It is getting cold in Bend

Just when you think state and local government can’t make it any harder on taxpayers and small business, it proves you wrong.  We realize this is an odd title for a posting in July, but it was actually written by Bruce Brothers quite a while ago but never officially posted....so here you go!

Given an already overwhelming tax burden including draconian property taxes that have little relation to actual property values, among the highest personal income tax rates in the country, high estate taxes and a myriad of fees, it is difficult to imagine a less inviting business climate.  It is little wonder that Oregon now is ranked 43^rd of the 50 states in terms of its attractiveness to businesses wanting to relocate.

Instead of addressing the negative tax environment, local and state governments have decided that, in order to attract business, they will get into the development game.  The City of Bend spent millions of taxpayer dollars to create the black hole known as Juniper Ridge.  There it offers industrial property in competition with private developers at a price at which no developer could compete.   Taxpayer money was spent on property improvements that ordinarily would be the responsibility of a developer and the City is not finished yet.  And there it sits, essentially empty. 

Not to be outdone, the State of Oregon, through its Department of State Land, has expressed an interest in developing hundreds of acres of vacant land it owns, near the Fairgrounds in Redmond, for industrial use.

Now, along comes the City of Redmond.  It recently paid $350,000 for a privately owned gymnasium in anticipation of “someday” improving the roads nearby leasing it to Parks & Recreation, another government entity, for $1.00 a year.  That will enable that entity to stop paying monthly rent of $3,600 to the owner of the property it presently occupies, will take the purchased property off the tax rolls and will result in a zero return on the taxpayer money invested.

At the same time, the City is offering, through its “Opportunity Fund,” to give away $2,000,000 of taxpayer money, as well as fee reductions, to some lucky businesses for use in building still more industrial property in the Redmond Urban Renewal District in order to “enhance the long term tax base.”  Its stated purpose is to “assure an adequate supply of planned industrial, commercial and residential land...”  Never mind that the vacancy rate in existing industrial properties in Redmond is 20%.  The “free money” under the program is specifically restricted so that it can’t be used for tenant improvements and buildouts on existing privately owned buildings.  The city has effectively said to the property owners that have already invested in developing buildings in Redmond for industrial purposes that they are of no importance.  Never mind that when they built the existing industrial property, they were required to pay for the sewers, build the streets, install utilities, lay down the sidewalks,  pay thousands of dollars in fees and that they are obligated to continue to pay property taxes on their unoccupied buildings.  The buildings they built will remain empty while the City of Redmond gives away taxpayer money to build still more industrial buildings, while large industrial property developed by the City of Bend sits empty and while the State of Oregon uses taxpayer money to create still more industrial property.

Owners of existing business property must pay property taxes on empty buildings while competing with government give away programs intended to build still more unneeded buildings and develop still more vacant land, with taxpayer money.  If the objective is to attract new business with free money, it would make more sense to offer to subsidize rent or loan money for down payments on existing property.

It appears that government is simply trying to grow government at the expense of those of us who pay the taxes that pay their wages.  Based upon government success as property developers to date, one would think that it would stick to governance, get out of the real estate development business, and not compete with existing taxpayers.