3.       REQUEST FOR EXPANSION OF KLAMATH FALLS/KLAMATH COUNTY ENTERPRISE ZONE (COB FACILITY)

a.       Report of City Manager

          b.      Public Hearing

          c.       If desired, motion to introduce the Resolution

          d.      If desired, motion to read the Resolution by title

          e.       If desired, motion approving the Resolution


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Are Dollars for Education a Top Priority in Granting COB the Huge Tax Break it Proposes ??????     by Lyn Brock
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The same group of people spoke at the Klamath Falls City Council meeting on Monday, March 7, 2005 who are usually at meetings to advocate for the COB.  The agenda item concerning the COB related to expansion of the enterprise zone to Langell Valley.   Tom Rios representing the union workers stated that construction of the COB facility will provide jobs and job training.  Other union workers and representatives also spoke.  Trey Senn said that this has become a better project.  He said that they have been asking that the money paid to The Climate Trust to mitigate for carbon dioxide excess be spent in the Klamath Basin and that it looks like some of the money will be spent here.  He said sometimes all we have to do is ask.

So I suggest that we ask that COB gives a percentage of the power they produce to the Klamath Basin.  We have asked for this repeatedly.  It could be used to provide power for agriculture at a time when threatened increase in power rates in 2006 could be devastating to irrigators.  In the Hermiston area, one of the power generation facilities is giving the city or the county something like 5% or 10% of the power generated.  I suggest that our county commissioners and the Klamath Falls City Council negotiate for this as part of their proposal when considering tax incentives for the COB after the process of extending the enterprise zone.

This could become an even better project.  COB could pay their full share of taxes.  More tax money would mean more spending in Klamath County.  If more were spent on school construction, it might provide even more union and construction jobs in addition to COB facility construction.

Commissioner Bill Brown spoke.  He reiterated that he doesn't believe the enterprise zone should be extended to Langell Valley.  He also clarified information as to how money given the schools would be treated by the state.  If given to the school district in lieu of property taxes, he had been told, it would reduce or offset the amount the schools received from the state.  If given to the school district from the county general fund, though, even though the county received it in lieu of taxes, it would not reduce the amount the schools would receive from the state.

Councilman Bud Hart asked several astute questions.   He talked about what is fair ... that a business should pay their fair share for impact on services.  That is difficult to measure or to predict.  He wondered if the dollars from COB were paid as taxes, would the county still give money to the schools out of their share.  He said that some studies show that enterprise zones do not provide as much benefit as was believed.  Our elected leaders should look at those studies.  He stated that he doesn't believe the city should receive any of that money from COB but he believes that taxing districts should get the same percentage as they do of taxes and that the city council should help with these decisions.  He mentioned the County Commissioners' proposals.

COB and Commissioner Switzer have been saying how we should extend the enterprise zone and that schools could benefit so much more than if COB just paid their reduced amount in lieu of taxes as a contribution.  Yet Switzer does not offer to give many dollars to schools or to libraries in his proposal.  Below is an approximation of what they should get if given the same percentage as they receive from property taxes and compared to that is what Switzer proposes to give them.  $ 2,800,000 per year for 15 years is what Switzer proposes COB should pay in lieu of property taxes or as a "contribution" instead of paying property taxes.

.......................................................................................... Approximate distribution of  ............................Amount offered of $ 2,800,000
........................................................................................  $ 2,800,000 at present rates. ............................... by the Switzer proposal.
Klamath County Schools ................................................................$  1,037,000 ..........................................................  $ 500,000
Klamath Community College  ..............................................................  105,000  .................................................................... 134
Education Service District (Special Ed programs)  .................................   90,000  ....................................................................  74
Library  ...............................................................................................  125,000  ................................................................... 154

The City Council did vote in favor of expanding the enterprise zone to include the future site of the proposed COB Energy Facility.  The process now goes to the state when our local governing bodies "submit the enterprise zone boundary changes to the Director of Oregon Economic and Community Development for approval, pursuant to the request from the local sponsors."  The Board of County Commissioners and the Klamath Falls City Council are the local sponsors.

The next step after that approval is "prior to commencing construction, submit an application to the local enterprise zone manager and county assessor for entry into the enterprise zone."  The local enterprise zone manager is Heather Marlow, Klamath County's Director of Planning/Code Enforcement.

The process goes on from there and COB and the government sponsors of the enterprise zone enter into a written agreement for a term of 7 to 15 years and for an agreed tax exemption.

What really confuses me, though, is that Commissioner Switzer has repeatedly said we need this enterprise zone to help the schools.  His numbers above don't lend credibility to his argument.  Let's look at some more of his numbers.

.......................................................................................... Approximate distribution of  ............................Amount offered of $ 2,800,000
........................................................................................  $ 2,800,000 at present rates. ............................... by the Switzer proposal.
Bonanza Fire Department ................................................................  $  159,000 ..........................................................  $    25,000
Fire Patrol Surcharge .............................................................................123.000 ..........................................................  none / not listed
Bonanza Park......................  ..............................................................     45,000  ...................................................................6,000

Klamath County (General) ..................................................................   444,000  ........................................................... 2,132,000

Let's look again at the amount he is offering Klamath County Schools.  He says we need new buildings.  Yes, we do.  I have worked in many of the Klamath County Schools.  I would say that Henley and Bonanza especially, of the ones I've been in, need some new buildings.  I guess $ 500,000 a year might build one or two new classrooms a year at the most.  How generous! 

And then look at the amount he is proposing for the discretionary fund ... by that I mean the amount of money that two County Commissioners voting together could decide how to spend... $ 2,132,000 per year.  That is more than four times as much as he is offering the schools.  Commissioner Switzer, I don't know what to say!  How much importance do you place on education?  Why are you proposing to give so little to schools and libraries?

Lyn Brock
Bonanza, Oregon