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Mayor gets aggressive on business recruitment

OUTLOOK PHOTO: JOSH KULLA - Bella Cupcakes on Main Street in downtown Gresham used the Garage-to-Storefront program to open what is now a thriving business.The city is hoping to replicate the simplicity and ease of its Garage-to-Storefront program — the innovative policy that waived fees that the city usually charges to business to inspire growth — to help along traded sector jobs

In 2010, the city launched Garage-to-Storefront which created 144 new or expanded businesses and filled 225,000 square feet of vacant storefront by waiving fees.

It was simple. And if the concept worked once, Mayor Shane Bemis said at the policy discussion on April 14, it can work again.

City staff presented a plan for boosting traded sector jobs in Gresham by drafting a series of incentives to make Gresham competitive in industrial development both in the state, country and globally.

In 2011, the council approved a strategy on economic development traded sector jobs that focused on manufacturing, clean technology and professional, scientific and technical services.

In its new iteration being proposed, the traded sector job strategy would be more focused on manufacturing, which has been Gresham’s strength.

To draw in business, the staff has proposed incentives for developers as a creative solution to address the issue of alleviating high upfront costs for new construction.

The city has learned that Gresham’s fees and system development charges are generally comparable to the Portland metro region, but from a national and global perspective, Gresham’s upfront costs are high.

Shannon Stadey, director of economic development services in Gresham, said often companies are scoping out Gresham before the city is even aware of it and looking for a reason to eliminate a location from the list.

The city charges about $5 to $7 per square foot — high when compared to Salem which charges about $2 per square foot, Stadey said.

“I will tell you, in conversation with folks in Salem, they still get beat up about their price,” Stadey said. “Many states are putting land on the table for free.”

Stadey said the city has offered a similar incentive package for reduction in system development charges and other fees for prospective leads, but this process usually takes place after the city has been chosen in the site selection process.

If the city adopts a policy, Stadey said, it would eliminate uncertainty from prospective businesses and could also encourage growth of existing Gresham companies by addressing upfront project costs, which may deter a company from expansion.

Stadey presented a tiered model of incentives that would include a full forgiveness of system development charges and development fees for projects larger than $75 million.

For projects valued from $30 million to $74.9 million, incentives could include a partial forgiveness of system development charges, land-use fees, building permit fees and mechanical equipment permits.

Stadey said the city would pick up the costs associated with the discounts. To make this work financially for the city, funds could come from projected utility rate revenue, community service fees collected through the city’s enterprise zone program or the general fund.

Though the councilors praised the staff’s work, many pushed Stadey and her team to be even more forceful in courting business.

“I still don’t think it’s aggressive enough,” Bemis said. “When we look back at the companies we have tried to recruit, I’m not sure this helps us. It certainly doesn’t hurt, but I’m not sure it gets us where we want to be.”

Bemis said the simplicity of the Garage-to-Storefront program was what made it “pop.”

“The reality of economic development in today’s world, as I see it, is if somebody comes in and it’s a $15 million project, we’re all going to get together and say get them here and give them everything,” Bemis said. “My point is, what’s wrong with having a year’s worth of ‘nothing’ “ in terms of development charges.

“If you become the first jurisdiction that memorializes that we’re open for business, I think that’s pretty powerful,” Bemis said. “In terms of economic development, we have to play the long game.”

Bemis said bringing in big business also provides a boost to smaller businesses and attracts new restaurants and shops.

“I don’t think we have anything to lose,” Bemis said. “We have the land and the people and the tremendous quality of life. I think we should...see if it catches fire.”

Councilor Lori Stegmann agreed, saying “let’s go out on a limb.”

And Councilors Kirk French and Karylinn Echols agreed, saying that filling vacant land with good paying jobs was a priority that should be pursued.

However, not everyone was ready to throw caution to the wind.

“I am a very aggressive person in business. I don’t want to sound like I’m anti-aggressive. But I just want to make sure we’re grounded in this as well,” Council President Jerry Hinton said. “We want to make sure we’re grounded in what we could lose because there is a lot to lose. It’s hard to un-ring the bell once we set a precedent.”

Hinton said some existing companies might feel slighted if the city gives everything away to new ventures.

Bemis still pushed for the city to be bold, saying that the Garage-to-Storefront was successful in a way no one could have expected.

For example, Debbie Phillips, owner of Bella Cupcakes at 101 N. Main Ave. said the Garage-to-Storefront was the push she needed to open her business in the city.

Phillips was producing cupcakes out of a home-licensed kitchen and had been considering opening up in a space but didn’t know if she could afford it.

“It made the whole process easier,” Phillips said of Garage-to-Storefront. “Less permits and things that you had to deal with and less money out of pocket. It did push me to jump off the cliff and do it.”

Kristin Chiles, Gresham’s small business coordinator, said businesses like Bella are what the program was all about.

“She started in her home, expanded to a small storefront on Third Street and then expanded again to a larger location on First and Main Avenues,” Chiles said. “She took advantage of the incentive twice and the city saved her about $7,250 total in city-related fees and charges for tenant improvements and licensing.”

Stadey said there may be drawbacks to having the city cover system development charges, and one of those is that Gresham would need to make sure it would have enough staff to do the work to make such a program happen.

“If we were to do this, say open for business and leave your checkbooks at home, what’s the downside?” Echols said. “The money’s not coming in, but it’s not coming in anyway.”

Stadey said the staff will craft a proposal on the system development charges, based on the councilors input, and return for further discussion in May.

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