Two weeks ago, aircraft maker Cessna told the state of Kansas that it needed at least $25 million on top of local incentives if it was going to build a factory for its new long-range business jet.
Four days later, the Kansas Legislature passed a package worth up to $33 million, and Cessna agreed to build the factory in Wichita.
The multimillion-dollar aircraft company that recently landed here when it bought Columbia Aircraft Manufacturing isn’t afraid to ask governments for loans or tax breaks when it expands.
But other than saying it wants a tower at the Bend airport by the end of 2009, Cessna has made no requests of Central Oregon governments.
Bend city officials say by all indications, the company is in Bend to stay.
“As far as we know they are investing in Bend; they are investing in that plant; they are hiring workers; they are training workers,” said John Russell, the city’s economic development director.
But the city and the county have few economic incentives to offer if Cessna were to come asking in the future.
“I can’t speak for the board on that issue,” County Administrator Dave Kanner said. “I’m hard-pressed to think of a source of money that we could tap into for that purpose.”
Doug Oliver, a Cessna spokesman, reiterated the company’s commitment to Bend last week, but otherwise declined to comment on the company’s plans. Several other Cessna officials did not return calls seeking comment.
Mark Withrow, the new manager of Cessna’s Bend facilities, told the Bend City Council earlier this month that his company has huge expansion plans, but he wouldn’t go into specifics beyond saying he intends to add 100 more jobs to the plant, which currently has 430 employees.
Withrow acknowledged to the City Council that Cessna needs to bring down the cost of the Cessna 400 and increase its production numbers to make it more competitive.
“Our goal in Bend is much bigger than where we’re at in Bend,” he told the council.
Taking flight in Kansas
Cessna’s roots in Wichita, Kan., date to the company’s formation in 1927. About 8,000 of its 9,500 employees are there, according to the company’s Web site.
The company is Wichita’s largest employer and coupled with several other aviation companies, a key part of the state economy, said Kim Young, a project manager at the Greater Wichita Economic Development Coalition.
The city, county and state provide a number of incentives for Cessna and other companies. For example, businesses at Wichita’s airport don’t ever have to pay property taxes on their land or buildings, Young said.
Businesses can get income tax credits for each new job they add and certain businesses can write off up to 10 percent of the cost of equipment they buy.
The city and county also set aside money from their general funds that they can give to companies as forgivable loans. For example, if companies meet targets for new jobs, then they don’t have to repay the loans, Young said. And the state provides money to help train new employees in a range of industries.
“We’re constantly looking at how we can sharpen the tools in our toolbox,” Young said.
Incentives like those can add up to millions of dollars in savings for companies to build and expand in Kansas, Young said.
“Those are just some competitive advantages we have for business, and we certainly make up for it in other areas” like job creation, Young said.
Cessna’s ability to get the state Legislature to bend over backward so quickly earlier this month was “unheard of” and “unprecedented,” Young said.
“That’s exactly the type of thing that we wanted to do,” Young said. “We have to move at the speed of business, which is very fast.”
If not for the Legislature’s action, she said, there was a risk that Cessna would build the plant for the Citation Columbus jet in another state. The plant will bring more than 1,000 new jobs to Wichita.
Central Oregon incentives
Roger Lee, the executive director of Economic Development for Central Oregon, acknowledged that the region has a long way to go if it wants to compare to Kansas’ incentives.
“When we first met with Cessna they made very clear what was available to them in Wichita and other parts of Kansas,” Lee said.
Since Bend Airport is in Deschutes County, the city can’t provide many incentives beyond lower lease rates on land. And the county hasn’t shown much interest in creating aggressive economic incentives, Lee said.
“From our perspective, in many cases the city and the county have not been significant players as far as offering incentive packages ~ for this industry or any other industry for that matter,” he said.
The state currently provides some tax breaks for new businesses, but nothing that compares to Kansas, Lee said.
A special enterprise zone the city and county applied for at the start of the month could provide property tax breaks for businesses at the airport and in La Pine if the state approves it. That would mean businesses wouldn’t have to pay property taxes on new buildings in those areas for five years, Lee said.
The city’s special projects manager, Ron Garzini, said it’s not just about having financial incentives for companies.
“It’s not just a financial issue,” he said. “It’s also, if you’re willing to stretch a bit to show a commitment to them, that means you’re going to stay with them for a long time.”
And ultimately it’s those small steps at building relationships between business and government that matter, Young said.
“Not everybody can right away put dollars on the table,” she said. “But if you’re talking about it and working together, I think you’re certainly moving in the right direction.”