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Incentivizing agrarian investments

Marion County is the hands-down top agriculture-production county in Oregon, and a new program implemented by county officials serves to maintain that designation.

Woodburn based DK Fab became one of two recipients granted a limited tax-exempt status through the new Marion County program, “Rural Industrial Investment Exemption,” aimed at providing investment incentives in agriculture.

In April the Marion County Board of Commissioners approved the tax exemption via a resolution with Kevin Cameron and Colm Willis voting favorably and Sam Brentano abstaining due to personal connections with the business.

A report to the commission noted that DK Fab plans to invest about $4 million in new equipment, for which it applied to the program’s exemption standing. The exemption amounts to $43,259.20 each year for three years.

Marion County Economic Development Coordinator Tom Hogue explained that the agriculture-supporting RIIE program developed through the state legislature, with advocacy and support from the county, dating back to the 2016 session. Marion County became the first to enact an implementing ordinance for the program in July 2018, and it became active last October.

The purpose of the exemption is to afford a business time for its new investments to generate revenue. Hogue said it also demonstrates the county’s support for investment in the agricultural industry.

“Cities have enterprise zones, and there are quite a few of them across the state. But there are very few directed tax exemptions for rural areas,” Hogue said. “Here we are in Marion County where ag is our number-one industry, and yet it’s very difficult to do the kinds of exemptions and incentives that cities take for granted and (implement) as part of their business every day.”

DK Fab operates in the 11200 block of Serres Lane, just east of Woodburn, and also has a facility in Zillah, Washington. The company, which began in 1999 as a mobile welding and steel fabrication shop in Woodburn, provides processing equipment for a variety of regional agricultural crops, including hops and hazelnuts.

The ag-based steel fabrication business plans to build two shop buildings on 5.5 acres, about 48,000 square feet, to install processing equipment that includes machinery that cuts, strips, sorts, dries and packages various agricultural crops, DK Fab’s controller and project manager Henry Schacher told the county.

“We fabricate a wide range of custom parts and also stock off-the-shelf replacement parts,” Schacher noted. “We are one of two facilities in the US that manufactures a specialized formed wire called a Hop Picking Finger from raw materials. This product has several applications outside of hop picking.”

In addition to DK Fab, Hopmere Cold, LLC, of the Brooks/Wheatland area near Willamette Mission State Park was granted an exemption. Hopmere plans to build a $2.6 million hop-processing facility. Its exemption amounts to $31,053.88 per year, also for three years.

Hopmere spokesman Doug Weathers told the county that the company’s investment provides for energy-saving, smart technology for food-grade cold storage, primarily hops and hop products. The company anticipates handling more than 4-million pounds of hops annually.

The Hopmere exemption was passed unanimously by the commission.

“Increasingly, it’s important for us to have high-tech capability in our ag businesses,” Willis said. “My wife’s family is in the dairy business, and they just bought a robot that milks their cows, and it’s very, very expensive. But we are in a globally competitive market for ag now, and if we don’t make these capital investments, our ag industry is going to suffer.”

Hogue agreed, and indicated that it is important for an agrarian-steeped county such as Marion to keep a abreast of industry developments.

“Ag industry is changing rapidly and the kind of investments that are going to be needed to keep up with that are going to be significantly expensive and involve a lot of technology,” Hogue told the commission. “I think that as we go forward and we see the results of this kind of exemption, it will give us one way to have our finger on the pulse of what’s happening.”

Hogue saluted the Marion County Assessor’s office and SEDCOR for their work in facilitating the program’s specifics and vetting the initial applicants.

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What planners need to know about economic development

Congratulations! You’ve been handed another hat to wear. Now what? In typical fashion you’ve probably been asked to respond to a last minute recruitment lead that has your mayor excited. Recruitment is a tough game and one better left until later in the creation of an effective city economic development program. But local political reality prevails.

Do yourself a favor. Don’t start with an advisory committee to gather opinions and laments. Instead, create a working group with specific work tasks. Call it the economic development fire drill team. They will be charged to gather and maintain the accurate data needed to respond to recruitment leads, and be able to host successful recruitment visits on short notice. They have to maintain confidential information and sign non-disclosure agreements. They should gather examples of lead requests and response packets from other cities. They will need to work well with the utility service providers and partner agencies. Ask them to report their readiness status to the city council in 3 months. Then schedule a dry run. Your Business Oregon development officer can help with all of this.

Next, arm yourself with a few clichés. These will be useful in the various short conversations you will have regarding economic development. I’ve collected a few favorites over the years. You have to spend a nickel to earn a quarter. You have to fish with many lines in the water. If money is a problem you are working on the wrong plan. No dirt – no deal. Eventually you will need a complete communications program including a solid 2 minute elevator speech everyone on the team can deliver. You might be surprised, or not, at how many cities don’t get beyond the advisory committee and the clichés stage.

One of the strong advantages planners bring to the economic development game is the ability to deliver on the hard work that a complete economic development program requires. A lot of it looks just like the kind of planning you want to do anyway. I like to say that you can do a lot of good planning if you wear an economic development hat. People are willing to listen and participate differently. So get started.

It is crucial that your city have an effective business retention and expansion program. If you are not showing the love to your existing businesses, they are not going to like the attention you give to the fickle recruitment prospect. And remember – that prospect will eventually ask local business people about the city’s attitude toward business. Don’t be surprised at their answer. A retention program is hard work and not glamorous. You need someone that has or can earn the trust of local business people and can find out about their situation without blabbing it around town. You’ll hear lots of complaints at first, but if done well and persistently, eventually someone will let you know something you can act on. It’s a test! How you handle the information, and what you accomplish, will be noticed.

This article is written for planners, so take a look at your zoning and development code, and process. Many cities effectively exclude entrepreneurial activity. Start-ups are renters, not developers. Can an entrepreneur in your city operate in their garage? Can they grow and find an affordable useful space for light industrial or small scale retail? Can a new business occupy an old space without going broke installing sprinkler systems and other retrofits before they earn a dollar? Or my favorite, can that metal sculptor find a live-work welding shop downtown so he can make specialty parts to ship and make art for tourists?

And lastly, you will need to develop a new skill so you can work with the business financial documents. This is necessary to be conversant on the various financing programs you will be working with. But more importantly, a little effort on this subject and you will be prepared have fun with creative finance techniques that will make you a winner. Here are a few clues. Low interest loan money is available, but money with longer loan terms makes projects pencil better. To make financing work, re-arrange which parts of the project get financed by which program. And to make that work, you will need a pot of flexible local money. For that you will need access to a local organization that can qualify for pass through program money. Take a class – IEDC and NDC are two providers. And, please, attend an Oregon Economic Development Association conference event. We all are wearing multiple hats these days.

Originally published in Oregon Planners’ Journal, December 2013

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Newman’s Own Land Use

I’ve noticed my grocery shopping habits have tended toward a brand with a reputation for ethical business practices and high quality products. I’m spending the grocery money anyway – what’s not to like.

While explaining the shift of preferences to a friend in Colorado, I quipped that I wished that Newman was running land use in Oregon. Or had a competing program. What would the customers do? Would they shift to a provider known for careful operational and product quality?

I pay a bit more for Newman’s Own Lite Raspberry and Walnut salad dressing compared to other bottles on the shelf. While I’m willing to bet that cities would gladly pay more for reliable quality and timely completion I’m also willing to bet that they won’t have to pay more. Quite the opposite.

If Newman’s Own Land Use reduced by even a modest percentage the costs of lost productivity, legal wrangling and delay, it would be a winner on the shelf. Even out-of-pocket costs could decline if less could be spent on consultants who know how to navigate a whimsical state product offering.

Sound tasty to you?

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The Secret Sauce: Ownership

Thomas Friedman, writing in the NYTimes about education, politics and global competition observes “We’re going through a huge technological transformation in the middle of a recession. It requires a systemic response.”

He reports that the Program for International Student Assessment, or PISA, found that the most successful students are those who feel real “ownership” of their education. “The highest performing PISA schools all have “ownership” cultures — a high degree of professional autonomy for teachers in the classrooms, where teachers get to participate in shaping standards and curriculum and have ample time for continuous professional development.”

It made me reflect on the culture of dependency and lack of autonomy Oregon’s land use program fosters in our stressed out cities and rural counties. There are a few local governments who know they are empowered but most spend their limited resources hoping to comply with the whimsical review and appeal process.

In such a circumstance they can’t be held accountable for the outcomes or lack thereof. And it is only getting worse. Will the state guarantee these communities will thrive? Of course not. Will it let locals experiment? Not much.

Will the secret sauce – owning the outcome – remain a form of unobtanium?