Hiring controversy spills into council meeting

This article was published in the 11/3/10 Nugget Newspaper

By Bill Mintiens City Councilor Sharlene Weed pressed City Manager Eileen Stein for answers regarding the controversial hiring process for Sisters' economic development manager last Thursday evening during the regular Sisters City Council meeting. She didn't get any. And she's not the only one pressing for answers. Weed has been pressing the city council for several months over what she considers the lack of transparency with the hiring of Sisters' new Economic Development Manager Mac Hay. Widely reported, the entire hiring process - position description, solicitation of candidates, interview panel members, and final recommendation - was outsourced to EDCO (Economic Development for Central Oregon) by Mayor Lon Kellstrom. Mayor Kellstrom purposely kept all other city council members entirely out of the process citing a "need to keep the council at arm's length so as not to appear to have hired a friend of the council." During the "other business" portion of the council meeting Weed admonished Stein for not replying promptly to the questions sent to her by Mike Morgan, also present at the meeting Thursday evening. "They were just two simple questions, not public records requests that he was asking for. And you didn't respond to the questions. Not responding is not OK," stated Weed. Morgan, along with Ed Protas, has been a vocal critic of the hiring process at past council meetings. Both men have sent several emails to Stein requesting "public records" information. Stein stated that she felt she had addressed their public records requests. "I was not 'not responding' to the request. I took the tack that these were public records requests; there's a $100 deposit required before we can proceed to figure out the total cost," said Stein. Initially Morgan had indicated he wanted certain public records, subsequently boiling his request down to two yes/no questions for Stein for which he believed no records were required. He received no response to these questions. Pressing Stein, Weed said, "The point is we just need to respond." The two questions were: "Was there a board resolution delegating the council's powers and responsibilities as the contract review board to EDCO per paragraph 2.32.020 of the contracting ordinance?" And "Did the city manager set selection criteria per 2.32.120 of the contracting ordinance?" Morgan read both of the questions aloud during the "visitors communication" portion of the council meeting Thursday evening. Morgan added "Oregon Public Policy requires transparency in government. We seem to have a mayor, supported by two other councilors, that disagrees with that policy and the laws of this state that effect that policy." Councilor Weed asked Stein directly, "Did you receive anything in writing concerning EDCO's recommendation (of Mac Hay)? To which Stein replied "No, just Mac's résumé." Stein deferred answers to other questions to the city's attorney Steve Bryant. The furor over the hiring process does not seem to be diminishing, even though Hay's position as an independent contractor has begun. Councilor Weed's final remarks on the situation were, "I feel like we made a mistake (about the hiring process); we need to tell the truth so that the public doesn't think there are shenanigans going on." No other councilors spoke on the issue. Mayor Kellstrom was out of town.

Independent Contractor will fill City Position

(Published in the 9/15/2010 issue of the Nugget Newspaper) By Bill Mintiens The Sisters City Council on September 8, in their first regular workshop following a month-long recess, decided that the economic development manager's position will be filled by an independent contractor hired by the city. The manager will not be a direct city employee. The position will also not fall under EDCO's (Economic Development for Central Oregon) banner. Although the printed workshop agenda listed discussion about the "Economic Development Services Agreement," many assumed the workshop would be an "unveiling" of EDCO's recommendation for the economic development manager. It wasn't. EDCO was assigned, earlier this summer, the task of writing the position description and independent contractor agreement, posting the listing, interviewing the twelve candidates that applied, and submitting a recommendation to the council. None of the five councilors were involved in any of those steps, nor were they aware of the candidates or members of the interviewing panel. EDCO directed people to an online position description (www.edcoinfo.com), stating that "the independent contractor will provide staffing of the Sisters Business & Attraction Team (SBART) and coordinate with the City of Sisters and EDCO to provide economic development services for the greater Sisters Country area. This 10-month, $30,000 contract-for-services period begins September 1, 2010, and ends June 30, 2011, and will be paid in equal monthly installments by EDCO with funding from the City of Sisters." The $30,000 will come from the City of Sisters' budget and is intended to cover the independent contractor's wages and all expenses. City Manager Eileen Stein began the workshop with a spreadsheet laying out for councilors the positives and negatives of the position's reporting structure. She wanted councilors to decide if the position status should be "employee" or "independent contractor" and whether the position should report to the City of Sisters or EDCO. A majority of the discussion centered on the risk of legal entanglements. If the manager became a city employee, the city would be responsible for an on-the-job injury or an unemployment claim. The city would also be responsible for payroll and other employment taxes for the position, not to mention supervising a position the city has little experience with. "We're not economic development people," said Mayor Lon Kellstrom. The council clearly wants a cap on the $30,000 budget - and no lawsuit down the road dealing with the basis for employment. At this time there are no other sources of funding for the position. The challenge for the council is how to provide oversight to a position that, at this point, doesn't have a direct reporting structure, measurable goals or receivables. Indicating a reporting structure, measurable benchmarks and goals could look to a court like an employee relationship. City Attorney Steve Bryant advised the councilors to be cautious. "Looking at the EDCO independent contractor agreement, it sure looks like the 'independent contractor' is more of an employee, not an independent contractor. If you really want accountability with the position, make the person an employee," said Bryant. Early in the discussion it appeared that Mayor Kellstrom was in favor of the manager becoming an employee. "Based on Steve's (Bryant) comments, I suggest that the independent contractor route is very difficult," said Kellstrom. Councilor Weed felt there was a simple test for determining whether the person should be an employee or independent contractor. "Seems to me that we need to determine what we want this person to do, then determine whether it's an employee or independent contractor relationship," she said. Councilors Bogart and Thompson both agreed with Council President Bill Merrill that the person should be an independent contractor. "I agree with Bill, we can still have oversight (of the position)," said Bogart. "I'm concerned with how much an employee would cost, what with roll-up costs for employees these days," said Thompson. Mayor Kellstrom, mulling the pros and cons, said, "But if we don't like what's going on and we try to direct the person, that's when we could cross the line (into an employee relationship)." The mayor asked City Attorney Bryant what he could do. "If we tighten-up the independent contractor's agreement to avoid employment claims, can we still do it?" Bryant replied, "Just determine, as a council, the receivables you expect and I'll write them into an independent contractor agreement. I can make the agreement as tight as possible, but I can't provide any guarantees. There's always an inherent risk that the person will claim to be an employee," said Bryant. Nearing the end of the hour-long workshop, Councilor Weed offered a suggested set of deliverables for the position. These included surveying the entire business community, two or three community-wide meetings, and creating a central information location for business grants and loans. "There was really not enough time to hash things out. I plan to draft a message to Lon (Kellstrom) and Eileen (Stein) outlining my concerns and ideas for the position," said Weed following the workshop. Roger Lee, EDCO executive director, attended the meeting. "Our economic development managers (Prineville, Redmond, Madras) have deliverables which include the number of new jobs created, number of new companies, etc., within a given year," he said. Mayor Kellstrom asked attorney Bryant to draft an independent contractor's agreement by September 30, with an effective date of the contract October 1, 2010. He also asked Bryant to look into including language that offers one- and two-year options. The mayor is expecting EDCO to have completed interviews with the 12 applicants before September 30, bringing their recommendation to the council by that time. Kellstrom indicated the goal was to have a person "on board" by October 1.

Will Sisters have an Economic Development Director?

(This article originally appeared in the Nugget Newspaper 7/20/2010)

By Bill Mintiens The Sisters City Council budgeted and approved $30,000 for the 2010/2011 fiscal year for a part-time economic development director. The 2010/2011 fiscal year started on July 1. The money is there, the director is not. Back on May 6, Patty Vandiver, chamber of commerce president and SBART (Sisters Business Attraction and Retention Team) project manager, wrote a letter to the Sisters City Council stating, "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." Having just entered into their yearly budget cycle, the council dutifully discussed the proposal during budget committee meetings and decided to add the part-time position into the city's 2010/2011 budget. But councilors and budget committee members had reservations. Vandiver's proposal stated that the economic director should be "under direction of the Sisters Country Chamber of Commerce Executive Board of Directors." Councilor Sharlene Weed was a vocal opponent. "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. And I'm not in favor of the person reporting to a committee." Chris Tosello, a budget committee member, agreed with Weed. "I think there are too many gray areas about the position right now; we need clarification," said Tosello. 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. The council, clearly wanting clarification on the duties, responsibilities, and reporting structure of the position turned to Roger Lee of EDCO (Economic Development for Central Oregon) for assistance. EDCO helps to fund and manage economic development director positions in Redmond, Prineville, and Madras. Successful programs in both Prineville (acquisition of the Facebook facility) and Redmond (Altrec, T-Mobile, and several other businesses) give EDCO experience and credibility with hiring and management. When asked about EDCO's role in Sisters' hiring process, Roger Lee, in an e-mail dated June 25, wrote, "We are still trying to work out some of the logistical and legal details. Our board has officially not yet decided to proceed, however I don't see any real roadblocks. I expect that we will have a decision at our July 8 board meeting. Assuming that EDCO is involved as discussed, we would look to advertise, conduct interviews and ideally hire by the first week of August. I would expect that EDCO would coordinate the interviews, but that most of the hiring panel would be comprised of leaders in Sisters." EDCO's July 8 annual meeting, held at St. Charles Medical Center in Bend, went longer than expected, allowing the EDCO board no time for discussion. Roger Lee briefly mentioned the Sisters issue but tabled the discussion. Eileen Stein, Sisters city manager, thinks she understands what Lee means by "legal details." In an e-mail dated July 13, Stein wrote, "Last week Mayor Kellstrom asked me to give our legal counsel an agreement to review. It was an agreement between the city and EDCO relative to the position. So this is what the 'legal' issues probably are." Three weeks into the 2010/2011 fiscal year, there is no sign that Sisters is close to hiring an economic development director. Councilor Sharlene Weed, still opposed to the position and frustrated by the process, recently commented: "We have not had a proposal. What is the plan? Job description? Reporting structure? Measurable outcomes? I would rather use the funds to reenergize our Community Action Team... pay for a part-time director. That person could help 'stimulate' a number of community projects (leadership, outside voice, public art, etc.) as well as 'economic development.'"

Sisters Stations Pay Up on Gas Taxes

(This article originally appeared in the 6/29/10 issue of The Nugget Newspaper)

By Bill Mintiens Sisters gas stations are paying up on the city's new gas tax - but the fight over the tax may not be over. On June 4, Judge Alta Brady ruled that Sisters gas stations owed the City of Sisters the three-cents-per-gallon gas tax for the period of April 9-30. By the May 25 due date only two stations in Sisters had paid their bill - both Shell stations. They sent in payments of approximately $1,100 and $1,200 to the City of Sisters. The four other stations, prior to Judge Brady's ruling, were advised by the Oregon Petroleum Association's attorney, Paul Romain, not to pay the tax until a ruling was made. "I have told them (the local fuel dealers) not to pay it," Romain told The Nugget on May 21. The four stations that had not paid on the May 25 due date accrued penalties for nonpayment. "If dealers do not pay, the penalty is 1 percent of the tax and increases to 10 percent if payment is not received by the end of the month in which payment is due," said Eileen Stein, Sisters city manager. Since the ruling was handed down on June 4, all six dealers have now paid their gas taxes. The Sisters City Council passed an ordinance creating the gas tax back on August 13, 2009 as a means of generating funds to maintain and improve city streets. This was prior to a statewide moratorium on local gas taxes scheduled to take effect after September 28, 2009. For the fiscal year 2010/2011 which starts July 1, 2010 the council budgeted $126,000 in gas tax revenue for city streets. The Oregon Petroleum Association (OPA) took issue with the ordinance passed in August, immediately circulating a petition on behalf of the local gas station owners, getting the issue on the March 2010 ballot as a referendum. OPA's position was that the council's ordinance passed back in August should not be enacted until the people voted on it. And, with a vote not scheduled until March 2010, the ordinance would not be valid because it would be after the moratorium date for new local gas taxes. In the March 2010 ballot, Sisters voters approved the gas tax, paving the way for the city to set the payment schedule. The OPA has the right to appeal Judge Brady's ruling and plans to meet with station owners to discuss a possible appeal. "We are meeting next week regarding an appeal," said Romain. "I believe that the dealers are paying the tax and will get a refund of the tax if they appeal and are successful."

City Wins Gas Tax Fight in Court

(This article appears in the 6/8/10 issue of the Nugget Newspaper) Judge Alta Brady ruled last Friday that the City of Sisters' gas tax is legitimate. That means Sisters gas stations owe the City of Sisters the three-cents-per-gallon gas tax for the period of April 9 through April 30, 2010. The due date for their first payment was May 25 but, to date, only two stations in Sisters have paid their bill. Both of the Shell gas stations have paid their bills, sending payments of approximately $1,100 and $1,200 to the City of Sisters. The remainder of the stations, Sisters Pump House (McMeekin Enterprises), Space Age Fuel (Pliska Investments LLC), and the Sisters Mainline Station were advised by the Oregon Petroleum Association's attorney, Paul Romain, not to pay in advance of the pending court date with Judge Brady. "I have told them (the local fuel dealers) not to pay it," Romain told The Nugget on May 21. The stations that have not paid are now accruing a penalty for nonpayment. "If dealers do not pay, the penalty is 1 percent of the tax and increases to 10 percent if payment is not received by the end of the month in which payment is due," said Eileen Stein, Sisters city manager. The Sisters City Council passed an ordinance creating the gas tax back on August 13, 2009, as a means of generating funds to maintain and improve city streets. This was prior to a statewide moratorium on local gas taxes scheduled to take effect after September 28, 2009. The Oregon Petroleum Association (OPA) took issue with the ordinance passed in August, immediately circulating a petition on behalf of the local gas station owners, getting the issue on the March 2010 ballot as a referendum. OPA's position was that the council's ordinance passed back in August should not be enacted until the people voted on it. And, with a vote not scheduled until March 2010, the ordinance would not be valid because it would be after the moratorium date for new local gas taxes. "When does an ordinance get enacted, when the council votes on it or when the people vote on it? I believe it's when the people vote," said Romain. In the March 2010 ballot Sisters voters approved the gas tax, paving the way for the city to set the payment schedule. Judge Brady's ruling confirmed Sisters city attorney Steve Bryant's argument that the city council's action back in August "enacted" the gas tax ordinance - and the March referendum merely placed on hold the effective date of the ordinance. "When the ordinance was successfully referred, i.e. qualified for the ballot, the implementation (collecting the three-cents-per-gallon from the stations) was suspended. After the election we indicated we would implement the ordinance immediately. Legal counsel clarified that would be 30 days after the election date, or April 9," said Stein. Thus the first gas tax collection period of April 9-30, 2010, with payment due May 25. The OPA has the right to appeal Judge Brady's decision but, at press time, there was no indication an appeal was in the works. Phone calls to station owners owing gas taxes were not returned by press time. Council President Bill Merrill feels strongly that a gas tax was the right means of generating the necessary revenue. "We made a decision based on what's best for the people. We are elected to do the people's business and that's what we did," said Merrill. For the fiscal year 2010/2011, which starts July 1, 2010, the council budgeted $126,000 in gas tax revenue for city streets.

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