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.

Hay tapped for Economic Development job

This is the Sisters Talk podcast with guest Mac Hay.

(This article was published in the 10/6/2010 Nugget Newspaper) by Bill Mintiens

Mac Hay will be Sisters' part-time Economic Development Manager. EDCO (Economic Development for Central Oregon), after culling down the applicants to four, recommended Hay to the council. The recommendation was passed on before the council's regular workshop last Thursday. Councilors voted 4-1, with Councilor Sharlene Weed dissenting, to accept the recommendation. Hay was a leading candidate for the job, presently serving as the volunteer chair of the SBART (Sisters Business Attraction & Retention Team), a volunteer group of area business people. Hay is looking forward to the challenge. "The energy and creativity of our community is needed to make this effort of economic vitality and stability a success. Together, we have the passion, talent and resources to create an even more vibrant community. I look forward to working with the citizens of Sisters to retain jobs, attract businesses with sustainable jobs and add to an economy that has tremendous potential," said Hay. Although the recommendation of Hay was no surprise to those following the process, the city council has wrangled over the matter for several months. The need for the position, the recruiting process, and the position's scope of work have been controversial since last spring. The economic development manager's statement of work reads: "Contractor shall develop specific performance measures and deadlines for the period of this agreement (in consultation with the Sisters City Manager and as approved by the Sisters City Council) within the first 30 days following the execution of this agreement." During last Thursday's regular council meeting, Councilor Weed aggressively challenged the hiring process, the lack of transparency with the public, and the scope of work for the position. "I've never seen anything like this. I can't imagine, in my job (Sisters Habitat for Humanity Executive Director), hiring someone and then asking them to develop their own performance measures," said Weed. Weed was referring to her repeated requests for the council to discuss and create measurable "deliverables and benchmarks" to be written into the statement of work. Similar positions in Prineville and Redmond have measurable goals and benchmarks. Council candidate David Asson, speaking during the visitors communication portion of Thursday's regular council meeting, said: "I'm troubled that it's taken five months to write an agreement. Here it is September 30 and you're voting on an agreement that is supposed to start tomorrow. I personally think the independent contractor designation won't fly. Pushing it through now does not make sense to me. If there's any way to spend a few more days to address this I think you should." Following the meeting Asson added, "The city is going to spend $30,000 on this program. We need this kind of economic development, but I personally think the program needs a lot more money than that to be successful. If we blow this $30,000 we may not get community support next time around." Budget committee member Gwen Chapman said, "I am a bit confused as to how the city could have recruited for this contractor before the services to be provided and performance expectations were decided on by the council." Back in July EDCO was asked by Mayor Kellstrom to "take the reins" regarding the position description, hiring process, and interview panel. Neither city councilors nor city staff were involved in that decision. "My choice was to keep the council out of it in favor of an arm's-length relationship in the hiring of the economic development director," Mayor Kellstrom said last July. "We need an arm's-length arrangement, through EDCO, to keep the council out of trouble. We don't want to be accused of using public funds to hire a 'friend' of the council." That "friend" was Mac Hay. Concerned that the council and taxpaying residents were not included in the process of choosing Hay, Councilor Weed, last Thursday evening, asked Mayor Kellstrom several direct questions. "Why were councilors excluded from this process, and why do we not know who the candidates were, or who sat on the interviewing panel? Was anyone from Sisters represented on that panel?" asked Weed. Mayor Kellstrom, shrugging his shoulders, indicated as he had before, that he made the choice to "keep the council at arm's length from the process" and "I don't know who was on the interviewing panel." Weed asked Hay, sitting in the audience, who was on his interviewing panel. Hay took a moment and answered, "I don't feel like I'm the one to divulge that information." Stepping into the conversation, City Attorney Steve Bryant said, "Why not have Eileen (Stein, Sisters city manager) e-mail EDCO and ask them? They may tell you or they may not." Weed said she would vote no on EDCO's recommendation because of her concerns with the process. Councilor Pat Thompson defended the statement of work and said he was comfortable with the process. "We have to expect a general statement of work (versus specific deliverables) because we don't know what to expect going forward," he said. "I think this statement of work does a good job and, frankly, we need a man in the trenches right now." Commenting on the entire process of recruiting for the position, Thompson said, "At no time did I not understand what was going on. This (hiring for this position) is the logical next step to keep our city on the right path."

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 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.

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