By Christine Metz / The Bulletin

In a contentious decision, the Bend City Council agreed Tuesday to a deal that would move the corporate headquarters of Les Schwab Tire Centers to Juniper Ridge.

The City Council agreed to sell 12 acres of land at Juniper Ridge at a discounted price to the company, whose corporate office is based in Prineville with about 320 employees. In return, the company would be the first tenant to move into the 1,500-acre Juniper Ridge, which the city hopes will spark interest from other businesses. City councilors someday want a university, research and development park, housing and light industrial uses at Juniper Ridge.

After an hourlong executive session Tuesday morning, the City Council adopted the agreement in a 4-3 vote. Mayor Bill Friedman and councilors Bruce Abernethy, Dave Malkin and Chris Telfer voted for the agreement.

Councilors Jim Clinton, John Hummel and Linda Johnson voted against it.

Councilors and city staff supporting the agreement said the deal was an opportunity to keep roughly 350 jobs in Central Oregon, noting Les Schwab was looking to move out of the region to Sacramento, Calif., Reno, Nev., or the Portland and Vancouver, Wash., area.

“Les Schwab will be an incredibly good business to start off our operations at Juniper Ridge by bringing in 350 jobs to Bend,” Councilor Dave Malkin said.

“They are one of the leading employers in Central Oregon and one of the strongest national businesses in the West. I am just pleased to get them and to retain them here in Central Oregon.”

Several councilors said they were told there was little room for negotiations with Les Schwab and the deal was “all or nothing.”

Some councilors raised objections to the lack of time they had to make the decision, Les Schwab’s demand for secrecy after the details of the agreement were reached, the effect the company’s plans would have on the vision of Juniper Ridge and how the deal would affect the city of Bend’s relationship with Crook County and Prineville.

“To me the contract is remarkably bad, unacceptably bad,” Councilor Jim Clinton told the City Council on Tuesday morning.

The agreement

At the crux of the agreement, the city agreed to sell a 12-acre parcel just northeast of Cooley Road and 18th Street. Les Schwab also has the option to purchase another 8 acres in the next 12 years.

The company plans to build a 120,000-square-foot office building for the 350 employees it expects to hold.

The city agreed to either sell the land for $6 a square foot and cap the amount of system development charge fees Les Schwab would pay at $525,000, or charge $7 a square foot and have the city cover the system development charge fees.

City Economic Development Director John Russell said the price of industrial land in Bend runs around $10 to $15 a square foot.

The city has until March 31 to decide how it wants to sell the land. If the city decides to sell the land for $6 a square foot, it would get $3.1 million.

The city has yet to calculate how much extra money a 120,000-square-foot office building would bring in property taxes. Russell said it would be significant, but noted the taxes from Les Schwab would go to the urban renewal agency, which has formed a district around Juniper Ridge as a way to generate money for the infrastructure the city has to build there.

This summer Les Schwab plans to start construction on the site and the city plans to begin working on building roads, and water and sewer lines into the undeveloped land, city officials said. In a prepared statement, the company noted it anticipates the headquarters to be completed by the fall of 2008.

“This concludes a long process that I have been working on for the last year. We wanted to remain in Oregon but also looked at areas beyond the state,” Les Schwab Chairman Phil Wick said in the prepared statement. “The Bend headquarters location provides the land and infrastructure needed to support our business and reinforces our commitment to the Central Oregon region that has supported us.”

Les Schwab spokeswoman Jodie Hueske said the company would not comment on its decision beyond the information provided in the press release.

Negotiations begin

In May, the executive director of Economic Development for Central Oregon, Roger Lee, approached Russell and City Manager Andy Anderson about a company potentially looking to move to Juniper Ridge, Russell said. Later in the summer, the two learned the company was Les Schwab.

“We didn’t go to recruit them. The company approached us,” Russell said.

This fall, city councilors were told a company was interested in moving its headquarters to Juniper Ridge and that it was asking for some concessions as an incentive to come there. However, councilors said they did not receive the details of the agreement or the name of the company until early last week.

On Tuesday, city councilors met for the first time with city staff to discuss the agreement in executive session, Councilor John Hummel said.

The council had little time — less than 25 minutes — to delve into the meat of the agreement, before Les Schwab representatives said they needed an answer, Hummel said.

“John Russell came into the room five minutes to 10 and said he just spoke to Les Schwab representatives and he said if we didn’t make a decision by 10 o’clock the deal was off,” Hummel said.

The City Council knew a decision was expected Tuesday, Hummel said, but he believed the councilors would have three or four hours to discuss it.

“I think 25 minutes wasn’t enough,” Hummel said.

The city’s decision to accept the agreement coincided with a corporate meeting Les Schwab held Tuesday where the company planned to make the announcement in Prineville, Russell said.

Councilors weigh in

In a public meeting directly after the City Council’s executive session, Mayor Bill Friedman cast the deciding vote. After listening to the comments, Friedman said he heard both affection for Les Schwab and excitement that the company wants to come to Bend. But he also heard worries about the secrecy of the negotiations, which conflicted with the image many held of the company.

“I’ll vote yes, in hopes that the real Les Schwab emerges,” Friedman said.

His fellow councilors had concerns that the company was placing far too many restrictions on what the council could discuss about the agreement, some of which might be against state public records law. Part of the agreement stated that all the parties were to “keep this agreement and all subsequent discussions strictly confidential and not to disclose the existence or the contents of this agreement.”

Clinton, who worked for months to negotiate a deal with the master developer at Juniper Ridge, said he understands the need to keep the discussions private during the negotiations.

“However, there comes a time where a line is crossed and after that line is crossed, the public has a right to know what kind of contracts the city is entering into with their money and assets at stake,” he said.

Clinton, along with Hummel, said he also was worried that nothing in the agreement mentioned Les Schwab’s commitment to follow the city’s vision for Juniper Ridge.

The city has consistently said that it does not want Juniper Ridge to be a traditional office park with isolated buildings surrounded by a sea of parking lots. Instead, the city wants Juniper Ridge to have more buildings on less land with businesses close to housing and retail shops, so people can walk to work and the stores.

Clinton said Les Schwab’s proposal to put a 120,000-square-foot building on 12 acres “scares” him.

“It looks like we are embracing a model that is different than what the city’s vision for Juniper Ridge is,” Clinton said.

Russell said Les Schwab’s interest in Juniper Ridge shows its commitment to the city’s vision.

“I think the choice of Juniper Ridge speaks highly of their vision,” Russell said. “If they didn’t want to be there, they wouldn’t have approached us.”

Hummel and Clinton also are concerned about a section of the agreement that would exempt Les Schwab from following the building design standards established for the rest of Juniper Ridge. The city is still working on those standards, which should be finished by May.

The master developer the city picked to help build Juniper Ridge, Ray Kuratek, said Les Schwab is a fine company for the project, but was disappointed that it was not a company from outside Central Oregon that would bring in new high-paying jobs.

“Not to knock on Les Schwab, but it is not as exciting as I hoped it might be with a company coming out of the area,” he said.

Kuratek said he found out about the headquarters move late Tuesday morning and was not involved in any of the city’s negotiations.

Not everyone in the community was disappointed.

Bend Chamber of Commerce Executive Director and President Mike Schmidt said Les Schwab is a great fit for the kind of companies Juniper Ridge should attract.

“This is a good first move, and we’re tickled pink,” Schmidt said. “We welcome Schwab and their people.”

In a memo to the City Council, staff noted that about 60 percent of the jobs relocating from Prineville would be salaried positions. The average salary is around $73,100. For those employees who work for hourly wages, their average annual compensation is $26,800.

Despite their concerns over the agreement, Hummel and Clinton said Les Schwab is the kind of company they want to see at Juniper Ridge.

“From everything we have heard in the past, Les Schwab is a model company,” Clinton said. “A company that any city would be proud to have. But the way this has come together, it has put some very serious question marks in my mind — and they are shared by a number of councilors — that are at odds with everything we know about Les Schwab.”

Les Schwab Timeline

1917: Les Schwab born in Bend, his family lives near Fife.

1935: Schwab graduates from Bend High School.

1936: Schwab marries Dorothy Harlan.

1942-51: Schwab works in circulation at The Bulletin.

1952: Schwab buys the O.K. Rubber Welders in Prineville.

1953: Schwab opens second store in Redmond.

1954: Schwab begins profit-sharing plan.

1955: Schwab opens third location in Bend.

1956: Schwab changes his store names from O.K. Rubber Welders to Les Schwab Tire Centers, separating from the O.K. franchise.

1957: Les Schwab Tire Centers opens John Day store.

1963: Starts “Free Beef in February” program.

1966: Harlan Schwab, Les Schwab’s son, joins the tire firm.

1966: Schwab purchases a chain of tire stores in northern Idaho, expanding the company to 17 retail tire centers, two re-treading plants and two warehouse and wholesale centers.

1971: Harlan Schwab, now vice president of the company, dies in an early morning car accident. He was 31.

2000: Schwab receives national Dealer of the Year award from Modern Tire Dealer magazine.

2000: Les Schwab Tire Centers breaks $1 billion sales mark.

2003: Schwab recognized by Gov. Ted Kulongoski in first Governor’s Gold Awards.

2005: Margaret Denton, Les Schwab’s daughter, dies of cancer. She was 53.

2006: Les Schwab Tire Centers has more than 7,700 employees in 410 locations. Sales expected to exceed $1.6 billion.

2006: Les Schwab Tire Centers announces its corporate headquarters will move to Bend.

Sources: Bowman Museum, Crook County Historical Society, The Central Oregonian

Christine Metz can be reached at 617-7837 or at cmetz@bendbulletin.com.

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