Port of Coos Bay CEO David Koch along with Commissioner John Sweet and city managers Terence O’Connor and Roger Craddock have concocted a workaround to the State’s “Long-term Rural Enterprise Zone” incentive program to put themselves in charge of almost a $100 million in the name of “waterfront revitalization”. Koch revealed the plan at January 8, 2014 chamber luncheon. Power point materials quote in this story can be found here and here
From a perspective of improving the revenue potential for nine local taxing districts the siting of the proposed Jordan Cove LNG export terminal could not be less advantageous. The North Spit location sits in the middle of the Bay Area Enterprise Zone which is a legislative device approved by local taxing districts that exempts businesses from local property taxes, typically for three to five years but sometimes even longer on new investments. To make matters worse the site is also situated in an urban renewal district. When the abatement period ends 99% of the tax revenue from the $4 to $6 billion project, an estimated $40 to $60 million of general government funds and $20 to $30 million in educational funds annually, would flow into the Coos County Urban Renewal District (CCURA) because somewhere along the line it was decided the North Spit was both urban and blighted requiring funds for investment in projects to generate growth.
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Affected Taxing Districts 4-H Service District North Bay Rural Fire Protection District Coos County Airport District Port of Coos Bay District Southwestern Oregon Community College District Library Service District Coos County Bay Area Health District (Collects no taxes) Coos Bay School District Education Service District |
As we have discussed here before there is absolutely no empirical or statistical evidence that enterprise zones result in the net creation of jobs or that the cost of those jobs to the taxpayer shows a positive return. According to the State of Oregon, enterprise zones are designed to encourage business investment in troubled areas through property tax relief yet there are no peer reviewed published studies supporting the use of enterprise zones as a local economic driver. (There is evidence such zones create a competitive disadvantage to existing businesses outside the zone). In fact, the original enterprise zone architects never even devised a mechanism by which the benefits of these exemptions could be analyzed in order to justify the cost to the taxpayer, nevertheless there are now 64 enterprise zones in Oregon.
Long-term Rural Enterprise Zone
Presumably, enterprise zones are created to encourage companies to locate in areas they would not otherwise consider without the tax exemption. In the case of Canadian owned Jordan Cove, this particular argument holds even less water than it did for the Australian chromite miners, ORC but in any event David Koch represented the possibility of a fifteen year property tax exemption as the company’s “right” should it choose to apply.
Removing property from the tax rolls for extended periods of time would seem to be counter intuitive to community revitalization when you consider that “a minimum of 10 new employees suffices in most relevant zones, if the investment exceeds $200 million”, is all that is necessary to qualify if those 10 employees earn 150% of the local average wage or approximately $48K per year. That and the approval of the enterprise zone sponsors, namely the port, the county and the cities of North Bend and Coos Bay.
Should Jordan Cove acquire its LNG export license and various permits the terminal is characterized as the largest single project ever in Oregon. Taxed at the same rate as my property, the potential annual property tax revenue generated for both general government and education in Coos County alone would approach $60 and $30 million respectively. What company doing the type of volume projected for Jordan Cove wouldn’t be willing to pay an extra half-a-million a year in salaries to avoid $1.4 billion in taxes over 15 years? Conversely, how is subsidizing $500K in annual salary with a $90 million annual tax break ever possibly going to show a positive return to the taxpayer?
Community Enhancement Plan
The first thing to note about this new Community Enhancement Plan is that there is no plan. At least no plan beyond figuring out how to put a very small number of unelected, self appointed individuals in control of a very large amount of public money. Using Oregon’s statewide equalization method for capping school funding to a fixed amount per student as the excuse to justify asking Jordan Cove to apply for the long-term extension, Koch suggests that the zone sponsors would agree to a fifteen year exemption on the condition that Jordan Cove pay annual community service fees or payments-in-lieu of taxes into two endowments setup specifically for this purpose.
Under the proposal, Jordan Cove would see its cumulative tax burden reduced by 72% from $1.4 billion to $360 million distributed variously over the life of the agreement between the nine taxing districts based upon a formula determined by the four masterminds, Koch, Sweet, Craddock and O’Connor.
Former State Senator Joanne Verger, John Whitty and Bill Lansing incorporated the South Coast Community Foundation in October 2013 specifically to administer 50% of the fees paid by Jordan Cove to the benefit of education. Funds from this foundation may not be used for teacher salaries but may be distributed in the form of “grants” according to Koch’s presentation.
The affected taxing districts will receive proportionate shares of 25% and the remaining 25% or $90 million is slated to fund a new, as yet unformed Bayfront Investment Corporation.
The Bayfront Investment Corporation is proposed as a public sector partnership. The partners would create the corporate
entity to help fund infrastructure investment and support the enhancement and redevelopment of the Coos Bay harbor waterfronts.
• Not for profit corporation would be established as a 501(c)(3).
• Goal is focused economic development and a mutually beneficial partnership for the waterfront areas involving:
o Coos County;
o City of North Bend;
o City of Coos Bay; and
o Oregon International of Coos Bay.
• The service area would be the boundaries of the Coos Bay Estuary Management Plan area.
• Approximately half of the annual payments initially would be set aside to build an endowment to fund bay front projects in perpetuity.
• The Bayfront Investment Corporation could provide funding for:
o Mitigation banking;
o Brownfield redevelopment
• Eradicate blight;
• Create shovel-ready sites;
• Improve access to multimodal transportation; and
• Create opportunities for expanded waterfront based tourism and recreation.
o Direct service projects
(i.e. waterfront walkway, shipyard work docks, water quality improvements, flood control, etc.); and
o Small business development and support• Board of directors is proposed to include five members serving staggered terms, with one representative each appointed by:
o Coos County
o North Bend
o Coos Bay
o Port of Coos Bay
o Public at large from the service area (agreed upon by all entities)
According to Koch, this will keep tax dollars local and ensure a “more intelligent” use of public money, however thus far the public have not been invited to weigh in as all planning has occurred behind closed doors. Most importantly, the public have been given no say whatsoever in the selection of who will control these funds. The hubris of the local economic development evangelicals is astonishing. Koch also revealed during his presentation that the CCURA doesn’t have to take all the money and that building up the endowment in the Bayfront Investment Corporation would give “us more time to play with the money.”
Government sanctioned economic development, particularly projects administered by the Port of Coos Bay have a dismal record, at least in Coos County. (Read The JOB Messiahs). Heretofore, none of the usual players involved in past and recent boondoggles have ever been held accountable in the local media. At the recent Wyden town hall meeting, a promoter of the 12″ pipeline, Tim Bishop, stood up and accused Jody McCaffree and Citizens Against LNG of being “against everything, even the county pipeline.” Of course no one is against “everything” but in the matter of the pipeline its opponents were right, Bishop was wrong. The project failed to meet any of its promises and the environmental degradation is still being cleaned up at public expense to this day. There is a disconnect between supporting viable projects and chasing pipe dreams and unfortunately, those currently slated to administer these endowments are more famous for the latter.
Here’s how theworld describes these self appointed guardians of the LNG payoff.
“Make no mistake. The current directors of this board are some of the county’s most respected and experienced citizens. They are veritable pillars of the community, and we have no doubt about their commitment and their integrity.”
I don’t doubt their commitment to Jordan Cove. They are all architects of this scheme and they have all been there from the beginning. In fact some of them hid their involvement or disguised their concerted efforts from the beginning. Even now our elected democrats are not quite sure that its safe for them to come out of the closet, even with all the propaganda from SCDC and BSOregon being spread to pave their alibi, they still don’t trust where the public is at on this issue. Have they mis-calculated the new editors of theworld?
Lets hope so.
Good article, Mary. I’m amazed to see John Whitty is in the middle of this scheme once again — though perhaps I shouldn’t be amazed. The Whitty’s were responsible, in the eighties, for hiring the biggest loudmouth con man that ever hit Coos Bay, to run the port. And it’s thanks to that con man and the Whitty’s that the port created both the Urban Renewal district on the North Spit and the Enterprise Zone, two rat holes that tens of millions of taxpayer money have been dumped into for no good at all. With that kind of record, why should we expect anything else from the latest scheme?
I’ll read all about it in the World paper – that will be the issue published after the eyesore is built and all those citizens who thought that they were getting jobs and tax money don’t and wont.
Jordan Cove is less likely to happen than they imagine, thankfully! So this scheme will likely never go beyond the fantasy stage
10-4 that. Hmm, “give ‘us more time to play with the money.'” That thought has to make them giggle like little girls while playing with their boners. I reckon erotic fantasies come in all manor. It would be nice if they would just keep their hands out of the public pants pockets. They probably consider themselves conservatives too, instead of the radicals they are.
With all that “public money” going through private hands they should be able to collect some hefty fees for all their hard work. Using this plan for private control of the PAYOFF, they should be able to name a few buildings or parks after the founding fathers of this grand scheme.
First question. Why should Jordan Cove receive any tax incentive to locate on the north spit? It is not like they can simply relocate to Lane County, or somewhere else.
If Jordan Cove gets a great tax break, someone still pays for government expenses. Oh wait, that is me, the local resident.
At least one of the folks is an elected official and may not be doing what is best for the public at large.
I believe that this tax break is only good for the Canadians not the folks in Coos County.
Agreed! Nor is it good for the entire state of Oregon