When the Deschutes County Commission voted to forgive a $21,000 loan to Zamp Solar last week, it became the latest in a string of such loans that exchanged hundreds of thousands of county dollars for the promise of hundreds of family-wage jobs.
Companies apply for loans of up to $50,000 and promise to create a certain number of jobs and maintain them for at least a year. If they succeed, county commissioners can choose to convert the loan into a grant, meaning the companies don’t have to pay it back.
Since 2010, the county has distributed $927,000 in loans to 26 companies in exchange for promises of 705 jobs. Most of that money — about $725,500 — has been converted into grants, and another $138,000 in active loans is split among four companies that aren’t yet due to repay or have the loans converted to grants. Companies that failed to meet expectations have repaid about $51,000 of the approximately $63,500 they owe the county.
In terms of jobs, 601 have been created and maintained for at least a year, and another 69 are pending. It works out to the county spending slightly more than $1,200 per job, but Deschutes County Management Analyst Judith Ure said the program was more complicated than that.
“They’re sort of built on the assumption that we’re going to give $2,000 per job,” she said. “If they want to commit to more than that, they’re welcome to.”
Humm Kombucha received a $50,000 loan in 2014 to create 25 jobs, and Consumer Cellular Inc. received the same amount in 2012 to create 200 jobs. Both businesses had their loans forgiven.
The county’s figures don’t show the full number of jobs created, just the ones companies promise to add in their loan applications, Ure said.
“We give them $50,000 or $14,000, and they end up creating more jobs than they’ve promised.” she said.
Deschutes County uses the median county wage, about $36,000 annually, to decide whether a company will create “family-wage” jobs, Ure said, but it doesn’t absolutely stick to the median wage standard. Zamp Solar, for instance, predicted an average wage of $23,870 — about $11.50 an hour or $1.25 more than the county minimum wage of $10.25.
The company received $1,000 per job instead of the typical $2,000. Companies that plan to create only minimum-wage jobs probably wouldn’t qualify for the loan, Ure said.
On Wednesday, the Board of Commissioners will vote to accept a $16,350 partial payment of the $40,000 it loaned Bend-based Nosler Inc. in 2015. Nosler’s Ammunition Development Corporation committed to adding 20 full-time employees when it developed a new manufacturing plant in Redmond, but only 13 of those positions were created. The board can decide to forgive the remaining $26,000 in June, once the jobs have stayed for a year.
Because most of the loans are converted to grants, the fund doesn’t replenish itself. It now has about $178,000, and it’s been refilled over the past several years from the county’s general fund, the county’s share of hotel taxes and its portion of video lottery proceeds.
The county’s economic development loan fund makes a difference in a state that doesn’t offer many perks to businesses, said Roger Lee, executive director of Economic Development of Central Oregon. The group processes loan applications for the county.
“Oregon on a national scale isn’t really known for incentivizing businesses,” Lee said.
Other states and counties, particularly in the South and the Midwest, provide more tax breaks and other incentives to businesses, Lee said. Those states also often end up paying much more on a per-job basis — sometimes $30,000 or $40,000 per job, he said.
Deschutes County’s forgivable loans program shows that the county is committed to a business’s success, Lee said. Because many of the recipients make goods or services that are shipped outside Central Oregon, they also bring money back into the region, he said.
“This is really a jobs program,” Lee said. “These dollars may not be going to wages for one particular job but they may go to pieces of equipment.”
The loan helped Zamp Solar, a Bend-based manufacturer of off-grid solar panels, buy an additional laser-cutter to fix a bottleneck in its manufacturing process, then purchase another piece of equipment when the bottleneck moved down the line, CEO Steve Nelson told the Board of Commissioners on Monday.
“It helped us to hire at least three new people at the time, and since then, we’ve hired many more,” he said.
The city of Bend started a similar fund in 2011 but ended the program by 2012, Bend Economic Development Manager Carolyn Eagan said.
Now, the city’s sole incentive for developers is the use of enterprise zones, which include most of the commercial land within city limits. Companies that build in the area or hire more employees won’t have to pay taxes on new buildings or other property that wasn’t already on county tax rolls for three to five years.
They qualify for a three-year tax abatement if they increase full-time employment by 10 percent, prioritize hiring local employees and maintain a minimum number of jobs in the area without offsetting those jobs by laying off employees elsewhere in Oregon. Companies seeking five-year abatements have to meet those criteria and pay new employees an average of 150 percent of the area median income, or nearly $62,000 a year.
Companies that don’t meet those requirements must repay their taxes.
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