Kollective Technology, whose software facilitates live video feeds for Fortune 500 companies, has raised investor capital in the millions, but CEO Dan Vetras said he could see no reason in 2015 to turn down a $50,000 forgivable loan from Deschutes County.
In exchange for the money, Kollective committed to creating 25 jobs by May 1, according to the county. Vetras said the company had 27 local employees in June, and he expects to exceed 30 by the end of the year because of Kollective’s recent growth. Its customers include Wells Fargo, Salesforce, Nestle, Unilever, Charles Schwab and John Deere.
The economic development loan to Kollective is one of 25 such loans that Deschutes County has made since 2010 to promote job growth. The county has loaned or granted $859,000 in exchange for 705 job commitments, an average of $1,218 per job.
Deadlines for job creation are still pending for 10 companies, but others have created at least 438 jobs and seen $438,000 in loans forgiven, according to the county.
“If you look at the spectrum of businesses, it’s not a bad batting record,” said Roger Lee, executive director of Economic Development for Central Oregon, which markets the program and is responsible for vetting applicants and auditing their performance on behalf of the county.
Companies that fulfilled their agreements include Navis, which provides reservation call support and data analysis to the hospitality industry; Central Oregon Truck and Consumer Cellular, according to Deschutes County.
At $1,218, the county’s average spending per job commitment is less than other cities and states spend on job-growth incentives, said Kenneth Thomas, a political science professor at University of Missouri-St. Louis who studies corporate tax incentives. He generally discourages local and state governments from using tax breaks or cash to persuade companies to relocate because the job-creation claims don’t account for jobs lost elsewhere.
“Lots of cities and states aren’t going to listen to me,” he said. “I also try to make sure they understand how expensive their program is relative to other cities.”
If Kollective retains all 25 jobs through May 1, 2018, the loan will be forgiven. Those companies that don’t live up to their agreements can get deadline extensions, but some have repaid the loans at 8 percent interest.
The county funds the program through various sources, including general funds and the county’s share of video lottery revenue, said Judith Ure, management analyst for the county.
Economic Development for Central Oregon markets the program, vets applicants and makes recommendations to the Deschutes County Commission. EDCO is also responsible for auditing the companies’ performance under their agreements.
“Our job is to make sure they’re used as judiciously as possible,” said Roger Lee, executive director of EDCO.
The maximum loan amount is $50,000, a useful tool for keeping or attracting employers, he said. “Even local companies, especially companies with headquarters elsewhere, want to see there’s local skin in the game,” Lee said.
Not every loan recipient has grown like Kollective. Three companies paid back all or part of their loans. G.L. Solutions, which received its $50,000 loan in 2010, paid back more than $19,000 after growth failed to materialize. Alchemy Solutions, a software company that in 2011 anticipated creating 13 jobs, moved to another state, Lee said. Geo-Spatial Solutions merged with FireWhat, which maps wildfires and other disasters.
The first loan recipient under the current program was the former Agere Pharmaceuticals Inc., a startup founded by former Bend Research employees who sold the company in 2015 to Patheon, based in Durham, North Carolina. Patheon later invested $5.7 million in an expansion of the Bend facility, which specializes in drug-absorption technology, and said it would add 22 jobs.
In 2010, Agere borrowed $14,000 on a commitment to create seven jobs over two years. At the time the company had a few employees and was waiting on a Small Business Administration loan, Lee said. “It wasn’t a lot of money, but it was money at the right time,” he said.
Other small businesses that have participated in the loan program include Vantage Clinical Solutions, Humm Kombucha and Sudara, a loungewear company.
Across the country, most corporate tax incentives go to large companies, even in programs that purport to support small business, Thomas said. “It’s good to see a government that’s actually giving incentives to small companies. It doesn’t have to be very much.”
Job-creation deadlines come up this year for several companies, including Medline Renewal, which refurbishes medical devices in Redmond, and Ammunition Development Corp., a subsidiary of Bend-based Nosler Inc. that has a plant in Redmond. EDCO has not yet reported on those firms, Ure said.
i3d Manufacturing revised its agreement with the county after its growth plans were slowed by the 2016 election, CEO Erin Stone said. “They were really willing to hear the story,” she said.
The company, which makes production-quality metal parts for aerospace and defense through 3D printing, is heavily dependent on government contracting, and the sales cycle ground to a halt last year, Stone said. i3d’s executive office is in Bend, while the manufacturing facility and engineering team are in The Dalles.
The company, which expected in 2015 to have 12 employees in Bend, is going to pay back half its $24,000 loan, Stone said. The county also extended the job-creation deadline to May 1, 2018, she said.
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