City council approves enterprise zone

The Sisters City Council, during their regular council session on March 12, approved a resolution to join Redmond in its application for re-designation as an enterprise zone.

The council vote went four-to-one in favor of the resolution. Councilor Sharlene Weed was the sole opposing vote. During the council workshop prior to the regular meeting, Weed expressed frustration with the short timeframe and amount of public input received.

"I really don't feel the taxing districts had enough time to ask questions and testify (about the enterprise zone.) In the future we need to do better," said Weed.

The council had to move quickly in deciding whether Sisters should create an enterprise zone by joining Redmond's renewal application. Applications for new or renewal enterprise zones must be submitted to the state by April 3. Redmond's zone expires on June 30.

Established in 1988, Redmond's enterprise zone has had 115 businesses participating, creating 1,722 new employees and over $124 million in new business investment.

Encouraging economic development has been high on the Sisters City Council's agenda since the start of the new year. Last March, Sisters received a "severely distressed community" designation from the Oregon Economic & Community Development Department.

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. Enterprise zones "sunset" after 10 years unless renewed.

The council's approval of the resolution means that Sisters will be part of what's being called "The Greater Redmond Area Enterprise Zone." A multi-jurisdictional enterprise zone, it will include the cities of Redmond and Sisters as well as Deschutes County.

Commenting on the enterprise zone vote and the zone's value to economic development in Sisters, Council President Bill Merrill said "I support it, it's worth a try, but I wouldn't say I'm enthusiastic toward it right now. If you're a businessperson and you have a choice of Redmond or Sisters to locate a business, where would you go? We can't compete with Redmond; they have the empty buildings and the cheaper land. It's to their advantage to include Sisters in their renewal application for an enterprise zone. Adding a 'severely distressed community' to their application makes them much more likely to be accepted again."

The enterprise zone will be managed by EDCO staff (Economic Development for Central Oregon). EDCO has the staff, expertise, and experience to administer the multi-jurisdictional zone.

They will be responsible for both seeking out and working with eligible businesses to make sure the appropriate paperwork is filed, insuring continuing eligibility for enterprise zone benefits. If a business fails to remain eligible for benefits, the business is required to pay all back taxes. This creates an incentive for the business to remain eligible under the program. Right now Sisters contributes $750 a year to EDCO.

The Sisters City Council will soon be debating whether Sisters' contribution to EDCO will rise to either $2,500 (Gold Level) or $7,500 (Platinum Level.)

The Sisters enterprise zone will be comprised of five zones totaling 273.2 acres.

Throughout the various workshops and meetings about the enterprise zone, the issue of "incentives" caused many to question the need for such a zone.

The "incentive package" approved by the city council includes: A waiver of the $200 enterprise zone application fee; an expedited permitting process for enterprise zone projects; waiver of 50 percent of land-use fees for businesses meeting the 150 percent salary and benefit threshold of the area median income; a waiver of 25 percent of the land use fees for businesses that do not meet the 150 percent salary and benefit threshold; a waiver of water and sewer hook-up fees; providing a five percent reduction in water and sewer user charges for each FTE (Full-Time Equivalent) created, up to 25 percent; discounting building permits by two percent per FTE created, up to 25 percent.

Chuck Humphreys, a member of the Sisters Planning Commission, has been studying the effectiveness of enterprise zones and questions their value in light of alternative strategies.

"Baker City set up an Enterprise Facilitation program - which has helped establish 30 new businesses and 70 jobs - the jobs cost $2,500 each (the program is financed entirely by grants for the moment), much, much less than what the cost is under the proposed enterprise zone. It does not involve special tax or rate waivers but rather a lot of intellectual and similar support," wrote Humphreys.

Roger Lee, EDCO Executive Director, believes enterprise zones help both new and existing businesses.

"An enterprise zone is not just an 'attraction tool' in your toolbox," he said. "Experience tells us that for every new company that uses the enterprise zone program, two existing companies will do the same."

Two program types were adopted by the city council for the Sisters enterprise zone. The first is traditional light industrial/manufacturing. New and existing businesses can apply for a three- or five-year term depending on the eligibility criteria presented for city council approval. This program also includes corporate headquarters and research firms.

The second program type is "electronic commerce." These are in-house or office businesses involved with moving products remotely. A third program type was discussed and eliminated by the city council. This involved adding hotels, motels, and destination resorts to the new enterprise zone. Neither the City of Redmond nor Deschutes County includes these in their enterprise zones and the council decided against it as well.