SHEDG board moves forward on Knife River land

Scott Swanson

The Sweet Home Economic Development Group Board of Directors agreed Feb. 18 to seek an agreement with the state Department of Environmental Quality that would limit SHEDG’s liability for environmental cleanup if it assumes ownership of the former Knife River property.

Rachel Kittson-MaQatish, chair of the organization’s Property Committee, told directors that getting a Prospective Purchaser Agreement with the DEQ would give SHEDG a legally binding agreement in the event of a need for additional environmental clean-up on the property. A PPA limits the purchaser’s or lessee’s liability to DEQ for environmental cleanup of the property.

SHEDG is working with county officials to take ownership of nearly 220 acres of land generally located between the north edge of town and the south bank of the South Santiam river between 22nd Avenue and Clark Mill Road. SHEDG and the county want to see the majority of the property converted into a park in which events such as the Oregon Jamboree could be held. The property could also be one anchor for a proposed riverside hiking and biking trail from Sweet Home to the edge of the Willamette National Forest, east of Cascadia.

Kittson-MaQatish, who is a practicing attorney, and others are working on the steps necessary to transfer the property, which is part of some 430 acres foreclosed by the county from Western States Land Reliance Trust on Dec. 30, 2010 for six years of unpaid taxes amounting to about $500,000.

Kittson-MaQatish assured the board that her committee was not interested in spending any money unless it was absolutely necessary.

SHEDG directors agreed to commit up to $3,700 for legal work by an environmental attorney, as needed, to get the application for a PPA done right and quickly.

“This is the most logical step to get the property,” Director Cindy Glick said after lengthy discussion of the matter.

The board also reviewed a spreadsheet of SHEDG’s financial history.

President John Wittwer said he and Erin Regrutto, Oregon Jamboree director, “went back and abstracted 10 years worth of 990 forms” to create the history.

Form 990 is a financial statement required by the Internal Revenue Service of nonprofit organizations such as SHEDG. In its past two 990 forms, SHEDG has changed the way it lists employee costs, which makes comparison to previous years more difficult, he and Regrutto said.

“We’re adding apples and oranges here when we’re talking employee expense because we had a completely different model employee arrangement in 2010,” Wittwer said.

“All these people, their earnings, were showing up as general expenses for events.”

According to the figures presented to the board, SHEDG finished $76,619 in the red for 2014, compared to a $173,792 deficit the year before and a low of $222,538 in 2012.

Wittwer said a key consideration is SHEDG’s net worth, which has dropped from a high of $1,321,233 in 2009, the last year the organization finished in the black, to $367,215 in 2014.

He noted that SHEDG’s “rainy day fund,” which was established shortly after he joined the board in 2002, is $384,000.

“That means other funds are supporting our rainy day fund,” he said. “That’s the reserve fund. That means we have less in equity than our rainy day fund. That’s the reality.”

The spreadsheet indicates that, if the Jamboree were simply operated exclusive of SHEDG’s other activities, it would actually have been in the black by at least $150,000 every year since 2004 with the exception of 2010 through 2012.

Three-quarters of the $400,000 difference between the SHEDG’s event expenses for 2014 ($2,288,596) and its overall expenses total ($2,675,580) is payroll, Regrutto said, with some $54,000 going to administrative expenses (office equipment, supplies, accounting costs, professional development, rent, utilities, etc.).

Other costs include Sweet Home Active Revitalization Effort (SHARE), which only spent about $3,500 last year, but in previous recent years its “economic developement” costs have been “in the neighborhood of $15,000 to $25,000, depending on the projects that they are working on,” Regrutto said later.

Those include the Commercial Exterior Improvement Program, which is responsible for painting and other restorative work done on many downtown buildings in recent years, murals and grants to other organizations such as the Sweet Home Farmers Market for promotion purposes.

Wittwer described 2010 as a “catastrophe.”

“There were many organizational disruptions that year,” he said. “It was horrible, what happened to us.”

That year longtime event manager Peter LaPonte stepped out of the picture, first working from home and then leaving the organization entirely. Regrutto, who was hired to manage planned SHEDG events under LaPonte’s direction, suddenly found herself in charge of the entire Jamboree organization, with a staff that was experiencing significant turnover, she said.

SHEDG had eight employees at the beginning of 2010, including LaPonte and newly hired Economic Development Director Brian Hoffman, when Regrutto arrived. She said following the meeting that SHEDG now has six, though the number of hours worked is about the same.

“There was a lot of realignment of duties after that time, she said.

The 990s list employee expenses as moving from $151,227 in 2004 to a high of $356,684 in 2010, and at $317,746 in 2014. Regrutto told board members that some of that was due to changes in how the information was listed in the 990s, and that employee costs have been “scaled down” in the last couple of years, particularly with Hoffman’s departure.

“We’ve done other things too, to scale that down,” she said, adding that the numbers on the spreadsheet are not what people would see if they consulted SHEDG’s most recent 990 forms.

Wittwer said he specifically requested that information on the two most recent forms be organized the way it would have been prior to the 2013 form when SHEDG changed its approach.

“All those things that the Jamboree and SHEDG were responsible for were extracted from the Jamboree budget and put in SHEDG, which increases transparency,” he said. “We’re comparing apples to apples here, rather than apples to oranges.”

Board members agreed that, given SHEDG’s decreasing equity, the organization cannot continue to operate the way it has been. They agreed that the new property will allow more people into the Jamboree, which sold out last year on the high school grounds, and may lead to improvements in the financial figures.

Regrutto told the board during a lengthy discussion that followed the presentation of the numbers, that competition is increasing in the country music festival business.

“The festival business is huge right now,” she said. “This is industry-wide. Companies like William Morris are buying or starting their own festivals. Country music festivals are popping up all over the place. There is only so much the market can sustain.”

Wittwer and other board members said that SHEDG needs to take action, but they agreed that the options are limited.

Glick listed several: Take the Jamboree totally out of SHEDG, which would require shelving the economic development thrust of the organization’s mission; partnering with another organization engaged in the festival business, which members agreed did not seem an attractive or viable option; simply continuing the current course of action; or calling it quits entirely.

“We’re in a downward spiral,” she said.

“We need to have a strategy to get out of this,” Wittwer said.

In other action on Feb. 18, the board instructed Wittwer to send a letter to the Sweet Home School District affirming its support for the Husky Field Turf and Facility Improvement Project, which will resurface the track and install artificial turf on the football field, which would then be used for multiple sports, organizers have said.

The project impacts SHEDG in that the field is used for camping during the Oregon Jamboree.

“SHEDG and the School District have a long history of cooperation in matters of shared concern,” Wittwer wrote in the letter, sent last week. “In this instance, SHEDG appreciates the way in which the School District has solicited SHEDG’s input relative to the potential impact of the Husky Field Turf and Facility Improvement Project on SHEDG’s activities.”

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