February 25, 2005

By ANGELA TORRETTA

Klamath County commissioners voted 2-1 Thursday to allow tax breaks for a power plant near Bonanza. However, they did not reach an agreement with the power company on the specifics of the breaks.

The decision extends an enterprise zone from Klamath Falls to the power plant's location in the Langell Valley. Under state law, the county can grant tax breaks to new businesses within such enterprise zones.

The commissioners and Peoples Energy, the plant's developer, are talking about a deal in which the plant would be exempt from property taxes and the county would get cash payments instead.

Commissioners John Elliott and Al Switzer voted in favor of the enterprise zone. The newest commissioner, Langell Valley native Bill Brown, voted against it.

The vote did not include a decision on what the terms of the zone would be, but Cob representative Paul Turner said he would stand by his latest offer.

The commissioners' vote is the first step in an approval process.

Next, the question goes to the Klamath Falls City Council, and then to state officials. Then it will return to the county for final action.

Reading a written statement addressed to Turner, Brown said he didn't think Cob should be granted an enterprise zone because he believes economic incentives should be used to lure businesses who otherwise wouldn't locate in the county.

"I do not feel the need to provide you with tax incentives, as your field representative hand-picked this location, so there was no competition for this site," he said.

Brown also disagreed with statements that Switzer and Cob representatives have previously made about the effect of taxes on school finances. Under state law, they have said, the money Peoples Energy paid in taxes would have been subtracted from the state aid the county school district gets.

Brown said he reached his conclusion after talking to education officials.

Switzer stood by his original statement, and cited a law firm he had consulted with.

Elliott said he liked to think that Klamath County was competitive in getting new industry. He said that even after the plant's tax breaks expire in 15 years, the facility's tax bill will be twice as large as any other in the county.

Switzer reminded people in the audience Thursday that voters had approved measures capping property taxes, leaving governments searching for other ways to find money.

Decisions he had to make during the water crisis of 2001 were the only others that have been as gut-wrenching as this one, he said.

Talks about whether to extend an enterprise zone started last year, but were delayed until the state granted the plant an operating license.

Turner has offered a payment equal to half of the assessed property tax value, up from a previous offer of a straight $1 million a year.

By his estimate, if the plant is built full-size, at 1,160 megawatts, the county would get $3.2 million the first year, and the amounts would taper off to $2.5 million by year 15. If the plant is built half-size, the amount would start at $1.9 million and be $1.6 million by the end.

In return, commissioners countered with three separate offers.

Brown asked Cob to pay full taxes or pay a lump sum of cash up front so the county could start collecting interest.

Switzer asked for a set amount of $2.8 million and Elliott asked for $3 million. Both said they didn't want the amount to hinge on the size of the plant.

In Thursday's meeting, Turner said he was going to stand by his original offer, but he did have a "minute amount of wiggle room."

Switzer said it would be preferable to get a set amount each year, instead of figuring out every year what it would be. Elliott worried that if Peoples Energy went off a state-assessed property value, there would be disagreements and the process would end in a legal battles.

Turner said he was receptive to the idea of a straight-across-the-board sum.

Before coming to a decision, commissioners heard from the Bonanza Fire Department and about an hour and a half of public comments from people both for and against extending the enterprise zone.

Representatives from the Bonanza Fire Department were concerned about having to fight fires at an industrial complex.

Turner invited to pay for a ticket to fly firefighters to one of Peoples' other plants to see what sort of fire prevention systems they have.

Lyn Brock, a member of rural-rights group Save Our Rural Oregon, questioned Switzer and Elliott personally, excluding Brown.

"I keep wondering, and people keep asking me, if you have any integrity," she said. "Do you represent the majority? No. This is all about the almighty dollar."

"Just say, I accept your votes and I accept your paycheck, but I don't represent your best interest."

Elliott and Switzer later in the meeting declined to respond to comments questioning their integrity. Switzer said he would prefer to disagree in a gentlemanly fashion and was disappointed by the personal jabs.

Many of the business owners, economic development officials and union representatives spoke in favor of the enterprise zone that spoke at previous hearings and meetings.

Klamath County Chamber of Commerce Director Stephanie Bailey defended the integrity of the commissioners and the Chamber's decision to support the plant after it was changed from a water-cooled to an air-cooled operation.

"We are not just blindly supporting it," she said.