Will Sisters get an Economic Development Director?

(This article was originally published in the 5/18/10 issue of the Nugget Newspaper)

The Sisters City Council at their May 13 budget committee workshop discussed a request from the Sisters Business Attraction and Retention Team (SBART) to fund a part-time economic development director. In a letter to the Council dated May 6, Patty Vandiver, Sisters Area Chamber of Commerce President and SBART Project Manager, stated: "The Sisters Country Chamber of Commerce would like to request the consideration of $30,000 to be budgeted into the 2010/2011 fiscal year for a part-time, paid position for an economic development director." The issue of an economic development director position in Sisters is not new. As far back as 2007, as the local economy was beginning to slide, key business leaders were wondering how to retain and attract businesses that provided living/family-wage jobs. (See "Sisters economic summit turns testy," The Nugget, October 31, 2007.) By October of 2008, with the economy deteriorating quickly, local economic development was a key issue in the city council election. Bill Willitts, developer of the FivePine Lodge & Conference Center, didn't mince words that month. "Very soon Sisters and La Pine will be the only Central Oregon communities without an economic development director," said Willitts. (See "Economic development is key issue in Sisters," The Nugget, October 22, 2008.) Redmond, Prineville, and Madras now all have economic development directors that are funded by Economic Development for Central Oregon (EDCO) and private fundraising. In spring 2009, the Sisters City Council addressed the issue of stimulating the local economy through the retention and attraction of businesses with living/family-wage jobs. The council's answer was SBART, an all-volunteer committee formed by the council. Team members include Mac Hay (Chair), Jerry Bogart (Vice Chair), Patty Vandiver (Project Manager), David Winter, Bill Willitts, Erin Borla, Lisa Clausen and John Tehan - all Sisters residents. "SBART is the 'rapid response team' that was envisioned years ago. They take a huge burden off city staff because they can meet the needs of new business inquiries in a timely way," said Eileen Stein, Sisters city manager, early in 2009. A subcommittee of the Sisters Area Chamber of Commerce, the all-volunteer team was selected using a cross-section of the Sisters business, arts, and cultural community. SBART received no funding from the chamber but knew that, with hard work and some "wins," they might convince the city council that future funding for an economic development director position would be necessary. During SBART's first news conference on March 23, 2009 at the Sisters Chamber office, Mayor Kellstrom said "I think everyone's (the various Sisters groups and committees) going to be involved but I think, for the most part, the heavy hitting is going to be done by EDCO and SBART. We just don't have the resources to pay a Bud Prince-type of economic development manager (Redmond's now-retired economic development manager) here; the returns (on investment) just aren't there to justify it." SBART has put much effort into outreach and "attraction" since the spring of 2009. "We've made contact with more than 40 companies over the past 16 months who are very interested in relocating to Sisters, but the lack of financing is what's holding them up," said Mac Hay. By November of 2009 Mayor Kellstrom had seen SBART's progress. "When we started this (SBART)... we didn't really know what kind of response we would get. I've really been impressed with the fact that there's been more than any of us thought possible. There are some (prospects) that are kind of borderline and some that I think have real potential," said Kellstrom. The May 6, 2010 proposal states that the economic director would be "under direction of the Sisters Country Chamber of Commerce Executive Board of Directors." Councilor Sharlene Weed took issue with that reporting structure and the need for the position. "I'm not in favor of the person reporting to a committee. And I'm not in favor of budgeting $30,000 for this position; it seems like an extravagance during these economic times," she said. "And besides, I have a lot of questions about the position, there are too many unknowns for me." Chris Tosello, a city budget committee member, agreed with Weed. "I think there are too many gray areas about the position right now, we need clarification," said Tosello. Shawna Bell, also a budget committee member, initially agreed with Weed and Tosello but later conceded to leaving it in the proposed budget. "I think this proposal was not well-prepared or presented," said Bell. Council President Bill Merrill saw the proposal differently. "I would not object to leaving the $30,000 in the budget. But I want to be sure we go through a selection process utilizing people like Jason Carr (Prineville's economic development director) and Lee Smith (La Pine's industrial group manager) who are familiar with the process and needs of the position. And I'd like to see the Sisters Chamber add some matching funds for the position. There are a lot of questions that need to be answered between the chamber and the city council," said Merrill. Mayor Kellstrom, clearly agitated by the discussion, expressed his sentiments very clearly: "If we're going to pull that ($30,000 from the budget), it's the shortest thinking I can think of! We've received 18 months of free work from Mac Hay and the SBART team. The $30,000 must stay (in the budget). I'm not saying this is a 'payback,' I'm saying this will allow the community to attract and retain the kinds of businesses we need. Our competition is doing it and we need to as well. I also think that the economic development director should be a 'contract employee' paid either through EDCO or the chamber," said Kellstrom. The city council will continue to review its 2010/2011 budget over the coming weeks. The public is invited to sit in on all budget workshops. Meeting schedules are available on the city's Web site, www.ci.sisters.or.us.

Developer Proposes Changes to Annexation

(This article appeared in the 5/11/2010 issue of the Nugget Newspaper)


The Sisters City Council reviewed Bill Willitts' proposed annexation agreement changes during their workshop session on Thursday, May 6, at City Hall.

Last December the City of Sisters and the owners of the 30-acre McKenzie Meadows Village property signed an agreement to annex the land into the city. The property is owned by Bill Willitts, Curt Kallberg and the Reed family, all Sisters residents.

Voters initially approved annexation back in 2006.

Intended for a senior living community, the property lies on the west edge of Sisters directly north of Sisters Middle School.

The council discussed several proposed changes to the agreement.

The first proposed change deals with the "one-in-10" requirement. The recorded annexation agreement calls for 10 percent of all units built to be "affordable," and evenly distributed throughout the retirement community. Of the 10 percent, one half must be affordable for individuals or families earning 80 percent of the Deschutes County AMI (Area Median Income, $58,000), and one half must be affordable to those earning 50 percent of the AMI.

The first request was that the "one-in-10" requirement apply specifically to the two buildings intended exclusively for low-income seniors (52 units total) rather than project-wide. The two buildings are phases one and two (26 units each) of Pacific Crest Affordable Housing's Independent Living apartments. (See related Nugget article, May 5, 2010, "Plans shifting for senior housing facilities.")

Council President Bill Merrill disagrees with the language of this proposed change.

"I don't think we should restrict the 'one-in-10' requirement to Pacific Crest's project - it should apply to all development on the property, including Pinnacle Alliance Group's project (assisted-living apartments for seniors)," said Merrill.

Councilor Sharlene Weed had a different perspective.

"We're getting a bonus with this project (Pacific Crest Affordable Housing), more affordable housing than we originally thought we'd have at McKenzie Meadows," said Weed.

Referring to Pacific Crest's Bend-based "affordable housing" communities, Weed was addressing the fact that one- and two-bedroom apartments rent on a sliding scale with the resident's income, and range from $394 to $589 a month. Monthly rents must stay "affordable" for 60 years, per state law.

Development of any senior-living apartments at McKenzie Meadows Village is still dependent on a number of factors: Local and state approval of Pacific Crest's plans, financing for the Pinnacle Alliance Group's development of senior assisted-living apartments, not to mention City of Sisters planning department approval.

Bill Willitts agrees there are unknowns in the development of the property.

"I'd like to be able to keep our options open should Pacific Crest not be able to develop their affordable apartments," said Willitts.

Curt Kallberg, one of the McKenzie Meadows Village property owners, also believes flexibility is the key.

"I agree with Councilor Merrill, the 'one-in-10' requirement makes sense because we're not sure ultimately how many apartments we're going to build," said Kallberg.

Merrill added, "I'm also concerned that we're excluding people younger than age 55 in the development of affordable housing. To deny the less fortunate the opportunity for affordable housing is not good for our community."

The second proposed change involved reducing the unit sizes of the one-bedroom (from 700 to 675 square feet) and two-bedroom (from 900 to 875 square feet) apartments in the Pacific Crest development to comply with HUD (Housing & Urban Development) requirements.

Councilors indicated little concern with this change.

The third requested change involved the agreement's "commercial medical facility." In the agreement, 1.22 acres of the property is to be set aside for a "commercial medical facility." Willitts would like the words changed to "medical facility" to better serve the needs of all Sisters Country residents while creating a close connection with the nearby schools.

Kate Moore, RN, and Program Manager of Maternal Child Health with the Deschutes County Health Services, spoke to the council regarding the synergy the medical facility would have with the local schools.

"This school-based health clinic portion of the facility would be open part-time, 20 hours a week, and act as a 'connector to health services' in the community. We offer health services from birth to age 20, services such as well-child checks and immunizations. We partner with the schools to mentor students regarding health issues," said Moore.

Regarding senior health care at the medical facility, Moore added: "Mark Adolf (Pinnacle Alliance Group) has offered to provide janitorial services in exchange for providing senior health services in the facility."

Councilor Merrill is uncomfortable with this agreement change.

"I'm uncomfortable with this change until we hear from the Sisters School Board - let's give them an opportunity to concur or disagree. Maybe they want the medical facility on their property (and not McKenzie Meadows')," said Merrill.

No final decisions were made regarding the requested annexation agreement changes.

The council did agree to direct city staff, including city attorney Steve Bryant, to amend the language of the agreement for further Council consideration at a future workshop (date to be determined.)

Attracting and Keeping Business is a Tough Job

This article was published in the 5/10/10 issue of the Nugget Newspaper http://www.nuggetnews.com/main.asp?SectionID=7&SubSectionID=88&ArticleID=17176&TM=37147.77

Bringing new businesses to Sisters - and keeping the ones that are here - is proving to be a challenge for the citizen volunteers who have taken on that mission.

The Sisters Business Attraction and Retention Team (SBART) has been working on attracting and retaining businesses for about 16 months.

Team members include Mac Hay (Chair), Jerry Bogart (Vice Chair), Patty Vandiver (Project Manager), David Winter, Bill Willitts, Erin Borla, Lisa Clausen and John Tehan - all Sisters residents.

"SBART is the 'rapid response team' that was envisioned years ago. They take a huge burden off city staff because they can meet the needs of new business inquiries in a timely way," said Sisters City Manager Eileen Stein.

A sub-committee of the Sisters Area Chamber of Commerce, the all-volunteer team is a cross-section of the Sisters business, arts, and cultural community.

"Because of the need for confidentiality with potential businesses, we could not be under the city's umbrella, it just made sense to be under the chamber's umbrella," said Vandiver.

SBART receives no funding from the chamber but is working with the Sisters City Council on future funding for marketing programs.

"Right now we don't have our own Web site or marketing materials but, for relocation inquiry purposes, SBART contact information is on the chamber's web site. We need somewhere between $30-50,000 in funding to pay for a marketer to create and execute a marketing plan aimed at potential businesses," said Vandiver.

SBART's outreach and "attraction" efforts have been significant, even without adequate marketing funds.

"We've made contact with more than 40 companies over the past 16 months who are very interested in relocating to Sisters, but the lack of financing is what's holding them up," said Mac Hay.

Hay added "We're talking with one company that could potentially employ over 100 people here in Sisters. They'd like to build a building, but need investors to make it happen."

Much tighter lending guidelines at banks and lending institutions, combined with reluctance by local investors, have left many potential new start-ups without the capital to get their businesses started.

Deanna Allred, a business development officer with the Bank of the Cascades, sees this every day.

"Credit is still pretty tight for start-ups in Central Oregon. Banks are still lending of course, but good credit quality is very important, as is a very well-thought-out business plan," said Allred.

Adding to the tight credit environment, potential Sisters Country owners/investors have shied away from local investment opportunities. Two recent examples include Crown Point Bank, a start-up which heavily solicited local investment, but ultimately dissolved; and Pinnacle Alliance LLC's attempts to fund a senior assisted-living facility in the newly annexed Metolius Meadows Village property. (See related story, page 1.)

"My goal was and is to finance the development through local investment and ownership. Unfortunately, given the economy, I don't think local ownership will happen, investment is likely to come from out-of-the-area sources," said Mark Adolf, president of Pinnacle.

SBART admits that their efforts over the past 16 months have been more toward "attracting new businesses" than retaining existing ones.

"We have about five potential new businesses that could potentially employ about 30-50 people here in Sisters within the next year, depending on how the economy recovers, of course," said Patty Vandiver.

However, these new companies may not make up for the continued loss of companies and jobs from Sisters.

After 15 years in Sisters, Faceout Studio, formerly DesignWorks, moved their office and nine employees this past January from their South Pine Street building to a space in Bend's Old Mill District.

A graphic design studio specializing in publishing, Faceout's clientele is national and the location of the company could be anywhere. Torrey Sharp, co-owner of Faceout, has lived in Sisters for close to 20 years but says the move was right for the company.

"Here's the brutal reality," said Sharp. "Artists and creative people need a variety of cultural influences to stay 'cutting edge' in commercial design. Our nine employees, for the most part, come from larger metropolitan areas. Sisters' 1800s theme really isn't enough to stimulate them. We realized that, after 15 years in Sisters, the environment was stifling the creativity of our employees, most of who commuted from Bend anyway."

Sharp also emphasized that commercial rents in Bend also made the move attractive to his company.

"The Old Mill District offered us a commercial rent that was very close to what we were paying in Sisters - and they really wanted us to relocate there. But we didn't receive any 'incentives' to move to the Old Mill," said Sharp.

A more recent example of a company leaving Sisters is O'Keefe's Company, manufacturer of O'Keefe's Working Hands Créme. The company employed 20 people in full- and part-time positions. Sold to Gorilla Glue of Cincinnati, Ohio, the company's jobs are moving to Ohio. (See related story, page 1.)

SBART volunteers acknowledge the task of retaining businesses is very difficult because they don't always "get wind" of a potential loss until after the fact.

"We're frustrated when we hear through the grapevine that a company is leaving Sisters. We'd like the opportunity to chat with them before they leave town," said Mac Hay.

Stein empathizes with SBART's challenge.

"I think SBART has been concentrating on 'attraction' but, clearly, they realize they also need to concentrate on the 'retention' part of their mission, too," said Stein.

Stein added "Economic development takes a long time. You have to kiss a lot of frogs."

Although the SBART team works well together, it's clear they would appreciate help from all the residents of Sisters Country.

"Everyone in Sisters needs to be the eyes and ears of SBART," said Patty Vandiver. "We all encounter people who come into town and say 'wouldn't it be great to have our business here and live here as well.' We encourage everyone to make note of these contacts and pass this information on to one of us so we can follow up."

Contact information for SBART can be found on the Sisters Country Web site, http://www.sisterscountry.com

Plans Shifting for Senior Housing Facilities

As a new player becomes involved in plans for senior housing facilities in Sisters, the developers of the property where the facilities will be housed are seeking changes to a recent annexation agreement.

Last December, the City of Sisters and the owners of the 30-acre McKenzie Meadows Village property signed an agreement to annex the land into the city. The property is owned by Bill Willitts, Curt Kallberg and the Reed family, all Sisters residents.

Intended for a senior living community, the property lies on the west edge of Sisters directly north of Sisters Middle School. Voters initially approved annexation back in 2006. Recently Bill Willitts sent a letter to the city council requesting a couple of changes to the annexation agreement.

"I've asked for small language changes to the agreement - primarily to account for new opportunities that will enhance the developed community," said Willitts.

In the agreement, 1.22 acres of the property was to be set aside for a "commercial medical facility." Willitts would like the words changed to "community/school-based health clinic" to serve the needs of all Sisters Country residents while creating a close connection with the nearby schools.

Willitts' second change request involves the developers used for the construction of the "Senior Assisted-Living Center." When the annexation agreement was signed in December, development was primarily to be done by the Pinnacle Alliance Group, LLC, of Yakima, Washington. Mark Adolf, president of Pinnacle, made several presentations to Sisters audiences over the past year with the goal of educating and involving the public about the proposed retirement community.

"My goal was (and is) to finance the development through local investment and ownership. Unfortunately, given the economy, I don't think local ownership will happen; investment is likely to come from out-of-the-area sources," said Adolf.

Pinnacle's development activity will concentrate on "assisted-living" apartments on the property. Assisted living, as opposed to "independent living," includes individualized healthcare, meals, apartment cleaning, activities, and local transportation for residents for a monthly rental fee.

In Central Oregon, assisted-living retirement communities offer one-bedroom apartments for approximately $4,000 to $6,000 per month, depending on the level of healthcare required. Pinnacle plans to market the apartments to "private pay" potential residents, as opposed to residents who may need to rely on Medicaid benefits. Currently in Central Oregon, most assisted-living communities are close to 100 percent occupancy.

Pinnacle plans to utilize the services of Care Senior Living, headquartered in Eugene, to staff and manage the operation. Development plans call for 42 units in the first phase of the assisted-living facility, with additional phases planned of 20-40 units. The annexation agreement calls for 10 percent of all units built to be "affordable," and evenly distributed throughout the retirement community. Of the 10 percent, one half must be affordable for individuals or families earning 80 percent of the Deschutes County AMI (Area Medium Income, $58,000), and one half must be affordable to those earning 50 percent of the AMI.

Willitts would now like the annexation agreement language to acknowledge the involvement of a second company, Pacific Crest Affordable Housing, developer of the Mountain Laurel Lodge and Discovery Park Lodge senior affordable housing complexes in Bend, as well as the Little Deschutes Lodge in La Pine. Pacific Crest is proposing to build the independent-living apartment piece of McKenzie Meadows, having successfully completed similar projects in Bend and La Pine.

Mountain Laurel Lodge, on Century Drive in Bend, is a 54-unit, affordable, independent-living retirement complex that was completed in September 2006. Restricted to residents 55 years or older who earn less than 60 percent of the AMI, couples earning less than $28,800 per year qualify, as do individuals earning less than $24,720 per year. At Mountain Laurel Lodge, one- and two-bedroom apartments rent on a sliding scale with the residents' income, and range from $394 to $589 a month. And monthly rents must stay "affordable" for 60 years, per state law.

Within six weeks of the lodge's grand opening, every one of the 54 units was rented, and management had a growing waiting list. The same thing happened with the other two properties.

In comparison, Central Oregon independent-living retirement communities rent one- and two-bedroom independent living apartments for $2,600-$3,500 per month. (Keep in mind, however, that "retirement communities" also include meals, in-house activities, and local bus transportation.)

On April 15, Rob Roy, one of two partners with Pacific Crest, along with Rima Wilson, project manager, reviewed Pacific Crest's development proposal for Sisters with the city council at their weekly workshop. "Sisters is currently underserved in terms of affordable and senior housing," stated Roy.

Roy went on to explain that the Sisters area has five percent of the county's total population, but only 2 percent (39 units) of the county's total affordable units. In contrast, Bend has 47 percent of the county's population and 71 percent of the affordable units; Redmond has 12 percent of the population and 25 percent of the affordable units. Comparing the La Pine market to Sisters, Roy said, "There are a lot of similarities between the La Pine and Sisters markets in terms of affordable senior housing needs. And we filled the La Pine property within 10 days of opening."

Pacific Crest's timeline is tight. They'd like a memorandum of understanding from the city by June, detailing what concessions the city is willing to make to make the project viable; community outreach/research July through December; final application into the Oregon Housing & Community Services division by April 2011; construction finished on 26 apartments by December 2012.

"We're very interested in your project and look forward to discussing it," said Mayor Lon Kellstrom, following Roy's April 15 presentation.

Councilor Sharlene Weed is also in favor of the project. "I'm in favor of the project but I think we're likely two to three years out before construction can start," she said.

City Manager Eileen Stein added a note of caution: "The devil is in the details with this project. Pacific Crest needs lots of concessions by the city to make this pencil out and the council is going to be tied up in the budgeting process during May and June."

The Sisters City Council plans to review and discuss Willitts' proposed annexation agreement changes during their regularly scheduled workshop at 8 a.m. on Thursday, May 6, at City Hall. The public is always invited to sit in and listen to the discussion.