Cob seeks 15-year tax-free deal
http://www.heraldandnews.com/articles/2004/07/23/news/top_stories/top1.txt

Friday, July 23, 2004

By BROOK REINHARD H&N Staff Writer

The Board of Klamath County Commissioners will help determine the future of a proposed power plant near Bonanza on Aug. 24, when it decides whether to extend up to $71.3 million in tax breaks to lure the plant to Klamath County.

Cob Energy Facility spokesman Rob Trotta is looking for a 15-year tax-free deal, in which the company would contribute $1 million a year to the county instead of paying any property taxes.

While the county has authority over property taxes for the power plant, permission to build the plant must come from the Oregon Energy Facility Siting Council. The council is expected to decide within a few months whether to grant a license for the plant.
 

Local opponents of the power plant have vowed they will appeal any siting approval to the Oregon Supreme Court.

Before granting property tax relief for the plant, Klamath County would have to expand the Klamath Falls enterprise zone to include the plant site. Boundaries of the zone would be redrawn to extend in a narrow corridor along Highways 140 and 70 through Olene, Dairy and Bonanza, and then southeast of Bonanza to the Cob site.

Klamath Falls and Klamath County must both approve the proposed 115-acre addition for anything to occur; the City Council meets at 7 p.m. Aug. 16 to consider the extension, while county commissioners will vote on the extension at a hearing set for 10 a.m. Aug. 24.

While redrawing boundary lines is a relatively easy task, the commissioners face tough questions on the economics of the issue: Does the county want to encourage the construction of a power plant in a rural area? And how much property tax revenue is the county willing to give up to bring a power plant here?

Commissioner Steve West has opposed the power plant for more than a year, and opposes the extension of the enterprise zone. Commissioner John Elliott is in favor of an extension, but unsure how much of a tax break to grant Cob. Commissioner Al Switzer was at a

conference in Salem and unavailable for comment this week, but he has consistently supported the Cob project, maintaining that it would be a boon to Klamath County's economy.

On the surface, the deal offered by Cob looks like a financial debacle for Klamath County. While the county would receive $15 million in contributions over a 15-year period, it would be losing $71.3 million in property tax payments, according to an analysis done earlier this year by Klamath County Assessor Reg LeQuieu.

If the county doesn't offer Cob a tax break, the plant may not be built. But that may not mean the end of the power plant issue - Trotta himself has consistently called the power plant location "energy central" and said if Cob doesn't site here, someone else will.

So why offer Cob a tax break at all?

First, Trotta said, if there were no tax break, 42.6 percent of the property taxes would go to schools, and state school support would be reduced by that amount, essentially negating that portion of the payment. The county would be left with $41 million in property taxes for other taxing districts.

Trotta said the county should grant a fair deal to Cob because the power plant has been a "good corporate citizen," and implemented changes at the community's request, such as switching to an air-cooled design instead of water-cooled, which would have used 10 million gallons of water a day.

"Who do you want to do business with?" he said. "Do you want to do business with a company that will be responsive to your concerns? Or do you want to go back to the poker table?

"This is now, this is reality. You've been to those budget hearings. Things are not good there. Here's a real opportunity. Not discussion or concept. Real."

When the Cob proposal is presented at the Aug. 24 hearing, the county may have its own advocate in the Klamath County Economic Development Association. KCEDA can prepare its own counterproposal to Cob's plan, but KCEDA's executive director, Trey Senn, said no decision has been made yet on the matter.

Trotta said he isn't planning to accept any proposal more costly than his $1 million a year plan. He said the county commissioners already voted in November 2002 to accept the plan.

However, commissioners were unable to offer an enterprise zone to the company at that time because Cob didn't qualify. That changed after state Rep. Bill Garrard, a Republican representing southern Klamath County, sponsored HB 2671 in the 2003 session, a bill which allows companies with expensive facilities but few employees to qualify for a seven to 15-year tax break.

To qualify now, Cob simply has to hire at least 10 full-time employees at 150 percent of the county's annual wage and invest more than $200 million in capital construction. Since sponsoring the bill, Garrard has started harboring doubts about his legislation.

"Well, I've kind of changed my position," he said. "I'm a little more angry about the fact that they're locating it on (exclusive farm use) land."

Garrard, a former Klamath County commissioner, said he's no longer sure the plant should be sited. He said if he were voting Aug. 24 on the enterprise zone, he would oppose it.

The opponents of the Cob Energy Facility hope commissioners won't pass a tax-free deal with the Cob.

"The few permanent jobs that it's going to bring to Cob doesn't seem compatible to the idea that the enterprise zone is," said Lyn Brock, a member of anti-Cob group Save Our Rural Oregon. "I thought the enterprise zone was to create a great number of new jobs."