the email I sent to Jennifer High. Let's see if I get a response. The only phone number listed on the statement of organization is for the Bend Chamber of Commerce. Yet when I called there I was told that Troy Reinhart works for NW Quadrant Wealth Management/Bill Moore and Associates, and they gave me a totally different phone number. But I do have addresses and if we need to do a formal investigation, I will get what I need.

Nancy E. Ferry
Compliance Specialist
Secretary of State
Elections Division
255 Capitol St NE, Ste 501
Salem, Oregon 97310-0722
Nancy.E.Ferry@state.or.us
phone: 503-986-1518
Fax: 503-373-7414

So the questions become: 1) Who paid for this $4000 ad just before the election and 2) Why did the original filings make it look like the Bulletin donated the ad, if they did not?

12 Steps--Can we "Fix" Our Little City?

First post, after the famous 12 steps of AA:

1. We were powerless over our greed, the need to develop and flip.

2. Came to believe that a power greater than us, like the FDIC, could restore us to sanity.

3. Made a decision to turn our will and our lives over to the care of God and the FDIC as we understand Them.

4. Made a searching and fearless moral inventory of ourselves and our balance sheets.

5. Admitted to God, to the FDIC, to ourselves and to other human beings the exact nature of our wrongs.

6. Were entirely ready to have God and the FDIC remove all these defects of character.

7. Humbly asked Them to remove our shortcomings, toxic assets and SDCs.

8. Made a list of all persons we had harmed, deceived, and screwed, and became willing to make amends to them all.

9. Made direct amends to such people wherever possible, including paying back goods and monies we stole, except when to do so would injure them or others.

10. Continued to take personal inventory and when we were wrong promptly admitted it.

11. Sought through prayer and meditation to improve our conscious contact with God and the FDIC as we understood Them, praying only for knowledge of Their will for us and the power to carry that out.

12. Having had a spiritual awakening as the result of these steps, we tried to carry this message to other greedy bubbleheads and to practice these principles in all our affairs.

Feel free to modify or add your steps in the comments.

-Bewert