Rating Bend. Now What?



The Bend real estate market made the top of yet another list. US News & World Report recently ranked the Bend as the #1 place to purchase retirement property (property values in Bend have fallen so far, they’ve become a deal).

US News & World Report obtained price-to-income data for 384 metropolitan statistical areas from Moody’s Analytics and used this to express housing affordability. According to the article, “By comparing a market’s most recent price-to-income ratio with its longer-term averages, we can pinpoint areas that have become particularly affordable.”

Home Price Drop
The Federal Housing Financing Agency’s recent report stated that the Bend area (actually defined as all of Deschutes County) showed the largest average home price drop in the country, year over year, for the first quarter of 2010 at 23 percent. While national figures showed a drop of just 1.2 percent, the report showed that Bend area home prices had dropped 20.5 percent in the last year . . . the biggest drop in the country.

Raise Your Kids
BusinessWeek says Bend is one of the best places to raise your kids: The safe environment, quality schools and popular outdoor sports including hiking, camping, rafting, fishing, skiing, and rock climbing helped place us on that list.

High Taxes
Oregon’s personal income tax system consists of five separate brackets with a top rate of 11 percent kicking in at an income level of $250,000. That rate ranks the highest among all states levying an individual income tax. Oregon’s 2008 state-level individual income tax collections were $1,322 per person, which ranks 7th highest nationally.

The good news, however, is that Oregon levies no general sales or use tax on consumers, joining Delaware, Alaska, New Hampshire and Montana as the only states not to do so. Oregon’s gasoline tax stands at 25 cents per gallon, which ranks 21st highest nationally. Oregon’s cigarette tax stands at $1.18 per pack of twenty and ranks 25th highest nationally.

Doing Business
Oregon hasn’t influenced the 600 business executives who responded to Chief Executive magazine’s annual survey on the best and worst states to do business. In that survey, published in the May/June issue, Oregon plunged from 24th best to 38th, the biggest drop in the nation.

The respondents said the factors that influence them most in assessing a state’s business climate are its real estate costs, employees’ work ethic, state income and corporate tax rates and — and here’s the critical one for Oregon — “perceived attitude of government to business.”

Retired Singles
U.S. News & World Report said that the large number of singles over 65 years old and the abundance of outdoor activities especially our golf courses led U.S. News to select Bend as one of the country’s top 10 places for single retirees to live.

This particular article was very complimentary noting our great weather, recreational options, healthcare facilities and arts and culture. But be careful about believing all of these rankings: U.S. News said Bend is a proud patron of the arts and pointed to 15 art houses including Deschutes Gallery, which closed a couple years ago and Cascade Festival of Music, which also no longer exists.

Bend was listed #4 by BusinessWeek for startup businesses by taking into account that we have 4.3 patents per 10,000 population, 13.5 percent of us are creative professionals and 33.7 percent have a BA or higher.

Puzzled over why Bend would score so highly on the startup scale?

Bend lawyer (and legislative candidate) Jason Conger of Miller Nash LLP specializes in security and venture capital law and sits on two boards of directors for local startup companies: PV Trackers, a designer of self-guiding “Trackers” that track the sun across the sky, generating more electricity than standard, fixed solar arrays and Bend-based Pixelsilk, a software company that has created a content management system that is search engine optimized, a first in the industry.

Conger said: I think the local EDCO and the Bend Venture conference do a fantastic job, but we are fighting against a current that is out of our control regarding our business environment and tax structure. Oregon treats capital gains like ordinary income and now we have the highest individual income tax bracket in the country.  We’re defeating ourselves and if you were starting a company today and eventually selling the business Oregon is not the best place to do so.”

What can we do as a community to try and attract business?  Conger suggests that fundamentally we have to change the state’s attitude as it appears to be very anti-business, which creates a competitive disadvantage.

“The state has such an overt misunderstanding of how businesses operate. When you see things like Measure 66 and 67 you get the feeling that business is being singled out. If this can happen, when will the next shoe drop?  Do you invest knowing that you’ll be penalized for it? We need to be competitive in terms of business cost structure and driving toward getting a permanent college located here.”

Some Good Things
OregonProspector is Oregon’s official website for those interested in relocating or expanding a business in Oregon. It connects companies with Oregon communities delivering good jobs and unlimited economic opportunity.

A couple of important components are highlighted on the site that make doing business in Oregon more palatable: Abundant and low-cost energy. Oregon has reliable providers with tailored energy management programs, cash incentives and renewable power options.

Low workers’ compensation rates: Cumulative cuts in insurance premiums since 1990 total 57.5 percent; saving employers more than $10 billion.

What Lies Ahead?
Central Oregon is still one of the best places to live: low crime rate, good schools, exceptional environment. Doing business on the other hand has become more and more of a challenge. We still have a rather lethargic recovery for our real estate market including the number of foreclosure notices. Our continued high unemployment rate in our three counties is alarming.  We have high building fees and inadequate availability of industrial land in Bend and destination resort development is at a standstill.

While commenting on Boulder, which was #1 for start ups, BusinessWeek said: ¨When I ask longtime players about local government, they shrug. When I ask them about state government, the common refrain is that the best thing it can do is invest in education and otherwise stay out of the way. The lesson here is that it doesn’t take billions in government spending to create a thriving industry cluster. Instead, with a little luck and lots of hard work by residents, local economies can be shaped from the bottom up.”

Food for thought. pha


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