Cannon Beach Council begins first purchase for Ecola Forest exchange

Published 5:00 pm Tuesday, October 6, 2009

CANNON BEACH – The city of Cannon Beach is about to buy the first parcel of property that, eventually, will be exchanged for the Ecola Forest tract east of the city.

The City Council approved a purchase and sales agreement Tuesday night that agrees to buy several tracts from Hampton Affiliates. Eventually, those tracts will be exchanged for the 800-acre Ecola Forest parcel owned by the Oregon Department of Forestry.

“This is still a work in progress,” said Mayor Mike Morgan. “There’s still a lot of time between this and the final deal.”

A 330-acre parcel, known as “North Klaskanine,” is the first property to be bought by the city. The tentative purchase price of $1.6 million could be renegotiated after a third-party appraiser has appraised the property.

Hampton’s appraiser valued the Klaskanine property at $1,585,298, while the city’s appraiser valued it at $1,624,800. However, the appraisals were conducted before Weyerhaeuser Co. sold 140,000 acres to The Campbell Group LLC in August. Because the Weyerhaeuser sales price was “substantially” below its asking price, comparable timberlands in Clatsop County may also lose value, including the Hampton properties as well as the Ecola tract, Planning Director Rainmar Bartl told the council.

Last November, Cannon Beach voters approved a $4 million bond measure to purchase land that could be exchanged for 800 acres of the Ecola Forest tract just east of the city. The land is in the city’s watershed and is a prime habitat for fish and wildlife.

Although state law forbids the forestry department from selling the land outright to the city, the department is allowed to exchange it for other parcels in Clatsop County with the same harvestable value as the Ecola tract. The department agreed that several parcels owned by Hampton meet that requirement.

An earlier appraisal for the Ecola tract valued it at $3.2 million.

But before the exchange can be completed, the third-party appraisals must be made, final agreements on the values of all the properties must be completed and the state Board of Forestry must approve the exchange. The final exchange of all the properties may not occur before July 1, 2011, and that date may possibly extend to Dec. 1, 2011, Bartl said.

The purchase of the Klaskanine property signals that the city is serious about working with Hampton, but city officials are entering the agreement in two phases. The purchase of North Klaskanine is in the first phase; city officials believe that parcel would be easier to sell if the deal falls through.

The second phase will include four to eight other parcels, depending on the final appraisals of all of the property. These parcels may be more difficult to sell, according to an adviser working with the city.

The city has already paid $100,000 in earnest money to Hampton, and $50,000 will go toward the Klaskanine purchase. The remaining $50,000 will be used to purchase the other properties.

To pay the balance on the Klaskanine property, the city may seek interim financing from a local bank, instead of selling the voter-approved bonds. The city’s bond counsel told city officials that, to avoid state law and tax consequences, the tax-exempt bonds couldn’t be issued any earlier than six months to acquire the properties. Because the city is waiting for the reappraisals and for the forestry department to complete its timeline, the interim financing may be necessary, Bartl said, but that may not be known until some time prior to next May.

Preliminary discussions with banks indicated the cost of providing a “bridge loan” would be between $64,000 and $135,000. The costs would be repaid after the bonds are sold, Bartl said.

So far, the city has spent $208,198 on the land exchange, including the $100,000 in earnest money, Bartl noted. All of the expenditures are reimbursable from the bond proceeds, he said.

If the agreement must be extended to Dec. 1, 2011, the city would have to pay Hampton another $50,000, which would not be applied to the property purchase, Bartl said.

Despite the extended timeline, Hampton has continued to work with the city to complete the exchange, Bartl noted.

“Hampton has been a very good partner in continuing to work with us,” he said.

In other business, the council:

? Learned that the city’s fire insurance rating has slipped slightly from a four to a five. The Insurance Services Office Inc., which conducts insurance rating reviews about every 12 years, rates communities on a scale of one to 10, with one being the best and 10 having inadequate or no fire service.

The lower rating should not affect fire insurance premiums, said Fire Chief Cleve Rooper, of the Cannon Beach Rural Fire Protection District. Rooper said that, while the district ranks high on dispatch and fire hydrants, it lacks enough volunteers and participation of the volunteers it does have. Although volunteers must have the same training as paid firefighters, it takes three volunteers to equal one paid firefighter because the paid firefighters are available all the time.

“The only option would be to abolish the Cannon Beach fire district and the Seaside Volunteer Fire Department and to form a new, paid department that covers the same territory,” Rooper said.

Nehalem recently completed a similar process, Rooper noted.

? Heard a report by Charlie Plybon, Oregon field coordinator of Surfrider Foundation, that the Cannon Beach Ecola Court outfall in midtown has continually high bacterial readings. Plybon asked the city to create a committee to investigate the contamination source. In response, City Manager Rich Mays and Morgan said city officials are looking into the problem and have determined that much of it comes from bird waste. They are seeking solutions, Mays said.

? Heard a request by Joyce Lincoln, owner of the Northwest by Northwest Gallery on Spruce Street, for a street light over the sidewalk between Second and Third streets. She submitted a petition containing 60 signatures of storeowners and customers requesting the light.