As everyone knows, ORC (Oregon Resources Corp) wants to mine or explore several thousand acres of Coos County property and are going through rigid permit applications with DOGAMI and other regulatory agencies to mine not just county timber land but Weyerhauser timber property as well. Pursuant to this matter Coos County Board of Commissioners upheld the Planning Commission’s decision to grant a Conditional Use permit authorizing mineral sands mining October 5, 2007.

Recently, as a consequence of the much debated road department layoffs Condition 13 of the Use Permit has received attention and Dan Smith, COO of ORC asked publicly at a meeting held last Tuesday at the Owen Building if the County agreed Condition 13 had been met ORC. Condition 13 says

The Applicant shall be responsible for the proportionate cost of maintenance, repair and upgrades of County roads on the designated transport route… To determine proportionate impact…County shall commission a traffic impact analysis [TIA] on the affected County roads, at the expense of the applicant, which shall include the proportionate cost of all necessary maintenance and repair over the duration of mining operations…

URS Corporation prepared a ‘Pavement Analysis Report’ for W Beaver Hill Road and I have quoted from it before here. The cost of the report was paid for by ORC but it is unclear whether the County commissioned the report or whether ORC did because URS states the analysis was prepared on behalf of ORC. This may admittedly be splitting hairs and not matter one way or the other but I mention it here because in my experience before reading studies I always look to see the conclusions first and who paid for it. Generally, if there is a bias it leans in favor of the party paying the bill.

Nevertheless, Oregon law forbids charging any entity more than their proportional share for ongoing maintenance. In this case, the URS study seeks to determine existing traffic patterns and its continued effect upon the road to determine the County’s rightful share. The URS study indicates W Beaver Hill Road has only a little over a year left and that adding 1″ of asphalt overlay at a cost of $450K will extend the life of the road ten years for existing traffic only. The study is a little ambiguous because it also states absent the improvement existing traffic “is not anticipated to fail the pavement section”.

Failure to add this overlay, however, will likely cause total failure within a year with mining related traffic amounting to a $2.75M total rebuild for the 4.7 miles of road. Commissioner Stufflebean has spoken publicly the County will opt to lay 2″ of overlay in anticipation of the mining traffic.

Condition 13 appears to impose conditions not only upon ORC but also upon the County, a sort of Catch-22. The Planning Commission may have bound the County to committing these funds so that ORC may mine private property, i.e. Weyerhauser. Meanwhile, Weyerhauser, potentially the recipient of a modest 3% royalty, incurs no costs at all.

ORC has promised 70 to 75 badly needed new jobs for Coos County. An phone call and email I sent to Dan Smith earlier this month hoping to get specifics on these jobs has gone unanswered. When mining operations begin on the Weyerhauser site how many jobs start then and how many are directly attributed to the County land? How soon will these jobs begin? Subtracting the 22 employees laid off to fund the road improvements reduces ORCs job offerings to the community almost 30% and will cost taxpayers upwards of $450K.

There is still the public safety issue to be addressed. Larry Van Elsberg, speaking at a BOC meeting shortly after the New Year’s Eve layoffs, recommended the Board hire Public Works Management, Inc a consulting firm. On January 14, Joe Strahl of PWM met with Road Department staff and to evaluate the current status of the department and reorganization. Strahl has worked previously with the County and former roadmaster Van Elsberg.

Strahl filed a report on January 23, 2009, three days after the final day of employment for most of the department.

It is questionable that a 60% reduction in personnel will allow for the same or improved road conditions on a system-wide basis, but the ability of the department to keep up with the needs of the system at lower staffing levels really depends on the line staff and managers who remain and their ability to organize and accomplish the work safely and efficiently.

Strahl makes several observations and believes it is fortunate the County has hired a new roadmaster, John Rowe, with extensive management experience and notes that Rowe acknowledges he may have to hire seasonal or additional full time help. Strahl further indicates the department may have to redefine ‘maintenance’ in order to meet the public expectations, by eliminating ‘hand brushing activities, road patrol, and frequent shoulder maintenance’.

Land use hearings on County property will begin only after ORC obtains mineral rights, a point still in limbo pending the County seeking outside legal advice. At Tuesday’s meeting Whitty and Stufflebean each seemed amenable to Main’s request to mineral expertise before engaging in a deal with ORC, however, at Wednesday’s regular BOC meeting, Whitty seemed less inclined to spend the money. Competent legal advice can often save money and I know my own corporate lawyer defers to a specialist in securities law when such issues arise. Personally, I think it would be money well spent.