• Bend Business Roundup 2-14-20

    By on February 14, 2020

    Happy Friday and happy Valentine’s Day,

    Here’s some stuff you might like. I hope you’ll take a minute (literally) to take part in.

    Business: A town described as “127 miles south of Burns,” is going to be remote and tiny and Fields, Oregon does not disappoint in either department. It’s at the southern end of Steens Mountain, which is itself remote. But the northern end of the mountain, anchored by the metropolis of French Glen, is relatively accessible for people going to see the Steens. In contrast, you have to really work at it to go to Fields. I’ve only been there once, on an epic drive from Bend with my buddy who’s also a politically inclined lawyer (imagine being in the car with us for eight hours and count your blessings you weren’t with us).

    Anyway, unbeknownst to me at the time, apparently Fields is home to some really good milkshakes. We got gas at The Fields Station, but didn’t venture inside, unfortunately. I won’t make that mistake again.

    Law: For years, the Oregon has waged a war of attrition against agreements which restrain employees from competing with their former employer for a period of time after termination of employment, aka non-competition agreements or as lawyers say when they think no one is listening, non-competes. Employers can only hope to enforce them against well-paid professionals, must provide a copy of the agreement before the employee’s start date, etc. At least 90% of these I see are unenforceable under Oregon law.

    Now, in a law that went into effect January 1, the legislature has conditioned enforceability of a non-competition agreement on the employer providing to the former employee a copy of the signed agreement within 30 days of the termination of employment. So this is one more hurdle employers must jump, and this one at the end rather than at the beginning of the employment period.

    Politics: Allow me to try to tie together two recent developments: (1) There are now more registered Democrats than registered Republicans in Deschutes County, for the first time in a very long time; and (2) the Democrats appear at least somewhat likely to nominate an actual socialist, Bernie Sanders, as their presidential candidate.

    First of all, some clarity around what I mean by “socialist.” If you’ve hung around conservative folks, you may have heard them refer to relatively mainstream Democrats as “socialists.” Barack Obama, Bill Clinton, etc. Those guys aren’t socialists. Eugene Debs, a five-time presidential candidate in the early 20th century was a socialist at a time when socialism was on the rise, with the 1917 Russian revolution ultimately creating the first modern nation-state based upon the social, i.e. government, ownership of the means of production. Despite the historical moment, Debs never received the nomination of a major party – he ran as the presidential candidate of a series of small socialist parties.

    Between Debs’s last run for president in 1920 and today, the Soviet Union collapsed in large measure because its socialist economy couldn’t keep up with the West, and its satellite socialist countries all morphed into something resembling capitalism. China became first socialist via the Chinese revolution and then veered toward capitalism when socialism finally starved enough Chinese people that the Communist Party couldn’t help but reform. Socialism, at least the hardcore variety of it practiced in the Soviet bloc and today in North Korea and Venezuela has largely been discredited as a useful economic system.

    The other thing that happened between Debs and today is that Bernie Sanders in 1988, then mayor of Burlington, Vermont, spent his honeymoon in the Soviet Union, praising housing affordability and badmouthing American foreign policy, which at the time was largely aimed at containing and besting the country in which he spoke. Sanders is the real deal – a socialist who even calls himself that.

    Which brings us back to Deschutes County. Registration has trended Democrat for years, fueled by in-migration from left-leaning places like Portland, Seattle and California and more recently due to the relative unpopularity of Donald Trump here. If the Democrats nominate Sanders, whose self-professed ideology plants him well outside the ideological mainstream of most Americans, they run the risk of alienating more moderate voters who have found a home in the party recently. Some voters will never again vote Republican because that party nominated Donald Trump; Sanders is an extreme enough character that he may similarly drive voters away from a Democratic Party that formally embraces socialism.

    (And for those who would point out that Trump is also outside the mainstream, you’re right that he is in demeanor and, um, approach. Part of my point is that the Democrats might nominate someone who may repel some voters, kind of like Trump has.)

    Et cetera:  I wonder if you could do me a favor and take this one-minute (seriously, one minute) survey about the Bend Business Roundup. It’s anonymous and really easy. Having assaulted in-boxes with this thing for a few years now, I want to make sure I’m giving you all what you want and need! I greatly appreciate the input.

    Your friends can sign up to receive the Bend Business Roundup here. No sales, no spam. Just the weekly email you’ve come to know and love.

    Have a great weekend!

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  • Bend Business Roundup 2-7-20

    By on February 7, 2020

    Happy Friday,

    Here’s some stuff you might like.

    Business: Aside from Nike, it’s hard to think of a more recognizable Oregon-based business than Les Schwab Tires. Here in Bend and presumably throughout other snow-afflicted cities in the Pacific Northwest, the twice-annual trip to Les Schwab to get snow tires put on (Fall) and taken off (Spring) is a region-defining ritual. Of course, here in Central Oregon Les Schwab, founded in Prineville and now headquartered in Bend, is one of the area’s most enduring business success stories.

    Les Schwab has always been family-owned and since the patriarch’s death in 2007, the ownership has been broken up between grandkids and great-grandkids. As these things often go, the heirs are now seeking a buyer. Amid the concerns about the future of the Bend headquarters and Prineville distribution center once the company is acquired, I wonder if Les Schwab might end up being employee-owned. Schwab already has a culture of sharing half each store’s profits with its employees, and promoting from within – taking the step to employee ownership, in which the employees via a trustee advocating on their behalf, would purchase the company from its present owners, typically via a note payable over time, would not be a huge one culturally.

    Law: If you’ve owned a business, you’re familiar with an employee identification number (EIN), which is kind of like a social security number for your business, issued by the IRS. Surely one of the best things the IRS has ever done (admittedly not a high bar) is to establish its EIN website, where people can pretty easily get an EIN for their business via a five-minute or so process. You just enter some information about you and your business and the site spits out an EIN right away. It works really well.

    Here’s the weird thing – the website has hours of operation, specifically Monday through Friday, 7 am to 10 pm Eastern Standard Time.  This is the only self-service website I’ve seen that has hours of operation, and I cannot for the life of me understand why this one does. The Oregon Secretary of State lets you register a new business any time during the day, but you have to wait for people there to review before it’s actually entered into the state’s system, so that can take a little time. But the IRS site gives you an EIN as soon as you hit submit, indicating that the process is entirely automated. Do the IRS servers need to rest between 10 pm and 7 am Eastern? I don’t get it.

    Politics: The words “the legislature is in session” ought, by now, to strike fear in the hearts of Oregonians. Well, the Oregon legislature is in session for its mercifully brief but perhaps not brief enough 2020 “short session.” The governor and her allies in the legislature have renewed their push for a cap and trade bill which, in its most recent iteration, would raise fuel prices west of the Cascades and in Bend and Klamath Falls (but not the rest of Deschutes County and Klamath County), unless one of the counties east of the Cascades opts into the program, in which case the increase would extend statewide.

    The whole scheme is intended to drive up fuel costs to deter people from using fuel, and to raise billions of dollars which the state government would, without any chance of graft or waste, dole out to programs intended to combat climate change. If you believe, like I do, that the climate is changing and that humans probably play some role in that change and the change is likely to have some negative consequences, you might be inclined to support cap and trade until you realize that for all the cost that it places on Oregonians it would have no perceptible impact on the climate. That’s because Oregon is barely even a rounding error in global greenhouse gas emissions. So, the bill would make Oregon even less affordable than it is already without actually doing anything meaningful to solve the problem it intends to solve.

    Et cetera:  Have you seen the video of a coyote appearing to recruit a badger to hunt together? Turns out coyotes and badgers do hunt prairie dogs and ground squirrels together sometimes. The coyote stays above ground and the badger digs below ground so the prey doesn’t have anywhere to go. The cooperation ends, it seems, when the prey is caught – whoever catches it eats it.

    Your friends can sign up to receive the Bend Business Roundup here. No sales, no spam. Just the weekly email you’ve come to know and love.

    Have a great weekend!

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  • Bend Business Roundup 1-31-20

    By on January 31, 2020

    Happy Friday,

    Here’s some stuff you might like.

    Business: This here nifty map tool from Harvard’s Joint Center for Housing Studies shows the ratio of median home price to median income by metropolitan statistical area (“MSA”), from 1980 to 2017.  When you get to 2017, there’s an interesting pattern. On the east coast, the only localities with a ratio of median home price to median income of five or more (e.g., median income $50,000, median home price $250,000) are the New York metro, Boston metro, Miami and Naples, FL metro areas. There are zero metro areas in which the ratio exceeds eight (e.g., median income $50,000, median home price $400,000).

    The west is a very different story. Starting with Denver and west from there, there are zero MSAs with a ratio of three or less. Bend-Redmond MSA, Portland and Seattle are in the same ratio range as New York metro and the other expensive east coast mega-cities. San Diego, L.A., San Francisco and Josephine County, Oregon (!) outpace any ratio east of Denver, Josephine County presumably due largely to income issues.

    Something about the west causes us to pay a lot more to live here – maybe call it a summer without humidity tax?

    Law: There are so many aspects of the impeachment trial that are, procedurally speaking, just weird. First of all, you have 100 senators, who, how shall I say it, did not obtain their positions due to a preference for not talking, being forbidden to talk or to use electronic devices. You also have the chief justice of the Supreme Court, John Roberts, presiding over a process that is by design political, despite the legalistic window dressing.

    When senators want to ask questions, they have to submit them in writing, and the question is then read by Roberts. Well, Senator Elizabeth Warren, who is confined to the senate chambers when she surely would rather be in Iowa trying to become the first President of the United States with a DNA test to prove she has a Native American ancestor six to ten generations ago, had a question and it was a doozy. Chief Justice Roberts read the question, which asked whether the fact that Republican senators refused to allow witnesses during the trial would “contribute to the loss of legitimacy of the Chief Justice, the Supreme Court, and the Constitution?”

    Judges, even those that aren’t the highest-ranking judicial officer in the country, don’t really appreciate someone questioning their legitimacy or that of the court or, I would think, the Constitution. Roberts’s grimace in reaction indicates he will probably be very happy to conclude his role as presiding officer over the impeachment trial.

    Politics: One of the (myriad) things we here at BBR were hyperventilating about during the 2019 legislative session was something called the Student Success Act, which levies an economic activity tax on lots of people and businesses who sell goods and services in Oregon. It was apparent to everyone that the tax  (essentially a sales tax hidden from the consumer/voter) would drive prices higher. I don’t think there was even that much of a fight about that issue; rather, the bill’s proponents mostly argued that the cost increases would be worth it because the corresponding increase in school funding would drive better education results.

    Fast forward to now, and it turns out the tax is driving up the cost of building schools. The North Marion School District has been hit with a change order increase of $180,000 from the contractor performing school bond projects for the district. The reason? Price increases for goods and services related to the tax hike. The tax to improve education is making it more expensive to provide education, and to do most anything else in Oregon too. And while the North Marion School District would probably accept the higher construction costs in exchange for the presumably significant increase in funding it will receive due to the tax, similar cost increases are impacting people, businesses and governments that don’t receive revenue from the tax. I hope someone independent from the politics of this whole thing can run an analysis to compare the costs imposed by the tax with the educational benefits it generates.

    Et cetera:  Quick: after English and Spanish, what is the most commonly spoken language in Oregon? I would have gotten this wrong. 

    Your friends can sign up to receive the Bend Business Roundup here. No sales, no spam. Just the weekly email you’ve come to know and love.

    Have a great weekend!

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  • Bend Business Roundup 1-17-20

    By on January 17, 2020

    Happy Friday,

    After a nearly two-month hiatus, the Bend Business Roundup is back. The emphasis in weekly(ish) is on the (ish), you see.

    Business: According to something called CloudKitchens, the Bend-Redmond metro area has the second-highest rate of self-employment among small cities in the U.S. Over 20% of workers here are self-employed, twice the national average. Self-employed folks make, on average $50,000 nationally versus $48,000 who are employees. Longtime readers will recall that we track and report on new business registrations in Bend, which are consistently the highest per capita in the state of Oregon. More self-employed folks means more business registrations.

    Law: If you’re self-employed, which is to say that you (or the company you own or work for) contract out services to other people or other companies, the truth of the matter is that unions and many Salem policymakers don’t like you very much. Well, they would say that they like you and probably like you better than you like you because they know better than you how you should sell your services.

    The state and unions don’t like independent contractors because these folks don’t pay unemployment insurance or workers compensation and they don’t withhold taxes. They are also largely immune from unionization efforts. During last year’s legislative session, unions and their allies were nearly successful in passing a bill that would have made it even more difficult for self-employed people to freely contract to sell their services by, among other things, re-defining employees to include anyone who provides services to someone else who more or less provides the same services. Many if not most real estate agents, construction contractors, hairdressers, truckers and many other professions would be impacted and forced to dissolve their businesses and become employees. The language of the bill was so broad that even my law firm could be prohibited from performing business law services to another law firm, because we’re all lawyers. Or doctors treating other doctors, I suppose.

    The self-employed are not asking for this “protection” and the “protection” would disproportionately hurt people in Central Oregon, who have found, in very high numbers, that self-employment is the best way to use their talents. Unfortunately, the legislature is likely to take the bill up again in next month’s legislative session. The legislature should reject it again.

    Politics: Oregon House Speaker Tina Kotek recently mentioned that she might seek to declare homelessness an emergency in the state. The primary effect of such a declaration is that it would allow cities to more easily site homeless shelters without jumping through Oregon’s famously restrictive zoning and other land use laws. Kotek’s proposal joins a growing list of recent exceptions to the state’s land use system: affordable housing and urban growth boundary expansion in the western Portland suburbs, child care centers, to name a few recent examples.

    The proliferating exceptions demonstrate just how pervasive are the effects of our land use system. The system makes it very hard to construct and site most anything. The exceptions arise when that “anything” is politically palatable enough to get the legislature’s attention, but most frustrated uses are below the surface. If you believe that the legislature knows what is best for us, our families and our communities, this system is fine but if you believe the legislature doesn’t and actually can’t know that due to the complexity at issue, then the system needs a reset.

    Et cetera:  If you’ve ever wondered what George W. Bush, Barack Obama, Kim Jong-un, Richard Nixon or Vladimir Putin would look like with a man bun, you’ve come to the right place, my friends.

    Your friends can sign up to receive the Bend Business Roundup here. No sales, no spam. Just the weekly email you’ve come to know and love.

    Have a great weekend!

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  • Bend Business Roundup 11-22-19

    By on November 22, 2019

    Happy Friday,

    Here’s some stuff you might like.

    Business: Let’s try a multiple choice question. Bend has the fourth highest concentration by population of which of the following, compared to other U.S. cities:

    a. Ford Raptor pickup trucks
    b. Blockbuster video stores
    c. Puffy jackets
    d. Dudes with tattoos of evergreen trees on their forearms and/or calves
    e. AirBnB rental units
    f. a, b, c and d

    If you answered  a, b, c, d or f you’re wrong because we’re number 1 in all of those (or at least we are with b and I can’t imagine anyplace has more of a, c and d).  If you answered “e” you’re correct – Bend has 1,658 AirBnB vacation rental listings per 50,000 residents, the fourth highest concentration in the U.S.

    Law: A Linn County jury has awarded thirteen counties and 150 additional taxing districts (like school districts etc.) $1.1 billion in damages in the districts’ breach of contract claim against the State of Oregon. The districts contended that they transferred timberland to the state in 1941 in exchange for a promise that the state would maximize timber harvest value on the land, a portion of which would be paid to the districts. State forestry practice changed in the late-90s to prioritize environmental and recreational uses, and timber revenues fell. The state has indicated it may appeal the judgment.

    The amount of the verdict is shocking: Tillamook County, one of the plaintiffs, alone stands to receive $330 million if the verdict is upheld, nearly $13,000 per resident. Now let me really blow your mind. That $1.1 billion – only these particular taxing districts’ share of revenue derived from a subset of state-managed forest land – represents only a tiny fraction of the economic harm experienced by rural Oregonians due to changes in state and federal timber policies since the 1990s.

    If anyone has seen actual estimates, I’d be interested in seeing them. I’d wager, though, that the total economic loss due to reduced timber harvests to taxing districts, state government, the federal government, private businesses and families located in rural Oregon must rank among the largest economic disruptions caused in material part or in whole by government policy in the history of the United States, other than war.

    That’s not to say I think public lands policy should be solely focused on timber harvests. It’s also not to say that there have not been economic benefits from a more diverse public lands policy, but it is a reminder of the enormous scale of economic and social trauma experienced by recent generations of rural Oregonians. Entire communities have been hollowed out, all across the state. State and federal timber policy changes played a big (not the only, but big) role in causing that. The verdict in the taxing districts’ lawsuit is a reminder of the cost to Oregonians of swinging the balance of of land management too far away from sustainable timber harvests.

    Politics: In peacetime and with a relatively robust economy, our federal government has spent in 2019 nearly $1 trillion more than it’s taken in. The path of growth of our federal debt is unsustainable and we are saddling our kids and grandkids with the bill for our extravagance. This scenario can’t continue and will end either in a manner of our choosing or in a manner of our creditors’ choosing. The former would be preferable.

    Et cetera: We’re in Portland visiting friends for the weekend and we’re probably going to the Evergreen Aviation and Space Museum in McMinnville on Saturday because we like big planes. We’re not doing the water park, just the museum. If you’ve been and have any tips relevant to two families of harried parents and their kids between three and five years old, let me know!

    Your friends can sign up to receive the Bend Business Roundup here. No sales, no spam. Just the weekly email you’ve come to know and love.

    Have a great weekend!

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  • Bend Business Roundup 11-15-19

    By on November 15, 2019

    Happy Friday,

    Here’s some stuff you might like.

    Business: It’s common knowledge that in the latter portion of the 20th century, Bend’s economy turned from timber to tourism, right? Not so fast says Damon Runberg of East Slope Economics: he writes that employment based on tourism has held relatively steady compared to population since 1990 (when timber was still a big deal here). Per Runberg, what’s replaced the timber jobs has mostly been construction and, more recently, professional services which includes lawyers so, yeah, you’re welcome.

    Law: You’ll recall that the Oregon legislature passed something called a Corporate Activity Tax which is actually a tax on almost anyone (not just corporations) who sells $1 million or more of stuff or services in Oregon in a calendar year. Businesses need to comply by January 1, 2020, but the Oregon Department of Revenue likely won’t have even temporary rules out by the beginning of the year, and no permanent rules until the second quarter. Deloitte has an informative piece on the status of the tax.

    Politics: Back in 2016, the Bend City Council passed a resolution professing concern about climate change and forming a committee to, among other things, “identify opportunities for the City to encourage and incentivize businesses and residents, through voluntary efforts, to reduce [greenhouse gas] emissions and fossil fuel use.” (Emphasis added). The inclusion of the phrase “through voluntary efforts” was not accidental – it was purposeful on the part of a Council that was concerned about criticism that the resolution was the first step toward sweeping and expensive city regulations of private and business activity.

    Fast forward to now. That committee has released a 108-page Community Climate Action Plan. Back on page 27 is the following proposal: “Implement a Home Energy Score program that requires every home to be scored on its energy use and energy efficiency at time of listing.” (Emphasis added).

    There’s something about requiring voluntary efforts that is, well, appropriate for our political age. What’s more, if the Council does approve the home energy score mandate, it’s people who want to sell their home who foot the bill for obtaining the score. In Portland, which you will be unsurprised to learn has a home energy score mandate, it costs $150-$250 to obtain the score. Either the seller eats that cost or passes some or all of it to the buyer, which has the impact of making buying and selling homes in Bend more expensive. That is in conflict with the Council’s goal of fostering affordable housing.

    The worst part is that, despite its expense and hassle, the home energy score mandate wouldn’t affect the climate in Bend one bit. That’s because Bend’s contribution to global greenhouse gas emissions is so miniscule that even if it stopped producing greenhouse gases completely, there would be no perceptible change to the climate (even Oregon’s statewide cap and trade bill would have had only a “negligible” impact on global greenhouse gas emissions).

    That’s not to say the city and all of us shouldn’t take reasonable and cost-effective steps to curtail greenhouse gas emissions, but the home energy score mandate is costly, intrusive, and contrary to the voluntary nature intended by Council for the Climate Action Plan. The City Council should not mandate a home energy score, but instead leave it to buyers and sellers to determine what type of energy analysis they want, if any.

    If you’d like to weigh in with city councilors on the home energy score mandate, you can go here and learn how to contact them.

    Et cetera:  Bend’s Mountain View High School has produced some remarkable athletes. Ashton Eaton won two Olympic gold medals in the decathlon, and also set the world record in that event. In 1991, as a sophomore at MVHS, I was a member of a JV 4 x 100 meter relay team that had to run in the girls’ race because there weren’t enough lanes in the boys’ race. Our team quickly developed a laser-like focus born of adolescent fear of public embarrassment. We never ran so fast and it was the only race we won all year. Like I said, remarkable athletes.

    Added to this pantheon of former MVHS athletes is Jacob Hollister. Hollister quarterbacked the state champion Cougars in 2011, winning statewide player of the year honors. In college, he switched positions to tight end, and then played for the New England Patriots and now the Seattle Seahawks in the NFL, where he just might be a star. A couple games ago, Hollister caught the walk-off game-winning overtime touchdown pass from Russell Wilson. On Monday night against the 49ers, he caught a critical third-quarter TD with one hand while enduring almost comically flagrant pass interference. Great to see Hollister playing such a key role for the ‘Hawks.

    Your friends can sign up to receive the Bend Business Roundup here. No sales, no spam. Just the weekly email you’ve come to know and love.

    Have a great weekend!

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