Commissioners Present: Benye Weber, Marshall Bronson and Ann McDonald

Others Present: Jim Patton (Executive Director), Molly MacLeod-Roberts (Edwards & Associates), Michael Stansbury (GFMG President), Nathan Whalen (Whidbey News-Times), and Barbara Kolar (Greenbank Resident).

Call to Order: The special Workshop meeting was called to order at 1:10 p.m. by Commissioner Weber in the Coupeville Recreation Hall, located at 901 Alexander Street in Coupeville, WA, followed by the Pledge of Allegiance.

PURPOSE OF THE MEETING:

The purpose of the special meeting was to conduct a workshop on the possible reallocation of funds in the Budget for 2009, which was adopted October 7, 2008.

The special meeting was open to the public, but comments or questions from the public were not invited.

Brief overview Of Port resources and financial obligations; possible "Plan B" and Board discussion: (Patton) Patton referred the Board to the document he prepared and submitted earlier, which provided a comparison of the budgets for years 2006 through 2009 from different perspectives. A copy is on file at the Port office. He noted that the Port essentially expended nearly all its operating reserves in 2004/2005 when significant work had to be done at the Greenbank Farm and at the Wharf. An example was the construction of a new pump house and reservoir tank for the farm's potable water system - without which the County would not have granted a permit to build Barn C. Revenue limitations: The main source of revenue is the levy from property taxes within the Port district. The Port's levy is limited to a 1% increase each year by State law, and although the Port has benefited from additional funds from taxes on new construction within the Port district, that may not happen this year due to the slow down in construction. Patton pointed out the comparisons between the Greenbank Farm expenses and the Port's G & A expenses (everything except the farm) for the last four years indicate that, including the annual expense of bond repayment of approximately $100,000 per year, 38%-45% of the Port's annual resources have been spent on the farm, depending on the year. The Port receives absolutely no revenue from the farm

Plan B: At the Board's last special meeting, the public commented that the Port should have a "Plan B" in the event that a) the Port does not go forward this year with a request for an increase in the levy, or, b) the Port goes forward with the levy increase request but it is rejected again. To date, Plan B has been to "hunker down and try to meet the bills as they come in." It occurred to Patton that there may be an alternative to that: The Port could connect its obligation to pay off the administrative bonds used to purchase the farm with its obligation to develop a Conservation Easement to protect the farm from unwanted development. He noted that the Attorney General's (A.G.) opinion, obtained last year, confirmed the legality of a port surrendering its development rights by creating a Conservation Easement and transferring that easement to another municipality, such as Island County. The point the A.G. made, though, is that the Port needs to establish a value for the property rights transferred and receive that value in compensation.

Patton noted that the Port is depending on the MSP to determine what portion of the farm should be placed under a Conservation Easement. The County Tax Assessor has established a "fair market value" for the Greenbank Farm as $6.7 million. He thinks that may be too high, since the farm is in a Special Review District and is, therefore, very stringently zoned against development. Patton spoke to Dan Jones of the Island County Tax Assessor's office and Jones said he was unaware that the farm was in a Special Review District. They won't do another assessment this year, but the conversation with Jones revealed to Patton the assessed value could not be used as a basis to identify the value of the Conservation Easement. It then occurred to him that the value of the Conservation Easement could be the equivalent of the balance of the bond debt, which will be approximately $831,000 on 1/1/2010. Patton then wondered, "If the Port were to transfer the Conservation Easement to Island County at that value, where would the County find the funds to take over the annual payments on the bond debt?" He spoke with Island County Budget Director, Elaine Marlow, who validated that since the acquisition of the farm in 1997, the County has been paying off its share of the bond debt out of property taxes paid for Conservation Futures. Conservation Futures is a separate tax line and it has no impact whatsoever on the County's operating budget. Patton noted that over the last few years, the County has spent Conservation Futures money in Oak Harbor and other places for a variety of reasons (not necessarily always for conservation). If there are sufficient funds in the Conservation Futures account to pay not only the County's portion of the administrative bonds used to purchase the farm but also to take over the remaining $831,000 of the Port's bonds, then we might have an equation between the two.

Yesterday, Donna Keeler and Patton met with Island County's Acting Planning Director, Keith Higman, They briefed him on the capital project for a multi-purpose building at the farm, and also tried out Patton's idea of "Plan B" on him. Higman saw no problem with it, provided there is sufficient money in the Conservation Futures account to pay both the County's and the Port's portions of the administrative bonds.

Weber noted that the deadline to submit applications to the Conservation Futures committee has passed for this year, so the Port would have to go directly to the Board of Island County Commissioners (BICC) with the request. Patton explained that the Port didn't submit an application before because 1) he hadn't thought of Plan B in time to do that, and 2) the Port still doesn't know exactly what portion of the farm will go into the Conservation Easement.

Weber asked if they could go directly to the BICC with the request without going through the process of submitting an application to the technical committee that evaluates such proposals. Patton explained the Port's Board would first have to adopt a motion endorsing Plan B. He noted that Marlow and Higman will be talking to County District 1 Commissioner, Helen Price-Johnson, and the Port will need to get BICC would be to sit down with Price-Johnson after she has heard from her staff. Weber reiterated that the Central Whidbey area has not received any Conservation Futures money, and said, "I think we should ask for this."

Patton said the County would need to research an interesting legal point - the ultimate ownership of the farm itself. According to the Conditional Sales Agreement, the County owns all of Greenbank Farm, and if the Port should default on its purchase of 151 acres, the title would remain with the County. The Port will not get clear title to the 151 acres of the farm until the bonds are paid off. The County will need to figure out if development rights on a portion of the farm is transferred to them by the Port in the form of a Conservation Easement and the Country agrees to pay off the bond with Conservation Futures money, will the Port then get clear title to the remaining portion of the farm. Patton felt an argument could easily be made that the Port is more than entitled to be the recipient of the title when the bond has been repaid, and Weber agreed.

Weber said she was very excited about his idea and very impressed with Patton's work. The Board strongly agreed and thanked Patton. Bronson pointed out that when using Conservation Futures money, the County usually has to purchase property and spend money to maintain and run it. With this Plan B, no additional operating costs would be incurred by the County, so it is actually a "money saver."

McDonald noted that the Council of Governments has approved of and committed to funding requests subject to complete information being provided later, and suggested the Port could begin the process prior to having the Conservation Easement fully defined.

Patton said the fundamental point is that the burden of the $100,000 per year for the bond repayment is what is forcing the Port to defer maintenance on both facilities (the Wharf and the farm). If the Port had that $100,000 and no longer had to make that payment, there would be no need to increase the levy. The Board concurred.

Regarding Patton's report, which shows the cost of ownership of the Greenbank Farm, Bronson pointed out that the public might want to see a matching report that shows how much is spent in Coupeville on the Wharf and Port office. Patton noted that most of the Port's G&A expenses were attributable to the Port's Coupeville holdings (Wharf & Port office). The Board directed him to break out the expenses into two lists, for money spent in Greenbank and money spent in Coupeville.

Board deliberations and budget adjustments as required:

Weber said the Port gets many requests from different organizations and committees to attend meetings or send a representative, and the Port cannot afford to send Patton, who works part-time as Executive Director. Currently, the Board attends many of those meetings and although they are entitled to per diem payment for their attendance and related travel expenses, the Board does not submit for reimbursement for those additional meetings or travel expenses within the Port district. The money allocated for travel in the Port's budget is rarely used, and only for out of district travel and/or required overnight lodging. Patton said the rolled-up cost of the fuel dock repair will run between $5,000-$6,000. He contacted the Port's insurance company, ENDURIS (formerly known as the Washington Government Entity Pool), and they think the Port can recover all but the $1,000 deductable upon submitting a claim. He will submit the claim when all the bills are received and update the Board via email. Budget details: Weber pointed out that the line items in the budget are numbers that have been budgeted, but those amounts will not necessarily be spent. Patton explained the items included in the budgeted amount for Individual Services and Compensation. Although he is only part-time, it has come to the point that he is at the Port office nearly every day, responding to mail, emails, and returning phone calls, plus working on compliance issues with state agencies, etc. He said that it is important for the public to realize the Port does not have any full time employees. Patton noted that if you call the Town of Coupeville, you hear a recording stating the hours they are open and you are informed that the town's planner and permitting official are only available for a short time each a week. He said the Board may want to consider a recording on the Port office telephone stating it is only open two or three days a week as an alternative if Plan B doesn't work in order to help reduce administrative cost. Weber said various departments in the County have cut back the hours they are open and available to the general public, and suggested they could try limited, posted hours that the Port office will be open. Bronson agreed, but McDonald disagreed because Patton is frequently pulled away unexpectedly and the public would be unhappy if he was needed outside of scheduled office hours but was unavailable. Weber felt it is important to have regular posted office hours and it works effectively for Island County and the Town of Coupeville. Bronson agreed with Weber, and Patton asked if he could take time to think about it and get back to the Board via email. The Board agreed.

ADJOURNMENT: There being no further business, Weber adjourned the meeting at 2:20 p.m.