Public meeting on enterprise zone set

The Sisters City Council is inviting the community to a public meeting this Thursday, February 26, from 5:30 to 6:30 p.m. at City Hall.

The council is trying to move quickly in deciding whether Sisters should create an enterprise zone by joining Redmond's existing zone. Applications for new or renewal enterprise zones must be submitted to the state on April 3.

The Oregon Enterprise Zone Program (OEZP) has 57 "zones" throughout the state, the maximum allowed by state law (ORS 265C.) Five of these zones expire in 2009, opening up slots for new or renewing zones. Redmond's zone expires on June 30.

The Redmond Enterprise Zone was established in 1988. Through 2008, 115 businesses have participated, creating 1,722 new employees and over $124 million in new business investment.

Encouraging economic development is high on the Sisters City Council's agenda right now.

Last March, Sisters received a "severely distressed community" designation from the Oregon Economic & Community Development Department.

The designation was based on several key indicators: a low percent of the population with a bachelor's degree (age 25 or higher), a high unemployment rate, and a high percentage of the population with below poverty level per-capita income.

Last month Sisters city staff officially requested that the Redmond City Council consider adding Sisters to the Redmond Enterprise Zone as part of Redmond's re-application process.

If the Sisters City Council approves the creation of an enterprise zone, and Redmond approves the "partnership," Sisters would be included in a three-jurisdictional state application consisting of Redmond, Sisters, and Deschutes County.

Sisters city staff recommended to the council on February 12 that the enterprise zone boundary contain the entire industrial-zoned land, the 48-acre Forest Service administrative property, some residential areas, and the commercially zoned land located north of Adams Avenue.

The sticking point for some is the need for incentives.

Enterprise zones typically offer incentives to new businesses as a means to entice them to the community.

Sisters city staff recommendations for incentives include: 1. Waiving the $200 enterprise zone application fee. 2. Expediting the permit process. 3. Waiving one-half of the land-use fees. 4. Waiving water and sewer hookup fees. 5. A 25 percent reduction in water and sewer user charges for three years. 6. Discounting building permits by two percent per FTE (full-time employee) created, up to a maximum discount to be determined.

Some people believe incentives encourage business investment and job creation; others believe they impact both the general fund and the sewer and water funds negatively through abatements, waivers, and discounts.

"My feeling is that the City of Sisters must take advantage of any and all opportunities that could potentially assist existing business here in town or potential business that could locate in our community," said Councilor Pat Thompson.

Councilor Sharlene Weed does not feel that she's seen the benefits of an enterprise zone in Sisters.

"The enterprise zone could cost taxpayers $5,000 in things like fee reductions for a $50,000 investment. The money would be taken directly from the general fund, and/or the water and sewer fund, all of which comes from the taxpayer. There is no guarantee that a business will stay in the community after the subsidy expires. A company could receive reduced fees and tax abatement for three to five years and then move their business to Bend or Redmond ... and take advantage of their (Redmond's) Enterprise Zone subsidy. In cases like this the subsidy would never be recovered. The national experience of the history of e-zones tends to support this case," said Weed.

Wendy Holzman, Chair of the Committee for Citizen Involvement, believes "If we are realistic about what an e-zone in Sisters can really accomplish - the number of living-wage jobs that will be created, what companies we may attract and whether they will meet the requirements of the e-zone, perhaps it is a next step to take for the sake of communicating that we are 'open to new business opportunities' in Sisters. I just think we need to be very mindful of the current economic climate and what we think it will accomplish and at what cost."

Chuck Humphreys, member of the Sisters Planning Commission, questions the need for incentives.

"The critical issue, it seems to me, is whether the tax exemptions would actually be the deciding factor for a new business to come," he said.

"A business that is coming here will always say that they are, so that can't be trusted.

Surveys typically indicate that market factors are most important - tax incentives come toward the bottom - something businesses negotiate once they've decided to invest.

Thus, those proposing tax exemptions need to provide evidence that they, and not other factors, are determinant.

If they are not, then the exemptions simply represent a transfer from taxing authorities to those who rent or sell property to the new investors.

In any case, we should not take it on faith that tax breaks are what make the difference."