Public notice for the Special Meeting was posted and the media was advised.

Transcription

1 BE IT REMEMBERED THAT a of the Crook County Court was held on October 27, 2009 beginning at 9:00 a.m. in the County meeting room located at 320 NE Court Street, Prineville, Oregon. In attendance were: County Judge Mike McCabe; County Commissioner Lynn Lundquist; County Commissioner Ken Fahlgren; County Counsel Dave Gordon and County Counsel Legal Assistant MaryLou Johnson. Members of the public signing the attendance log were: Craig Kilpatrick, Redmond; D.P.Tompkins, Powell Butte and Arleen Curths, Powell Butte. Also in attendance were Brian Iverson and Jere Breese. Public notice for the was posted and the media was advised. The purpose of this Special Session was to discuss the Breese Ranch, LLC Trust Deed matter. Dave Gordon reviewed the process that has occurred so far in the approval of Breese Ranch, LLC subdivision plat with the bonding by way of a Trust Deed to the County for infrastructure of the development consisting of roads and four wells. Approval of the plat map has been given by the Court but final approval by the Planning Director has been withheld pending completion of bonding. This matter has been before the Court several times and during this meeting the Trust Deed, Subordination Agreement and Personal Surety Bond requiring a second signature will be discussed. Mr. Gordon presented information regarding the language in the Trust Deed, the Subordination Agreement in which the first lien holder has subordinated interest in the land to the County for the first five lots and the Personal Surety Bond which required a second signature provided by Doug Breese. Mr. Gordon asked if there were any questions of the Court. There were none regarding information provided today. Commissioner Lundquist had questions that required an Executive Session in which to be addressed. The Court convened into Executive Session under ORS (2)(3), negotiations of real property transactions. The Court reconvened into the Open Special Session to continue discussion of the Breese LLC bonding documents. Commissioner Lundquist said he believes this is about a good policy versus a stupid policy. Discussion was held regarding comments by Judge McCabe that were published in the paper regarding special treatment of the Breeses. Judge McCabe said he had not made those comments. Further discussion was held that involved the discussion on this matter held at the regular meeting of the County Court held on October 21, Commissioner Lundquist asked for the comments made during a portion of that meeting regarding the Breese matter to be included in the record (minutes). Judge McCabe said he would not agree to just a portion of that discussion, but would ask that the entire discussion of the matter from the October 21, 2009 meeting be included in the record. Crook County Court 1

2 Commissioner Lundquist presented a page of six different options for the applicant to use in bonding or putting money in the bank to cover infrastructure costs. The options listed were: Use extremely strong financial statement to either borrow money or secure bond Sell portion of real property to raise capital Sell portion of person property (cattle, hay, machinery and equipment) to raise capital Give mortgage on home to raise capital (If local bank has to get approval from higher office it doesn t change the process only takes longer) Take trust deed from county (95 percent complete) and use it via a lending institution or private investor to raise capital. If trust deed is adequate for the county it is certainly adequate for lending institutions and/or private investors. Utilize another private investor just like they ve utilized the first private investor. Commissioner Lundquist stated there are other methods completely available. Commissioner Lundquist said to look at what the Court did to the employees at budget time: No COLA or step increase this year Decrease in the amount provided by the County into the 401k retirement accounts Increase in medical premiums Furlough days requirement Commissioner Lundquist said that these requirements were set for the employees and none of them that he knew of had anywhere near the resources that the applicants had. The Court asked the employees to make sacrifices. This is two distinct standards. Judge McCabe agreed there were two standards because after the Court agreed to the employee requirements, the County went ahead and hired a new HR Manager when there was a freeze on wages. Commissioner Lundquist said there was a need for the HR position. Judge McCabe said the employees and changes had no impact on the Breese matter. Commissioner Lundquist said that Mr. Gordon went above and beyond in finding the 1973 reference in the code to help the Breeses. Judge McCabe said the entity brought in the information regarding the personal bond. Commissioner Lundquist that is not true. Mr. Gordon explained that Brian Iverson came in and said the entity could not get a surety bond and could not post the cash. When he ( Mr. Gordon) was advised of this, he looked in the code book and found the personal bond option. Judge McCabe said he stood corrected. Motion Commissioner Fahlgren moved that the County Court approve the documents presented by County Counsel today as the security for construction of infrastructure improvements for Breese Ranch LLC Subdivision, Phase One. Judge McCabe seconded the motion. Discussion. Commissioner Lundquist and the Court discussed the amount of money, three percent of the $175,000 or $4,500 which was $5,200 minus the $700 appraisal fee paid by the Breeses that would be charged to the Breeses. This is to cover the time and work done by the County Counsel and staff. Commissioner Lundquist said he had never seen a financial institution that paid for an appraisal before. Discussion was held regarding the title search and title report. Judge McCabe said he wanted it in the record that the Crook County Court 2

3 Breeses have already paid the County $31,500 to date in processing this subdivision made up of 36 total lots of which 10 are in phase one. Commissioner Lundquist said to let the record show that County Counsel has spent three and one-half weeks already on the matter plus his staff s time, and the $5,200 would not cover the costs, especially if the Breeses had hired an attorney. He said it also was a little strange that the costs were not covered up front, and the whole thing rings sort of hollow. Motion (continued) Judge McCabe restated the original motion made by Commissioner Fahlgren followed by a second made by Judge McCabe. The vote was 2-1, with Commissioner Lundquist opposed Judge McCabe asked Dale Tompkins if he would to put his earlier comment to Judge McCabe into the record. Mr. Tompkins asked what that comment was. Judge McCabe said it was when Mr. Tompkins had complimented him on his new jacket due to increased wages. Mr. Tompkins said he didn t remember saying that. Judge McCabe said he did remember Mr. Tompkins saying that when he walked into the meeting room. Mr. Tompkins said he apologized. Commissioner Lundquist said he wanted it in the record Judge McCabe s comments that were in the paper regarding long time residents of the area deserving preferential treatment. Judge McCabe said that was not what he told the paper reporter; he said he told the reporter that they should not get preferential treatment. Commissioner Lundquist said the comments in the newspaper were based on the tape or recording of the meeting. Commissioner Fahlgren said that the paper is not always accurate. Commissioner Lundquist said to put the comments from the tape of the meeting of October 21, 2009 into the record. (A transcription from the minutes from the meeting of October 21, 2209 is attached to these minutes. There being no further discussion, the meeting was adjourned. Transcribed from electronic recorded, October 21, 2009, meeting hour 2:11:43 through 3:20:28 BE IT REMEMBERED THAT the regular meeting of the Crook County Court was held on October 21, 2009 at 9:00 a.m. in the County meeting room located at 320 NE Court Street, Prineville, Oregon. In attendance were: County Judge Mike McCabe; County Commissioner Lynn Lundquist; County Commissioner Ken Fahlgren; County Counsel Dave Gordon; Assistant County Counsel Brian Branch and County Court Secretary Colleen Ferguson. Transcription of meeting from hour 02:11:43 through 03:20:28 of recorded audio: County Counsel Dave Gordon: You will recall that several months ago there was a security format presented to County Court in the form of a trust deed to secure performance of construction of infrastructure on the Breese Ranch LLC phase I subdivision; the phase I is ten lots, the original concept was that there would be a trust deed on ten lots and that the county would be in a first Crook County Court 3

4 position on the property and that would operate as a security for gathering the funds necessary to ensure construction of the infrastructure which at this point are paving the roads and installing the wells; four wells all together. And that was approved. Commissioner Lundquist, shortly thereafter decided that was not a good policy and so the issue came back to County Court and was discussed; consensus was that it should move forward along those lines and so since that point, I ve been working with the Breeses, their representative, and ultimately an attorney representing the Breeses to develop documents that would reflect the same sort of structure but would have the set of documents that are necessary in my opinion to guarantee that the county will have the resources to pay for the infrastructure should Breese Ranch LLC not install the infrastructure. And so what you ve got ah, and you ve already all signed the plat for that phase I plat recording, one signature is not on the plat and so it can not be recorded and that would be our county planner, and so that is the only signature that s waiting at this point. That documents been done, signed off by everybody else. So what you do have before you though are the documents that would operate to secure this commitment and you ve got a trust deed which is in your book, unfortunately I was only able to deliver to you yesterday, the other two documents that pertain to this one being a subordination agreement which is this three page document and a personal surety bond which is a two page document and the trust deed; for one thing it identifies five particular lots that are identified on the plat as being lot numbers, until the plat is recorded the ground is actually metes and bounds described piece of ground so you have to look at those together to actually figure out what the lots are that are going to be secured or are securing the obligation. Once the plat is recorded, it ll be very clear what the lots are that are going to be set up to stand for this obligation and they are these lots, 1, 2, 7, 8 and 10 that are identified on the exhibit to the trust deed. There have been a couple of significant changes to this trust deed that I should bring to your attention, it s more or less the same document that you were presented with originally, it is a standard type of trust deed; it secures the performance of the construction of the infrastructure, that s the obligation that is secured and so if it s not performed then the October 21, 2009 County Court 02:11:43 03:20:28 Page 2 of 28 Crook County Court 4

5 trust deed acts as security to pay for that ah foreclosure of those lots that are pledged as security would occur, once foreclosed upon the lots would be sold to create the funds necessary to do the infrastructure ah the cost of that infrastructure is about $175, based upon estimates from late spring, and so that is ultimately where the money would come from to do the infrastructure construction, the county would collect those resources the county would contract with someone to do the infrastructure improvement and get it done and make sure it gets done. That is the same function that would happen if the county had a surety bond or had cash pledged in the bank, is if the performance didn t occur, the county would go and seek recovery of those funds from the surety bond and or go to the bank and say we need the money to do the work and then commission the work and then make sure that it gets done. That s the reason why there s a security in the first place. What this new trust deed County Commissioner Lynn Lundquist: I want to stop you right there a second if I might Dave. County Counsel Dave Gordon: Yes. County Commissioner Lynn Lundquist: They re not the same, because with the cash in the bank, or the surety bond, you have dollars. Here you have value and the value may be up or down whatever the situation, so the process is the same you re right, but they re not the same in that you have the same pot of dollars to work with. County Counsel Dave Gordon: You re right, they re not the same, ah the cash in the bank is cash, the surety bond is really a representation by the insurance company that they will make those dollars available when there s a default in the commitment. So, a couple of changes to this that are pretty significant, from the original trust deed. The original trust deed said $15, would be released or would be paid from the closing of each sale of the lots and slowly but steadily it would get to the amount of money that would be needed in the bank to pay for the improvements. Under this particular deed, upon the sale of any lot $40, would be paid by the ah out of the sale proceeds to go into a fund that would then be accumulated to pay for the improvements. That s a change. It is the option of the county under this agreement to state that if a lot is sold, instead of taking the $40, the county could extend the lien and the other trust deed that is on the property would agree to subordinate to a transfer of that lien to a different lot. I personally don t see why the county would not be expecting the $40, out of each sale. I think the goal is to get the money in the bank or to have the infrastructure constructed that would be even better. Then, you will also notice that the ah, Doug Breese s name is taken out of this trust deed, and the reason for that is a valid one, and was brought to my attention by the Breese s advisor is that a trust deed is actually a conveyance of an interest in real property. This particular real property is owned by Breese Ranch LLC., and so to put Doug s name into the trust deed is a bit confusing, now the reason I did that was to try to short circuit Crook County Court 5

6 having to have this other agreement, because our code requires that for a personal bond that there be a October 21, 2009 County Court 02:11:43 03:20:28 Page 3 of 28 Crook County Court 6

7 second individual who signs over as security for the performance. So that s the trust deed, those are the changes, the specific lots are being identified and the $40, is the new amount that s going to be paid upon sale of any lot. And this document, this subordination document is what s required to make the county be in the first position on the five lots that are identified in the trust deed. I ve reviewed it, it s been signed and notarized, it is an adequate security and adequate security to protect the first position of the county on the five lots. So that s the subordination agreement. And then you ve got this document, personal surety bond, which is the pledge that both Breese Ranch LLC. and Doug Breese as an individual are promising to perform the work and in the absence of the trust deed working for it s intended purpose, that would give recourse by the county against those two entities to collect the funds necessary that would be a different type of litigation but that s that personal guarantee that s in our code. And you ll notice this is going to have to be signed again because there are a couple of blanks on it that pertain to the trust deed. The trust deed hasn t been recorded yet, the timing for this would be that the trust deed be recorded, then the subordination agreement recorded, then the plat would be recorded, and so these blanks can only be filled in once the trust deed is recorded, and you can t change a document that s been notarized and this one s been notarized so we re going to have to fill in those blanks and then have it be reexecuted by Breese Ranch LLC. and Doug Breese as the surety. So, those are the documents that are in front of you right now. I will tell you that the ah my stand point as a lawyer ah if you ve got the five properties pledged, that the amount that s being secured is $175, roughly, and that the value of these lots as collateral, ah three of the lots were appraised at $385, I believe, and ah there are the two more that have not been appraised but certainly have value, so I think there s an adequate value to the real property to stand for the obligation which is why I think it works effectively as a security for the performance. County Commissioner Lynn Lundquist: What happens if they find an Indian artifact on the property? County Counsel Dave Gordon: Ah County Commissioner Lynn Lundquist: What s the value? County Counsel Dave Gordon: That s an interesting question. I couldn t tell you, I don t know. I mean it certainly would be a problem for the sale of those lots. October 21, 2009 County Court 02:11:43 03:20:28 Page 4 of 28 Crook County Court 7

8 County Commissioner Lynn Lundquist: And that s why when a bank is involved, that has multiple loans, they could have a loan that that could happen to but this one out of X. This is one out of one. County Counsel Dave Gordon: Right. And I honestly don t know what the implications are if you find an Indian artifact on the ground in terms of County Commissioner Lynn Lundquist: I don t know for sure either. But I assume County Counsel Dave Gordon: obligation of the property owner? In this instance Breese Ranch LLC. or the person to whom it s sold? I just don t know what the implications of that are. But, there s no obligation contained in these documents that the county go in and do any construction or deal with a problem like that if it exists. If a bank were lending on the property, and they are going to expect to get their money, and if they don t get their money and foreclose on the property, ah you re right, they would have multiple loans to assume the risk of loss on that particular loan ah, assuming the value went to zero then they would have a bad loan on their books and land that wouldn t stand for it. In this case, the county doesn t have a loan and so nobody s going to be able to come to the county and say county, you ve got to build these roads. County Commissioner Lynn Lundquist: If there were already three homes built on there, or four, whatever the case happened to be, and we ve had this discussion before, ah, you may say that the county doesn t have any fiduciary responsibility to those land owners, I maintain as a county commissioner that we do have responsibility to put those roads in. Whether it s legal or not, I guess that s up for debate. If we have done a planning, we have approved this through the planning process, we have said that the infrastructure will be put in, that s why we re doing this trust deed situation. And then to walk away and say you three land owners are just out of luck, ah, to me that s ethically and morally not acceptable, but it might be legally, I m not sure about that even. County Counsel Dave Gordon: I ve just never known of a local government, county or city, that has had to construct out of its own resources roads for a subdivision approved development. County Commissioner Lynn Lundquist: That could well be, but the potential I think is there. I don t know of one that s happened either. County Counsel Dave Gordon: I don t see the potential myself, but that s just my view. County Commissioner Lynn Lundquist: Well set this up a little from where we, ah cause you say this trust deed is different. The very first time we talked about this and we approved it, this land was free and clear. October 21, 2009 County Court 02:11:43 03:20:28 Page 5 of 28 Crook County Court 8

9 County Counsel Dave Gordon: That s what I understood. County Commissioner Lynn Lundquist: That was they, they absolutely said that and anyone who says they didn t say that, and you and I have had discussions about that and you ve had discussion with them as well and you said, cause I said to you, you know that I didn t like it, I said we re setting a president and I said Dale Landrus could do the same thing and you said well Dale is not free and clear and you know, I mean all three of us know that at that meeting, that land was free and clear. We didn t know that, we were told that. That was an outright untruth, lie or whatever you want to call it. And so that s where we started from. That s exactly where we started from in this process. And in one way, as far as I m concerned that s not a big issue? Because I personally believe and we ve talked about it before, we re in the business of the banking, we re in the residential development business, and the applicant, they have two other choices, three other choices really, the bond, the cash in the bank, or an irrevocable letter of credit which doesn t require them to come up with any money. There isn t any cost involved in it, and I know at one time, according to counsel, you were going to talk to them about doing that sort of thing. County Counsel Dave Gordon: Actually, um pardon me for interrupting. County Commissioner Lynn Lundquist: Go ahead. County Counsel Dave Gordon: An irrevocable letter of credit, in my experience, those are issued by banks, and they do charge a fee. County Commissioner Lynn Lundquist: Right. And I apologize for that. County Counsel Dave Gordon: And they have to be collateralized. County Commissioner Lynn Lundquist: Ya, but as Commissioner Fahlgren has said right from the start, this is a well financed operation that s why we approved it and if it s well financed, I see absolutely no reason why they can t do a letter of credit. I believe it s less costly than a bond. I don t think it is as costly but anyway, it don t take any money out of their pocket, it has to be collateralized but if you got all the collateral, that s what we re saying, there s all kinds of collateral here so why don t we have a letter of credit on the collateral? I don t get it. It just seems to me that we are going down an avenue that we shouldn t be going and we re doing it, I haven t figured out yet why we re doing it. I know that they ve been talked about their friends and all that kind of stuff but to me that s not what the county government should be doing. We ve had that conversation and you said well they re a friend of mine. County Commissioner Ken Fahlgren: Well you re a friend of mine too. So are most of these people but we are here to help the public. October 21, 2009 County Court 02:11:43 03:20:28 Page 6 of 28 Crook County Court 9

10 County Commissioner Lynn Lundquist: So why are we doing this one? We ve never done it before. County Commissioner Ken Fahlgren: It s in our code. County Commissioner Lynn Lundquist: It was put in in 1973, when they put I guess a bunch of planning stuff in, never been reviewed, and I was at a COACT meeting ah, Central Oregon Area what ah Commission on Transportation I guess or something like that, and I ll tell you ah you know there were commissioners there from Deschutes and Crook ah Jefferson counties and it s become the laughing stock of the situation. They can t believe that we would be doing this. And there s a simple mechanism, to just put the letter ah the letter of credit and that s over with, you don t have to have the surety the personal bond that would be just as good, correct me if I m wrong, that would be just as good as cash in the bank. County Counsel Dave Gordon: From a legal stand point, a letter of credit is also not mentioned in our code as a possibility. But, from a legal stand point a letter of credit is good as cash. County Commissioner Lynn Lundquist: Right. County Counsel Dave Gordon: Letters of credit are what are used often in international business and commerce. County Commissioner Lynn Lundquist: Sure. And I ve had more than one developer come to me and say boy we re going to be there if that s the case. And I know we ve had some discussion well this sets the parameters. We ve had no discussion about the parameters and we ve said we want to help people. I haven t said that but it s been stated here. We want to help people so if the criteria is that you got to have a certain level of security we re going to help people there s a lot of people out there Landrus will give more ratio than this is. I know that. And so once we start down this road, I don t see any stopping it, whether it s Remington Ranch or Hidden Canyon or anybody else. County Commissioner Ken Fahlgren: Or the city who says they do it in a regular forum. I talked to our City Manager Steve Forrester who talked to his attorney Carl Dutli who said this is a normal process through the city. How different are we than they are? This is something they ve done many times. County Commissioner Lynn Lundquist: Two wrongs, two wrongs don t make a right if they have. I know that Steve Forrester ah, I ve talked to him doesn t approve of this. County Commissioner Ken Fahlgren: He had questions and there have been answers and I don t think he disapproves of this now. I don t know how hard it is to get us from accepting three times the value on this property, I know ah policy in your mind it s just October 21, 2009 County Court 02:11:43 03:20:28 Page 7 of 28 Crook County Court 10

11 completely wrong, but it s just another way to help us go forward. And for them to help finish their project. The risk is not here. Three times the value on appraised value property. I just don t see it. County Commissioner Lynn Lundquist: So, why didn t the bank do it? County Commissioner Ken Fahlgren: Well, maybe we don t have bank loans anywhere. Do you see money available? I don t know that, I m not in that business. County Commissioner Lynn Lundquist: Yes there s money available. Where do you think we get our operating loans? There s money available, don t say the money is not available. Money is available if you have the right financial back ground. If you don t have there s not money available. But we re smarter than the bank. County Commissioner Ken Fahlgren: We re not smarter than the bank. We re not giving money away. We re creating a policy that helps the public to go forward on a project that they ve asked us to go forward on. Whether it be the Breeses, whether it be someone completely different. It s a good way to go forward for us. It s not a detriment to our county, we are not according to Dave we are not committing to finalize a project even though morally you know we will. County Judge Mike McCabe: Right. County Commissioner Ken Fahlgren: You know we will. But we re not sitting in a poor position here. They have ninety percent of the project done. County Commissioner Lynn Lundquist: So we should do this for everybody that wants to come in and have help? County Commissioner Ken Fahlgren: Maybe that s another option. County Commissioner Lynn Lundquist: So whether it s a farm loan or a business loan or whatever, because we have ah on our books we re going to have to show this as a liability. We owe that. We re also going to have to show an asset on our balance sheet. You have to show this on your balance sheet. You have an asset of the land and a liability of accounts payable. County Commissioner Ken Fahlgren: So is an asset of three times the value a problem for our accountability? County Commissioner Lynn Lundquist: It won t effect, it won t, ah, the balance sheet that s right. So, if we re going to do it for this one, then we ought to do it for everyone who wants help whether it s a residential development or not. How many lots are in this county, I tried to get hold of Bill but he was gone unfortunately, how many lots are October 21, 2009 County Court 02:11:43 03:20:28 Page 8 of 28 Crook County Court 11

12 already available for homes to put on? This is not a situation where we have ah you know a lot of demand and no place to build. We re just simply doing it because we like the people. And I don t like the Breeses that s not the issue. It s not about that; it s about what s right and what s wrong. County Commissioner Ken Fahlgren: I don t see it as wrong. County Commissioner Lynn Lundquist: I would like to have some, ah I ve invited some people here today I ll be right up front about it. I think they ought to have a chance to talk. County Judge Mike McCabe: OK, who is here from the public? Name, address, serial number. Robert Buckner: All that good stuff. Robert Buckner, ah Powell Butte, Williams Road. And ah, I come here to discuss this, I ve had a fair amount of experience with ah performance and payment bonds and issues with bonding companies for over twenty-five years and I have a lot of compassion for people that have to deal with them cause they ve caused me a lot of angst. And I understand the reason that somebody would want to try and circumvent that process. And however I ve been on the Breeses side of this in trying to get somebody to waive a bond or a mechanism that they can assure performance in their project and I have been unsuccessful in that virtually every time. And what I learned through all those years of experience is that I am better off you know for not having you know those requirements waived. And I think from the county ah position where you represent the public at large where you can get a bond and there is ah steps that they need to go through what it builds is a better viability for the project. And to make sure that their financing is in order and that they can perform. And it has, I ve had these situations with cities ah where I said you know I could do this for a little bit less or ah you know if I didn t have to bond it. Well all these other guys all the other competitors and which are the developers that you have around here they don t have that same opportunity and so it s kind of the good old boy deal. Um I think that in this particular situation, once you go down this road, you have opened up a Pandora s Box in as much as if it was me, I would certainly like for somebody to do that. But I don t think that the county and the public at large would be served the best for doing this. County Judge Mike McCabe: OK, thank you Robert. Anyone else? Art, come on up. Why didn t you just bring your tape recorder from the last time you were here? Art Proctor: Oh, I got something else to say. County Judge Mike McCabe: Oh, ok, good, good. October 21, 2009 County Court 02:11:43 03:20:28 Page 9 of 28 Crook County Court 12

13 Art Proctor: I m Art Proctor from SW Haelen. Who is paying for all of our attorney fees for this? You know I think the county has a sacred trust when they take my tax dollars and put them in the bank, what do they do with it? I resent them gambling my tax dollars and I know the attorney said oh this is the securest thing in the world if it was; the bank would be trotting out and making the money on it. If it goes bad, I m going to pay for it. And I don t think this is right. But I really am concerned about ah our attorney probably has all he can do and how many hours does he got into this thing with negotiations and contracts and all these things? I really think that we re going down a slippery slope and if I ever subdivide, I sure want to get to the county and have them help me out. And I m not talking about Breese or anybody else, I m talking about we re in a pretty good conservative county and it sounds like Obama s dropped down in here and helping us out. And that s what disturbs me so, ah thanks for your time anyway. County Judge Mike McCabe: Thank you for coming today Art. Anyone else? Arlene Curths: Arlene Curths, Powell Butte, and um, I wont repeat what I ve said before but you know as I listen it gives me great pause being on the planning commission and on the planning commission when we approve a land use application, for a subdivision or anything else, we believe that the county has in place these processes to assure that there will be infrastructure for these lots and houses that will be sold, and what I m hearing here if I m right, um, these five lots, one guy buys a lot and we get $40,000.00, the other four lots may not be bought or sold for five years, evidently the first guy sits there with no infrastructure because there s only been $40, paid on what is a $175, problem. Is that true or not true?. County Counsel Dave Gordon: I would not say that that is true for this reason. The time for performance is two years. And so lets just say one lot sold and there was $40, in the bank within that two year period and then you hit the two year period and the infrastructure has not been constructed; at that moment the county would have the authority to try to collect the rest of the rest of the funds out of those four lots secured, or if there were five lots secured, then five lots secured. County Commissioner Lynn Lundquist: Unless you extend it. County Counsel Dave Gordon: Unless we extend it. County Commissioner Lynn Lundquist: Says right here, it says two years from the date hereof but in the event a longer time for performance, County Counsel Dave Gordon: Right. County Commissioner Lynn Lundquist: In the event, of similar obligations is legislatively enacted by beneficiary and with the court, make it we ll probably go beyond that, then within such longer period as if commencing from the date hereof. In other words, October 21, 2009 County Court 02:11:43 03:20:28 Page 10 of 28 Crook County Court 13

14 It s not two years lock step. County Counsel Dave Gordon: It s not lock step. And, the ah that s true. The ah actually, I was looking at the personal surety bond because it talks about not less than two years from the date hereof but it will follow the trust deed. County Commissioner Lynn Lundquist: Ya, but if it doesn t happen it says it goes beyond, it doesn t come off after two years. The surety bond, I think that s what it says if I remember right. Ok, it says under #2 If the Principal faithfully constructs those improvements described on Exhibit B to the Trust Deed within the time period allowed or a letter of credit is issued in favor of Crook County as security for constructing the improvements described on Exhibit B to the Trust Deed, this Bond shall be void; otherwise, it shall remain in full force and effect. So it s saying, it s void if they do it in two years or put the infrastructure in otherwise it remains in force. County Counsel Dave Gordon: I think it would be a correct statement that the obligations would be allowed to be constructed within the time allowed by Crook County Law. County Commissioner Lynn Lundquist: Right. Which the beneficiary can change that. County Counsel Dave Gordon: And that would be the county of course. County Commissioner Lynn Lundquist: That s right. County Counsel Dave Gordon: The County could change the type of performance, but then the county would be making that decision. County Commissioner Lynn Lundquist: Well we re making a decision now, so to start with, so there s a good chance it would be, I would think it would be a good chance to go beyond. County Counsel Dave Gordon: Well and actually the time frame you would be looking at is a time frame contained within the county code for performance. Ah actually those extensions um if I m not mistaken I think, ah if you ll recall the county just adopted an ordinance allowing for extensions. And I think the county ah, I should know this cause I worked on the ordinance, I think they made those administrative decisions. But that process is the process that would apply. So if that process allowed lawfully under county law it to go five years then it could go five years that would be a choice of the county to allow it to go that far. If the county didn t or it reached the end of the period for extension whenever that is, and it could be sooner than the five years, it could be three years, two years whatever, ah then the mechanism would ah that s what the trust deed does it allows the getting the money out of the lots to do the infrastructure. October 21, 2009 County Court 02:11:43 03:20:28 Page 11 of 28 Crook County Court 14

15 Arlene Curths: Well um you know this was proposed couple months ago or whenever we started it as being developer friendly, that Crook County wanted to be developer friendly and I m all for that. On the other hand, this sounds to me like a for a buyer in Crook County, this is definitely a buyer not friendly. If I were to be buying a lot in a platted subdivision I would expect that the county was protecting me for that infrastructure and I wouldn t go checking all these details of how long things could be extended, so I think it s not a good protection for people who are interested in buying in Crook County. County Judge Mike McCabe: Hold on just a second. I need your help Arlene. There was an article that came out in the paper that said Curths said the worst thing about this is it s a perfect example of an old boy having a friend as a Judge and using county resources in a way that wouldn t be done if the friend weren t a Judge. Help me out with friend what s that entail does that mean going out to eat two or three times a year with out spouse, does it mean having lunch once a week, help me out with that. Arlene Curths: Mike I know that ah you are friends with everybody in the county, and more power to ya, you know I d like to be too. County Judge Mike McCabe: Maybe not after today. Arlene Curths: But, but there are other citizens in this county who would never get this consideration. County Commissioner Lynn Lundquist: That s right. Arlene Curths: Other applications ah in my seven or eight years I ve been watching this who would never get special consideration like this. It happens that if um you ve got very long term ah relationships people seem to get a lot better consideration for ah help that they need. And part of the problem here to me is it s not that someone is being helped now I don t know Mr. Breese and personally I d like to help him if I could. But, it s why that is being given for a particular person never given to anybody else and many other people have not gotten that kind of consideration. County Judge Mike McCabe: Really. So like the fact that I ve never been in his house and he s never been in my house, ah we probably haven t been to lunch in three years um, I m going to tell ya, if I wasn t sitting here. I called my attorney cause I think this is very slanderous. And he said that because I m sitting here, I have a higher bar to meet. But you don t know my relationship with Doug Breese. I haven t talked to him, I haven t even talked to him ah he called me and I was in Astoria and I didn t even return his call. So, that s fine, I m glad that you know how good of friends Doug Breese and I are, but his spouse and my spouse have never been out on a meal, we ve never traveled, never been on a cruise any of that kind of stuff. Is it a long standing relationship? Ya, his brother who just passed away was my 4-H Leader that s how far back, that goes back October 21, 2009 County Court 02:11:43 03:20:28 Page 12 of 28 Crook County Court 15

16 to 1958 or 9. So, but from any social engagement, and I really resent the fact that you make that implication that because he s a friend of mine that, that s why this is going through. And you came to my office and we talked. You know philosophies you know my background. Again I really regret that you had to feel compelled to make that comment. So be it, you did, I ll respond to it later but anyway. Well and Commissioner, you ve got some special consideration out of the county. County Commissioner Lynn Lundquist: What? County Judge Mike McCabe: When you had your two non-farm partitions, you didn t, ah I did, and everybody else in the community gave up the right of way. Every person in this community gave up a right of way. County Commissioner Lynn Lundquist: That s not true. That is not true. Avalez right across the road didn t do it. That is not true Judge. I didn t get any personal, ah I appealed, I went through the process, there was no personal thing. That s ah, I mean I know that, I ll take you out there and show ya it didn t happen. County Judge Mike McCabe: But you were going to be a sitting commissioner, and you said no it s an exaction, I don t know what you have in mind down the road whether you re going to want a lot of money from the county to have that right of way go through there, I don t care. But everybody, everybody that I m aware of I don t know about Avalez, but everybody else that I m aware of gave up the right of way when the county ah as a condition of their approval. County Commissioner Lynn Lundquist: And I still maintain it s wrong, and that s why I fought it. And that was why the ah counsel showed. County Judge Mike McCabe: And so it s wrong for me and everybody else in the county that did it? County Commissioner Lynn Lundquist: No, it was wrong of the county to ask them to do it. County Judge Mike McCabe: Ok, well we re going to agree to disagree on that as well I guess. Because there s been many, many, many, many, many people that when the county went to them and said ok we re going to give you this non-farm partition but the right of way is only 40 and we need it to be 60 for in the future. County Commissioner Lynn Lundquist: I know that it was wrong. County Judge Mike McCabe: Well, it s wrong to you. But we re talking about the good of Crook County? October 21, 2009 County Court 02:11:43 03:20:28 Page 13 of 28 Crook County Court 16

17 County Commissioner Lynn Lundquist: The exaction was based upon ah, what s it s based upon Judge? County Judge Mike McCabe: I don t know. County Commissioner Lynn Lundquist: It s proportionality. That s the law. That was the law in Tigard for that case. That s all about proportionality and that s what it s about. So, it depends on the size of the parcel, how many homes you have, etc etc. County Judge Mike McCabe: So, then put that in perspective. It was a 10 right of way on your property, correct? County Commissioner Lynn Lundquist: uh huh County Judge Mike McCabe: And it went what 2000? County Commissioner Lynn Lundquist: Ya, a little more, but 3000 whatever. County Judge Mike McCabe: Ok, so ¾ of an acre. County Commissioner Lynn Lundquist: uh huh County Judge Mike McCabe: Ok. I don t understand the proportionality of that. County Commissioner Lynn Lundquist: Well, read the law. County Judge Mike McCabe: Arlene, you ve been there for many many years, when you do a non-farm partition, you say that s fine, we want you to give up this much right of way for future Crook County people and cause we don t know what s going to be in that bar pit, what kind of infrastructure we re going to need whether it s gas lines, power lines, whatever. That is a routine, that s a standard. Arlene Curths: You are correct. And in that particular case, um I can t remember whether my vote was yea or nay depending on how it was presented, but um there was ah Commissioner Lundquist had a very long roadway ah whatever you call it facing the road, frontage, thank you. County Judge Mike McCabe: We just talked about that. We just did the math on that. Arlene Curths: And ah he was what, doing two lots. And then there was the rest of his ah the remaining farm property. I voted that he would have to give up the right of way on the two that were under the land use action that we were taking. But I did not think that a person had to give up frontage on land that wasn t in the application so you re correct it was the norm, I voted to maintain the norm on those ah the land under that October 21, 2009 County Court 02:11:43 03:20:28 Page 14 of 28 Crook County Court 17

18 application but not on the other land. So that particular application had a requirement for far more frontage than I d ever, you know on land that wasn t under the application so that was a strange situation too. Um, hey but as long as we re having this family discussion here, I d like to go on with this. You know Mike, or ah Judge McCabe, with all due respect, County Judge Mike McCabe: Mike s fine. Arlene Curths: Um, in this county, ah there is a widely held perception that people who have land use ah applications or requests get far different treatment depending on who they know and that usually has to do with how long they ve been here, unless they re a major developer. K, being on the land use commission as I have for eight years, I can t tell you the number of times it s been said to me, always by people who are newly arrived, newly arrived can be twenty years you know, but lets them say ah, you know I don t feel like I will get equal treatment when I go in to the ah, well I don t want to say this is the Planning Department either, I just wont get equal treatment here unless I am somebody who has been here for 3 or 4 or 5 or 10 generations. And that perception sets up to where you can have story after story after story of this unequal treatment. And is anyone individual going to come in and actually draw a real line with that? And complain about it? No. They ll usually say, I m just not going to stay here. I m going to go somewhere else. County Judge Mike McCabe: So, are you alleging that I got that kind of consideration? Arlene Curths: That you got that kind of consideration? For what? County Judge Mike McCabe: For my Measure 37 ah ah subdivision. It s out on the Madras Highway. Arlene Curths: I am not making that allegation. But, County Judge Mike McCabe: Alright well, let me ask you this. Arlene Curths: But many people would. County Judge Mike McCabe: Do you, ok, (laughter) Arlene Curths: Well, (laughter) I know, this is what happens when two Irishmen fight Mike. You know. County Judge Mike McCabe: So, let me ask you this. Do you have one ounce of compassion that one of your neighbors has had me tied up in a lawsuit for two years on that subdivision and he didn t even have standing? October 21, 2009 County Court 02:11:43 03:20:28 Page 15 of 28 Crook County Court 18

19 Arlene Curths: I have compassion for that, ya. I don t like to see, I don t like to see anybody tied up in bureaucracy stuff. County Judge Mike McCabe: You know it would still be tied up if we didn t, if my attorney hadn t sent for a list of discovery that made fold his tent in about two days? I d still be in a lawsuit for no reason. Arlene Curths: You know I ve got to tell you I m not sure where that is right now. County Judge Mike McCabe: I m a native. I m a local. Arlene Curths: Yes you sure are. County Judge Mike McCabe: So, how did I get favored treatment when somebody that just moved here a few years ago sued me? Arlene Curths: Well they, you know, I m not privy to the details, County Judge Mike McCabe: Come on, you are an Irishman. Arlene Curths: Yes, I know, so I mean I ll wing it. Right. (laughter) Cause if I can t wow you wish wisdom, I ll baffle you with the other. County Judge Mike McCabe: Alright, well hurry up and baffle us, cause we re about to wrap this thing up. County Commissioner Ken Fahlgren: Lynn s hungry. Arlene Curths: Now, but, your question was, oh how did you get, how did this other person get special treatment. County Judge Mike McCabe: No, how did I get any special treatment when somebody that just moved here recently sued me and, and you know what? Arlene Curths: Hey Mike? You re measure 37 went through there faster than anything we have ever seen before or after. County Judge Mike McCabe: Are you out of your mind? Arlene Curths: Well, I was there. There was no question, when your papers were there the t s were crossed and the dots were, all that. October 21, 2009 County Court 02:11:43 03:20:28 Page 16 of 28 Crook County Court 19

20 County Judge Mike McCabe: Ok, well I need to go back and look at the file, but I ll tell you this; I didn t get any consideration. My application for my 37 claim was in Bill s office for 90 days. Arlene Curths: Well, and I wouldn t deny that. I m talking about, County Commissioner Lynn Lundquist: (inaudible) was there for about 9 months. County Judge Mike McCabe: But it was a different deal. County Commissioner Lynn Lundquist: It wasn t a different deal. County Judge Mike McCabe: He was appealed and, County Commissioner Lynn Lundquist: He wasn t appealed Arlene Curths: I only know what happened in front of the Planning Commission; and yours was absolutely perfect application and there was no question it went right through. Others got a lot of stumbling on them. County Judge Mike McCabe: Ya, I paid an attorney $5, to present that. Arlene Curths: Well, it did a good job. County Judge Mike McCabe: Ya, he did. Arlene Curths: Ah, the person who, who would have ah would have sued you, l assume didn t do it through the county court. You know, they had to go through other courts. I m saying when something has to be done through this county group, that s where people say boy, you have to know who you re talking to. Um, any more damage I could do here? County Commissioner Ken Fahlgren: Ah, just one thing. Arlene Curths: Sure. County Commissioner Ken Fahlgren: You know, they did their homework. Their lawyer did his job. In 1973, we had these rules and we had it available to us, and it s not that we can go back on everything unless we go into an ordinance and change it. But, Arlene Curths: You re talking about the current ordinance we re talking about. October 21, 2009 County Court 02:11:43 03:20:28 Page 17 of 28 Crook County Court 20

21 County Commissioner Ken Fahlgren: About, yes. And it is a strange situation only because it hadn t been used, possibly? I don t even know if we know that. That in 1973 we had Judge Mohan a part of it, we had ah, Stahancyk, Joe was on that board, County Judge Mike McCabe: Right. County Commissioner Ken Fahlgren: Prominent people at that time, it made sense to them. It works today and we re getting three times the value for it. Arlene Curths: And, and it has ah, it s just an amazing coincidence, County Commissioner Ken Fahlgren: We didn t make it up. Arlene Curths: That it s working today for a special person. Um County Judge Mike McCabe: Well, alright, and I m not conceding that point whatsoever. Ok? Arlene Curths: Ok. County Judge Mike McCabe: But, the long term people, we re the ones, we paid for the roads, we paid for the schools, we paid for the hospitals, why, why shouldn t, I m just asking you this, it s rhetorical, and you can go back and see my voting record on any instance you want to look at and if I favored the good old boys as you put it, then bring it to my attention. But why, why shouldn t people, I m asking, why shouldn t people who have been here a long time, been the pillars of the community, served as Deacons, served as little league coaches, served on all the boards and made this community what it is, you re saying it s really wrong that they get any kind of maybe a little additional consideration? Again, I want you to go back and look at my voting record on all this. Arlene Curths: And of course, I ve never looked at your voting record. Um, the people who built this county are, are ah held by me particularly and I m sure most people in great admiration. Ok? Because they built this county in such a way that the rest of us came here and wanted to live here and I ve, that s giving full recognition to those folks. But under the law, it doesn t make those people any, or the ah the newcomers and the old-timers are all equal under the law. County Judge Mike McCabe: That s right. Absolutely. No argument whatsoever. Arlene Curths: It doesn t appear that they do get, where you know the law is interpreted, always it s interpreted right? I mean cause that s what happens with, that s why we have people like Dave, cause we need that. Interpretations are not seen to be October 21, 2009 County Court 02:11:43 03:20:28 Page 18 of 28 Crook County Court 21