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Support for economic development wanes

Southern Oregon Regional Economic Development Inc. is charged with attracting companies to Jackson and Josephine counties and providing expansion tools for existing businesses.

But business leaders and economic development officials say it has been largely abandoned by government officials, many of whom ran for office on platforms of creating jobs.

"If they want economic development in this region, they need to make it their No. 1 priority," said Michael Smith, a former SOREDI business development manager. "Everything flows out of it, the jobs needed to make for a good economy."

Twice laid off from SOREDI and now associate director at MV Pro Audio in Grants Pass, Smith said much of the economic development the region has seen in the past two decades has happened without a lot of help.

"When I grew up here, everything was based on our natural resources, and we were prosperous because of those natural resources," Smith said. "When that went away, we began searching for a new identity, and what kind of region we wanted to be."

The e-commerce and manufacturing that emerged following the downturn in the timber industry has not been fostered and supported to create the job growth needed to replace what was lost, he said. As a result, "It just kind of happened on its own."

In some respects, SOREDI's story is an economic development version of "MoneyBall," doing good things on a shoestring budget and hoping for extraordinary results. Its reach has shortened, its staff reduced and furloughed at points this year.

"When I took the job in 2006, it was quite clear the funding had its upsides and downsides," SOREDI Executive Director Ron Fox said. "We are primarily a membership-funded organization with public jurisdictions and private supporters. Compared to our contemporaries, using any kind of metric, we receive less from our counties and major jurisdictions."

SOREDI can offer a lengthy list of clients it has assisted — from small retailers to diners and manufacturers — and the key role it played in such successes as recruiting Amy's Kitchen to the Rogue Valley. But in the scrum for public funding, it is an afterthought.

The recession hit SOREDI hard as support dollars from local governments wavered and fewer businesses were able to participate in its revolving loan program, further eroding operating revenue. That led to layoffs, and furlough days for the remaining four staff members.

Fox said aggressive sponsorship efforts combined with expense management staved off further furlough days.

"We originally planned for eight, and took three, but we've been able to cancel the remaining days through our fiscal year."

Mark Von Holle, a past SOREDI board president and co-founder of the Sustainable Valley Technology Group, thinks the lack of economic development funding has exacerbated a brain drain from the region.

"There is a mindset of scarcity here, we're just kind of used to that," said Von Holle, business development director for R.A. Murphy Construction in Medford. "How do we change that paradigm? By planning and devoting resources."

Economic Development for Central Oregon, SOREDI's counterpart in Deschutes, Crook and Jefferson counties, is the beneficiary of close to $300,000 in funding from those three counties, while Jackson and Josephine come up with $51,000 between them for SOREDI. Public officials are quick to point out those counties collect lodging taxes from resorts such as Sun River, Black Butte and Eagle Crest, none of which are replicated in Southern Oregon.

Contributions from cities, however, are equally lopsided. In the current year, Bend contributed $90,000 to EDCO, while Medford's contribution to SOREDI was $26,750. Both cities are close to 75,000 in population.

Redmond, with a population of about 26,000, gave $100,000 to EDCO. Ashland, with a population just over 20,000, gave $2,700 to SOREDI.

One particularly sore spot for some SOREDI backers has been the use of state video poker proceeds specifically designated by statute for other purposes. Jackson County long ago began funneling video poker money into the library system — a practice falling within the broad definition of "economic development" outlined by the state attorney general's office.

"Just about everything qualifies now," said Jackson County Commissioner Don Skundrick. "Even though we don't have as many people gambling with state games, more of it is being siphoned off for other things every session."

While county general fund dollars help support libraries, the general fund is also heavily supported by money that was originally approved as a library levy but later pulled into the general fund by a change in state law. The levy of 63 cents per $1,000 of assessed value represents more than 30 percent of the county's general fund levy.

Skundrick, a former SOREDI board president, said he understands the organization's dilemma as much as anyone. He also knows there have been plenty of fiscal gaps left from the loss of timber-related funding from the federal government. As a result, he agrees with the course, predating his election in 2010, to first fund law enforcement, mental health and other general fund needs.

"We don't create jobs," Skundrick said. "What the government can do is create a culture and climate to encourage job development."

Fellow Commissioner Doug Breidenthal said the conundrum of too few general fund dollars could be overcome in other ways.

"Philosophically, the idea is that business comes in and drives the economy and gives the government ability to pay for services that the community wants," Breidenthal said. "We've done many things like enterprise zones, but we have laws and environmental restrictions that limit companies wanting to come here.

"Everybody that comes here loves the livability and is willing to put up with higher tax rates and regulations because of the livability. If we create the right atmosphere here, jobs would be plentiful here."

John Rachor, a long-time businessman who was elected to the Jackson County Board of Commissioners in 2010, is quick to applaud SOREDI's performance, but considers comparisons to EDCO funding apples and oranges. Deschutes County's library system has its own taxing district providing $8.5 million.

"When you are in business, the experts will tell you the last thing you want to cut is marketing," Rachor said. "The same thing is true with economic development. But it's hard to keep the marketing going and have to shut off the lights, laying off a deputy or nurse in the health department.

"Those people at SOREDI do a good job with what little they have, and Ron does a good job with as lean of a budget as they have."

Without having the pieces in place to play the game, economic development is a long shot at best, said Bill Thorndike, who has led SOREDI's board in recent months.

"The reality is that if you don't have the resources in place, you can't attract additional resources to do the job."

Thorndike likened SOREDI's role to a fire department, with the equipment and training needing to be ready before the call comes.

"If someone calls and says they want to come to the valley," he said, "we'll be ready."

Smith spearheaded SOREDI's Rogue Nexxus efforts, building relationships among the region's tech companies.

"When you can't afford Michael, you can't do that," Thorndike said.

During a gathering of the Jefferson Regional Health Alliance earlier this week, Thorndike said 10 focus groups surveyed as part of a community health assessment listed "jobs and the economy" as an area needed for improvement.

"Before the Great Recession we were able to retain young middle-class families in Grants Pass, Central Point and Medford," Thorndike said. "During the recession, a lot of those young families lost jobs and left the area. The challenge we face is that we're an aging community and our young families are poor."

Funding economic development efforts can reverse the trend, he said. "We're going to miss out on the opportunities if we're not in position to be successful."

Skundrick said he sees passage of a proposed library taxing district as a partial solution, but aside from additional funding sources, collaboration is a central element in effective economic development.

"I would love to see Jackson County have a single voice working toward economic development. We would go a lot further," Skundrick said. "In my perfect world, rather than everybody doing their own thing — and I understand why they do — they would pull together, under SOREDI, and put the money they are spending toward that effort. They would hold SOREDI's feet to the fire with expectations — making sure those expectations are realistic."

Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter @GregMTBusiness, friend him on Facebook and read his blog at www.mailtribune.com/Economic Edge.

Ron Fox is the executive director of Southern Oregon Regional Economic Development, Inc. - Bob Pennell