With grant on the line, Bend looks to create airport jobs

Sept. 21, 2009


Sep. 18--In the wake of the recent shutdown of Epic Air, the city of Bend is looking for ways to bring more jobs to Bend Municipal Airport ? and if it doesn?t succeed, it could risk having to pay back more than $200,000 for a grant that helped bring Epic to Bend.

The kit plane maker moved to Bend in 2004, after the city applied for nearly $1.4 million in state grants and loans to pay for infrastructure development on the east side of the airport, where the company was located.

In 2005, the city was officially awarded an $867,335 loan and a $500,000 grant for the work, but it came with a catch: To keep the grant money, Epic or another company using the new airport infrastructure would need to create 214 jobs and maintain them for at least a year.

So far, the Oregon Business Development Department has verified 132 jobs that met the requirements for the grant. Bend has until next summer to come up with the remaining 82 jobs, but city officials say they?re already working hard to bring in new companies that could help fill the gap and prevent the city from having to come up with the cash if it breaks the contract.

City Manager Eric King said the city has been talking to staff from Economic Development for Central Oregon about boosting employment at the airport and will start bringing plans to the state.

King said the city?s top priority is helping to create the 82 jobs, but it will float the idea of an extension on next summer?s deadline if the economy doesn?t improve and those jobs are hard to find.

?We?re going to begin those conversations (with the state) in the next couple of weeks,? he said. ?In terms of getting an answer from them, I have no idea how long it?s going to take. We want to take some responsibility here ? we?re not putting this all on (the Oregon Business Development Department). The city needs to work aggressively with EDCO, because we want the jobs, that?s where we want to aim. We don?t want to aim at restructuring the agreement and not paying back funds.?

Epic, which once had plans to employ 4,000 workers in Bend, had about 160 people on staff about a year ago, but began making significant layoffs in January. By July, with the company facing cash-flow problems and a lawsuit over its ability to fill orders for new planes, nearly all of the workers were laid off. Last month, a federal judge ordered a receiver to be appointed for the company as it moves into bankruptcy proceedings.

Several options

Finance Director Sonia Andrews said the city has several options if it is unable to find some or all of the new jobs.

First, the city could pay back the state at a rate of $2,500 per job that isn?t created, or a total of $205,000 for all of the 82 required positions.

Alternately, Andrews said the city might be able to wrap the outstanding grant money in with the 25-year loan that was awarded to the city to help pay for the infrastructure.

Or, the city could ask for a two-year extension to next summer?s deadline.

If the city gets an extension, however, it might have to start over and find 214 new jobs, not 82, Andrews said. She hopes state officials would be willing to compromise and grant an extension for just the remaining jobs.

?Given the completely unforeseen and worldwide recession ? we?re not talking about a mistake somebody made here, we?re talking about worldwide recession that nobody saw in 2007 when we entered into the agreement ? given that situation, we hope they will extend it for two years for 82 jobs,? she said. ?That seems like a very reasonable request.?

Mike Solt, a regional coordinator with the Oregon Business Development Department, said the state gives grants to many cities for projects tied to job creation and terms of the agreements are usually met. But Bend isn?t alone in having trouble finding businesses that can create new jobs, he said, adding that his department tries to be flexible to help cities with economic development rather than holding fast to the agreement and looking for money.

?We would much prefer to see the 214 jobs created at the Bend Airport,? he said. ?We certainly hope for that.?

?A good opportunity?

Eric Strobel, EDCO?s Bend manager, hopes the city won?t have to start negotiating ? that it will soon have businesses creating jobs at the airport. It?s possible that if a new company moves into the facility previously used by airplane maker Cessna, those jobs could be counted toward the grant even though the building isn?t located in the same area as Epic?s, he said.

Cessna is transferring its Bend production to its main plant in Wichita, Kan.

Strobel knows it?s a tough time for many aviation businesses, but said the departure of businesses like Cessna and Epic has created an unusual opening for something new.

?There?s also the possibility in two years of perhaps a company building over on the east side (of the airport), he said. ?It?s hard to know and these projects take a long time, and it?s a risk to take to move ahead, but it?s also something that EDCO is working really hard on and the city is working really hard on to get some companies interested in this facility. We haven?t had a spot on the airport for 10 years to put a company. It?s not that we?re happy that Cessna left, but it?s a good opportunity to get a company in there.?

Erin Golden can be reached at 541-617-7837 or at [email protected].

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