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Say ‘Yes’ to WalMart

By Bill MacKenzie

When WalMart proposed a 210,155 square foot Supercenter with more than 1,000 parking spaces at the intersection of Cornelius Pass and Baseline Road in Hillsboro 10 years ago, the surrounding community went berserk.

Fired up opponents had no shortage of complaints. Too much traffic. Too big a building. Too little pay for workers. Not compatible with the neighborhood. WalMart’s anti-union. In the face of vociferous opposition, Hillsboro’s Planning Commission denied WalMart’s proposal.

Now, as the little girl Carol Anne said in the 1986 trailer for “Poltergeist II,” “They’re baaack!” And the critics are, too.

At a Nov. 13 public hearing held by the Hillsboro Planning Commission, WalMart representatives tried to set a new tone for a newly designed project called Sequoia Village. “That denial decision has shaped what you have before you tonight.” said Greg Hathaway, an Oregon attorney for WalMart, when introducing the new design.

Instead of a regional Supercenter of Brobdingnagian proportions, there would be a smaller, more appealing neighborhood grocery store of about 50,000 square feet that would draw mostly local folks, explained a WalMart team representative.

There would also be 242 apartment units and two small retail buildings. Instead of 1,000 Supercenter parking spaces covering acres of asphalt, there would be just 284 parking spots adjacent to the grocery store and almost eight acres of open space. An improved road system, already in place, would capably handle traffic. There’d be more tree preservation and trail enhancement.

It didn’t matter.

When the commission members asked supporters of the proposed project to come forward and comment, not a single supporter came forward — just one woman who said she was neutral.

But when the commissioners asked opponents to come forward in groups of three, a very long night of testimony began.

I don’t like this; I don’t like that, asserted one opponent after another as they paraded to tables facing the Planning Commission.

WalMart’s a low-wage company. Traffic will be horrific. Our neighborhood will be destroyed. The development will mean more kids and that will hurt our schools. The new site plan doesn’t have a Northwest feel. Wildlife will be harmed. It will hurt the Albertsons store across the street. It will draw poor people. The litany of complaints went on and on into the night (and many were repeated in a Nov. 22 Hillsboro Tribune editorial).

Even a couple of the commissioners chimed in. Commissioner Charles Fleisher lambasted the proposed store’s architecture as severe and somber, and said the apartment buildings were too dense and tight. CommissionerBrian Roberts also criticized the site’s architecture, saying, “It seems ordinary; it doesn’t have a lot of life.”

I suspect what’s really driving the opposition is an anti-WalMart mindset, fostered by unions and some progressive groups, and a fear of growth.

To the generic anti-WalMart folks, the answer is simple. If you don’t like WalMart, don’t shop or work at their stores and let the marketplace function. If not enough people want to work or shop there, it will not succeed.

Consider also that WalMart can mean good things.

As Jason Furman, chair of the Council of Economic Advisors underPresident Obama, has written, “By acting in the interests of its shareholders, WalMart has innovated and expanded competition, resulting in huge benefits for the American middle class and even proportionately larger benefits for moderate-income Americans … to the degree the anti-WalMart campaign slows or halts the spread of WalMart to new areas, it will lead to higher prices that disproportionately harm lower-income families.”As for the anti-growth argument, stopping this project won’t stop growth. The 26 acres on which Sequoia Village would sit is prime property. It won’t sit vacant interminably. It will be developed.

If it’s done responsibly, that can be a good thing, and the Sequoia Village design is a good start. Economic growth is a desirable social goal, and preferable to stagnation. It is economic growth that creates jobs, which leads to more tax receipts, which allows government to pay for public services.

While some improvements at Sequoia Village are certainly merited, WalMart’s new proposal is clearly superior to its 2003 plan, and the Planning Commission should move forward to make it work.

That doesn’t mean the commission should just accept WalMart’s latest Sequoia Village proposal carte blanche. A more architecturally appealing grocery store is certainly achievable, for example. But a not-in-my-backyard halt to the project just doesn’t make sense.

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Dec. 7, 2013

 

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Tigard man is enthralled by tin toy trucks

By Bill MacKenzie

It all started, as so many good things do, with his father.

John Venheim’s father, Georg, a decorated veteran of World War II, came to the United States from Norway in 1945 to marry his 17-year-old sweetheart from New York. When Venheim was in kindergarten, his father brought home a 1955 Tonka Metro van he’d bought at Goodwill. Venheim was hooked.

In 2010, the year his father passed away, Venheim bought his first Tonka tractor-trailer set on Craigslist, followed by the purchase of several collections of Tonka parts from which he crafted some trucks. When he sold an orange 1958 Tonka flatbed truck carrying a bulldozer for $300, he knew his hobby had taken a turn.

“I realized I had to get organized,” he said, “so I put together a complete shop in my garage in 2011.” The cluttered 480-square-foot garage is now packed with a raft of tin toy truck-making equipment, including a sandblaster, woodworking tools, a painting cube, a Thumler’s Tumbler machine that shines chromed parts in vibrating corn cob grit, a metal polisher and a wood jig used to make identical wooden stakes for a Tonka Farm Stake truck.

In a corner of the garage are 7-foot-tall wooden racks with shelving. One rack contains already painted projects, another a collection of parts, a third a jumble of supplies. A fourth rack is used to dry newly painted projects at a constant 80 degrees. In another corner is a large metal rack filled with old tin trucks and parts acquired over time.

On a shelf is a collection of original, colorful crate labels found on the Internet that he uses to adorn the sides of trucks. “Minton’s. Choice Bartlett Pears packed by C.D. Minton Inc., Forest Grove, Oregon, U.S.A.,” read one.

by: JONATHAN HOUSE - John Venheim refurbishes vintage pressed-steel toy trucks that he then sells through his Custom Tin Toy Trucks business.by: JONATHAN HOUSE – John Venheim refurbishes vintage pressed-steel toy trucks that he then sells through his Custom Tin Toy Trucks business.

For the past three years, Venheim has been busily building, repairing, buying and selling tin toy trucks and parts made not just by Tonka, but also by Buddy L. Wyandotte, Nylint, Structo and others. He said he spends about 10 hours a week in the garage immersed in his hobby, but with his non-stop enthusiasm, it’s probably much more as he builds his business, Custom Tin Toy Trucks.

He buys and sells on eBay and Craigslist and on specialized websites such as tonkapartsandsupply.com.

“You can buy just about anything connected with old Tonkas online,” he said, “including whole trucks, grills, hubcaps, headlights, truck tailgates, and tires, which are real expensive.”

His most recent acquisition, a red Texaco Fire Chief fire truck made by Buddy L. in the 1960s, was purchased on eBay for $40

Venheim also seeks out deals at garage sales. “Lots of people with tin toy trucks have no idea what they have,” he said. At a garage sale he encountered a woman selling a 1955 tin toy truck for $10. He told her the truck was worth much more and bought it for $80. After he fixed up and polished the truck, he sold it for $127.

Some online sellers buy old model trucks online, strip them down and sell all the parts individually. “Most people selling these old trucks don’t realize that if they took them apart and sold the parts, they could get three times as much,” he said.

The truck Venheim got the most for was a worn vintage unrestored Steelcraft Streamlined City Trucking Co. truck. What made it special is that it was designed by Viktor Schreckengost, a legendary American industrial designer often called “the American DaVinci.” Venheim sold the truck on eBay for $600.

by: JONATHAN HOUSE - Once finished, John Venheims custom tin trucks bring back the nostalgia of these old toys.by: JONATHAN HOUSE – Once finished, John Venheims custom tin trucks bring back the nostalgia of these old toys.

Some people only want to buy completely original vintage trucks, which tend to cost more. An original 1958 Big Mike dump truck with snow plow and dual hydraulic in mint condition with its original box can go for $1,000 or more. Other collectors are fine with new toy trucks. For them, there are companies like Smith-Miller Inc. of Lake Havasu City, Ari., which sells handmade scale trucks in miniature. A 41.5-inch-long, 21-pound Navajo Freight Lines Hauler is for sale on its website at $1,295.

Venheim’s trucks cost considerably less. That’s partly because he hasn’t built a solid reputation yet. It’s also because his creations often have added parts or parts that are different from the original. Once in a while, he even does whimsical add-ons such as a tiny spotted owl he placed on a logging truck.

As much as he’s able to make a little money from his tin trucks, he wants to keep it as a hobby and hold down a steady job for a while. “It’s an avocation now,” said Venheim, 55. “Hopefully, it’s going to be an established business when I retire.”

At that point, he expects to concentrate on mass-producing a highly sought after type of model gas turbine toy truck. “My intent is to get businesses like breweries to buy 10 or 15 of them, put their label on the side and then use them for promotional purposes,” he said. “That will be my bread and butter.”

In the long term, Venheim’s goal is to create a legacy. “My intent behind this company is that 50 years from now people will see one of my trucks and say, ‘Oh, wow, that’s a Custom Tin Toy Truck.”

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Dec. 5, 2013

 

View a video, Custom Tin Toy Trucks with John VenheimImage

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Hillsboro’s data centers: Big tax breaks, little disclosure

By Bill MacKenzie 

Computer data centers built in Hillsboro’s Enterprise Zone are enjoying generous tax breaks with almost no public accountability.

Companies with data centers already open or on their way include T5 Data Centers, Umpqua Holding Cos., Via West Inc., Fortune Data Centers, Digital Realty Trust Inc., which houses NetApp in its building, and Adobe Systems Inc.

Oregon’s 63 Enterprise Zones are designed to attract investments by exempting businesses from 100 percent of local property taxes on new investments for up to two years while construction is in process and up to five years after that if they are growing employment in the zone.  Because IT equipment in a data center must usually be refreshed within 5 years, the net effect is that there is no tax, neither sales nor property, on such equipment in Enterprise Zones. Fortune says these “…are enormous financial incentives”.

Are the tax breaks Hillsboro’s giving out to data centers paying off for the city?

Since the Enterprise Zone program is ballyhooed as a job creator, you’d expect stringent and substantial hiring requirements to be tied to the valuable property tax exemptions. You’d also expect the city and the data center companies getting the tax breaks would gleefully share their job creation achievements with the public to demonstrate their impact, openness and corporate responsibility.

Forget about it.

Enterprise Zone contracts require that if a data center already operates inside the Zone and applies for benefits or renewal, it is required to increase employment by just ten percent. If a firm locates a new data center in the Zone it only needs to add one employee to be in compliance. That’s right, just one.

As for job creation, the City of Hillsboro said it didn’t have employment numbers on the data centers in the Enterprise Zone. Mark Clemons, Hillsboro’s Economic Development Director, has, however, said publicly that all the Enterprise Zone companies have added a total of 1,420 jobs since joining the program. How he arrived at that number without knowing the number of employees at each company, including the data centers, is a puzzlement.

Just one data center company disclosed its Hillsboro employment numbers to me. NetApp said it has 12 full time employees plus one contractor and expects to hire one or two more people over the next couple years. It’s likely that the other data centers have similarly small workforces.

As a general rule, if incentives cost more than the resulting jobs contribute to the economy, they are misplaced. Given the significant tax abatements enjoyed by the data centers in Hillsboro’s Enterprise Zone, the wisdom of those abatements is questionable.

Still, the public can be assured that the employees earn good wages, right? When I asked all the data centers for the average wage of their employees, not a single one provided the figure.

But, thankfully, Hillsboro taxpayers can easily find out the value of the tax abatement each of the multi-million dollar data centers is getting from the city. That way the public can judge whether the foregone taxes are worth it in terms of investments made and jobs created.

Nope.

I asked the Washington County tax assessor’s office how much the Enterprise Zone property tax exemptions save each data center annually. “…it has been determined that this information is confidential and exempt from disclosure,” replied Julie McCloud with the Washington County Administrative Office.

Quite simply, there is little transparency to the entire data center process. Without a requirement that data centers make their the employment numbers, average wages, investment numbers and the value of the tax abatements public, it is impossible to judge how much each new job is costing the city and whether the job gains are worth the tax losses.

Without that, the public can’t know whether the data center Enterprise Zone     deals being cut by the city make sense.

It’s time to change that.

 

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Oct 25, 2013

 

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Sometimes it pays to go with the crowd

By Bill MacKenzie

It seems like nearly everybody is trying to raise money for their personal use through online “crowdfunding.” It’s clearly not just for start-up businesses.

Crowdfunding — funding a project by raising many small amounts of money from a large number of people — is exploding in Hillsboro, throughout Oregon and across the United States.

Even Caroline Channing, the tall blonde in the TV show “2 Broke Girls,” is a believer. In a recent episode, she went on a crowdfunding website, gofundyourself.com, in an attempt to raise $1,500 for a new pair of pants.

If you believe in the wisdom of the crowd, the Internet is bursting with opportunities to join others investing in people.

Keith Merrow of Hillsboro recently sought to raise $15,000 on a crowdfunding website, Indiegogo.com. His band, Conquering Dystopia, wanted to use the money to record an album.

In just 45 days, his campaign raised $35,320, more than double his goal, from 792 contributors, some as far away as Australia.

Typical of arrangements on Indiegogo, contributors got no financial return on their investment, but could pick a gift based on the amount of their donation. A $10 donation spurred a digital download of the album; a $500 donation earned a VIP dinner with band members at the Hard Rock Cafe in Seattle.

Matt Peterson of Hillsboro tried to raise $3,000 on another crowdfunding website, GoFundMe.com, so he could go to a 28-day intensive wrestling camp. He reached $1,750 from 16 people in six months, then secured the rest from family.

At GoFundMe, participants usually raise money for themselves, a friend or a loved one for purposes such as medical expenses, education costs, volunteer programs and youth sports. Fundraisers can keep every donation they get or get the donations only if they reach a pre-set goal.

A different approach is offered by the crowdfunding website pave.com, an online funding platform that allows individuals to support promising high achievers. Pave claims it’s “a new investment option, not a donation.” If the investees achieve financial success, they agree to share that with their investors.

Oren Bass, who co-founded Pave in 2012, said his motivation was basic: “To provide people with what I consider a better financing option than debt — one that allows risk-taking plus the collaboration and support of the community; and to build something with both social and macro-economic impact.”

At Pave, the percentage of income an investee commits to sharing with investors varies depending on the amount of funding raised, along with how much the recipient is expected to earn.

Stephanie Walker, an engineering student at Oregon State University, recently launched a campaign on Pave. She hopes to raise $50,000 to pay off her student loans so she can pursue a career in sustainable engineering and product design with a focus on creating sustainable materials.

Close to 30 prospects have already raised over $400,000 through Pave, and a few have started making payments to their backers.

Though crowdfunding is gaining wide acceptance, there is reason to be cautious.

To guard against fraud, Pave does extensive checks to verify identities, review credit histories and check any “structured data” a prospect supplies, such as college attendance, GPA, and work employment history.

GoFundMe is much looser in its oversight.

“With hundreds of thousands of campaigns, it’s not feasible for GoFundMe to investigate the claims stated by each campaign organizer,” reads an excerpt from the GoFundMe website.

I’m not sure what motivates people to give money online to complete strangers. Maybe a lot of people who have had good fortune want to pay it forward. Maybe it’s just a charitable impulse.

But you can’t check the veracity of a lot of crowdfunding proposals. Some are the equivalent of the infamous Nigerian email scams where mass emails promise great riches to potential victims. The entire personal crowdfunding platform relies largely on trust, something scammers have always known how to exploit. So prudence should be the watchword.

 

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Nov. 15, 2013

 

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American dream in a Mexican restaurant

By Bill MacKenzie

Carolina Tapia and Maria Calderon had a dream: to own a thriving, authentic Mexican restaurant. With the recent opening of A Taste of Mexico in Hillsboro, their dream is on its way to being fulfilled, but the journey has not been easy.

by: HILLSBORO TRIBUNE PHOTO: CHASE ALLGOOD - A Taste of Mexico is now open on Southwest Cornelius Pass Road in Hillsboro. Owner-operators are Carolina Tapia and Maria Calderon. PHOTO: CHASE ALLGOOD – A Taste of Mexico is now open on Southwest Cornelius Pass Road in Hillsboro. Owner-operators are Carolina Tapia and Maria Calderon.

Carolina was born in the United States, but grew up in the barely-there town of San Jose del Vergel in central Mexico. She left school after the sixth grade to help at her father’s grocery store. At 17, she embarked on a pilgrimage to a better life in Oregon, where two of her brothers lived. Because her mother had been born in Colorado, her American citizenship was secure, but her future was not.

Determined to flourish in her new home, Carolina learned fluent English through immersion in the American culture, and at 19 she earned her GED. Over the next 12 years she worked for several Hillsboro manufacturing companies, including Intel and White Electronics, where, 10 years ago, she met Maria.

Maria was born in Morelia, Michoacan in southern Mexico and grew up as one of 10 children in an impoverished family. Finishing school in the ninth grade and married at 15, she became the mother of three children in the next four years. At 19, she and her family slipped across the U.S. border at Tijuana and headed to Oregon.

Maria spent her first five years in the U.S. toiling under the sun in Oregon’s fields, before shifting to a cabinet-making company and several manufacturers in the Hillsboro area, including White Electronics. In the meantime, she became a proud U.S. citizen in 1988, following the passage of federal immigration reform legislation in 1986.

“After 30 years here, I feel like this is my house, my home,” she said.

About a year ago, Maria took a trip to Mexico where she saw a number of small restaurants that seemed to be doing well. When she came home, she pitched to Carolina the idea of starting a little eatery featuring all fresh authentic Mexican food.

They leased space at 3002 S.W. Cornelius Pass Road, just off TV Highway in Hillsboro, and figured all would go smoothly.

It didn’t.

They weren’t prepared when bills came in to upgrade the plumbing or re-do the walls and floors of the leased space. They weren’t prepared for all the government requirements, each with its own fee. They weren’t prepared for the multiple government inspections and dealing with the city bureaucracy.

“It took a lot more effort, time, money and everything,” Carolina said. “We almost gave up because everything was taking too long. We had thought we could be done in three months so we could open in April. It was eight months. It was harder than we expected.”

It also took $20,000.

A Taste of Mexico finally opened on Aug. 5 with a cramped kitchen, six tables and three booths squeezed into 960 square feet.

“The first week was terrible, to be honest,” Carolina said. “We were like, oh my gosh, what did we get ourselves into?”

After about two months in business, Carolina and Maria are still struggling, but more customers are coming in with each passing week and they’re increasingly hopeful.

“Our families are behind both of us,” said Carolina. “They trust us and know we’re going to make it, and we don’t want to give up the dream.”

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Oct 18, 2013

 

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Giving the workforce a ride

By Bill MacKenzie

 If we want people to be at work instead of on welfare, small initiatives can make a big difference.

Emelia Moreno knows that.

When a used truck she owned was totaled in an accident, the insurance payment didn’t cover the full amount of the loan still due, leaving her owing $6,000. So when she bought a used Saturn to replace the truck, she added the $6,000 to a new $11,000 loan. That created a burdensome $17,000 loan from AmeriCredit, a General Motors subsidiary that offers auto loans to financially challenged “sub-prime customers.”

To make things worse, the loan had a punishing interest rate of about 35 percent, translating into initial monthly payments of $390 … which rose to $426.98 when she missed some payments.

Emelia Moreno (not her real name) is a single mother who grew up in south central Los Angeles and now works for a social services agency in Hillsboro. In the beginning, she figured she could handle the monthly payments on her car, but eventually they overwhelmed her.

“I couldn’t refinance because I owed more than the car was worth,” she said. “I was juggling my bills. Then I learned my employer planned to cut my work hours from 40 a week to 32.”

Compounding her troubles, she was caring for a daughter born with heart problem who required continuing medical care involving specialists and an extensive regimen of drugs.

“I got to a point where I just couldn’t make it, where I wanted to say, ‘OK, take my car. I just can’t make the payment anymore,’” Moreno said.

That was when a co-worker told Moreno about the “Ways to Work” program under the umbrella of Portland-based nonprofit called Metropolitan Family Service. The program helps low- and moderate-income individuals buy, refinance or repair cars with loans at reasonable rates.

According to the Urban Institute, families without cars often find it difficult to find a good job, get to work and stay in the work force — particularly in spread out suburbs. People without vehicles also have problems meeting their family’s needs, such as getting to and from medical appointments and childcare facilities and dealing with emergencies. Transportation difficulties may also limit where people look for or consider working.

It is to Hillsboro’s economic advantage, therefore, that residents have access to cars.

Moreno took her first step toward car contentment by scheduling a meeting with Abby Wood, Ways to Work’s program coordinator. Wood told Moreno to bring her current $9,000 loan balance down to $8,000 (all Ways to Work would refinance) and to draw up a budget.

When Moreno finally whittled down her existing loan, Ways to Work offered to refinance her car with an $8,000 loan at 8 percent, repayable at $150 a month.

So far, Moreno is another success story for Ways to Work.

In other situations, such as when clients seek a loan to buy a used car, Ways to Work teaches them how to do it.

“The financial part is important, but learning how to buy a used vehicle is a really important thing to learn,” said Wood. “A lot of people who come to our program have no idea that they have a choice of what car to buy; that they have the option of taking the car to be checked out before they purchase it; that they can research a car before they purchase it; that Consumer Reports could tell them this car is better than that car. It’s a really empowering thing.”

The Ways to Work program offers loans of up to $8,000 at 8 percent interest. The result is more than $1 million in loans to community members in Oregon and southwest Washington since the program began in 2004; a low payment delinquency rate of less than 10 percent; and a default rate of less than 4 percent.

“Ways to Work is not a handout,” Wood said. “It’s helping Emelia make sure she can keep her job, stay off public assistance and get her daughter where she needs to go.”

“It’s been a blessing,” Moreno said. “To me, it’s been a lifesaver.”

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Oct 4, 2013

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Turning unemployment into self-employment

By Bill MacKenzie

Ronald Reagan once wisecracked, “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’”

But sometimes, the government gets it right.

Julie Thomas knows that. Thomas recalls with sadness when her beloved black lab, Barney, had cancer. Wanting desperately to ease Barney’s pain, Thomas, an employee at Intel’s Hillsboro site, studied small animal massage and began treating her pet. When Thomas learned she was going to be let go by Intel, she decided to take a risk and change careers to work in canine water therapy.

But how could she get the business off the ground while unemployed? Oregon’s Self Employment Assistance Program (SEAP) came to her rescue.

The regular Unemployment Compensation program requires unemployed workers to be actively seeking work to get benefits. SEAP allows unemployed people to collect allowances equal to their benefits while devoting all their time to starting a business, rather than looking for another job.

The program was created in 1993 after passage of federal legislation championed by then-U.S. Rep. Ron Wyden. SEAP is now active in seven states, including Oregon. In 2012, legislation sponsored by Wyden — now Oregon’s senior U.S. Senator — provided for $35 million in grants to states to improve administration and promotion of the program.

With the economy still struggling, SEAP offers a lifeline to some entrepreneurs.

“It seemed a perfect fit for me,” Thomas said.

Thomas opened her business, Doggie Paddle, in Portland in October 2010.

“I’m not making the money I made working in a corporation,” she said, “but I’m doing something with animals, something of service, something for which I have a passion.”

Thomas is just one of several thousand Oregonians who have taken advantage of SEAP, including 55 now enrolled from Washington County, with seven of those from Hillsboro.

With SEAP support, Dave Crosswhite of Tigard started Oregon Backflow Testing, which tests backflow prevention devices that help to prevent hazardous materials from entering drinking water. He said SEAP was a huge factor.

“It took the pressure off of needing to produce an income right away and allowed me to focus on building the business and not having to job search in order to receive benefits,” he explained.

Glen Wagner and Steve Bauer signed up after they both lost their technology jobs. They decided to start a company called Open Lore in Beaverton that would deliver assisting technology to people having difficulty reading English, primarily those with dyslexia.

“Unfortunately, with multiple kids in college and still relatively young, at least at heart, we did not have the complete means to meet our family obligations and the capital expenses of starting a new technology business,” Wagner said. “With SEAP, we could put our heart and soul into the business.”

But SEAP is not without its weaknesses.

Key SEAP performance data is based only on surveys returned by program participants, but a lot of participants don’t return the surveys. For example, a recent Oregon survey sent out to 356 SEAP participants got only 78 replies — a 22 percent return.

So the state doesn’t know how many people sign up for SEAP, exhaust their benefits and end up with no business and no job. Some of those missing may be in worse shape than when they started.

Another glaring weakness is, success in Oregon hasn’t been determined on the basis of how many SEAP participants start and maintain a successful business. Rather, success has been judged by how well the state promotes SEAP and how much money is distributed to participants. Only government could think that way.

In addition, although SEAP requires that potential participants fill out an application scored to determine the feasibility of their proposed business, there’s no real follow-up. That means no assurance participants will take advantage of the array of support programs available to help grow and sustain a business. Failure may too often be the consequence.

Only about half of all new businesses survive five years or more, and only about one-third survive 10 years or more. To improve their odds, SEAP-related businesses need continuing guidance. After all, although new businesses create new jobs, it’s only when they succeed and expand that real job growth occurs.

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Sept. 13, 2013

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Interns ought to be paid

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By Bill MacKenzie

Ahhh, it’s summertime in the city, with baseball, concerts in the park, day camps, outdoor festivals … and unpaid interns.

Eager young interns are plugging away this summer at businesses across Hillsboro, learning about the world of work. Some are being paid, but others are working for free.

The Hillsboro Hops baseball team, for example, has five interns working for them. On game and non-game days they do such things as promotional work, helping with preparations for entertainment during the games, assisting front-office employees and taking ticket orders. Some of the interns are getting college credit for their work.

But none of them are being paid. Not one thin dime. Not one red cent.

Come on now. Legal issues aside, do you really think the Hops, operating in a $15.6 million ballpark subsidized by the city, can’t afford it?

It’s a good thing the Hops and other local businesses are offering internship opportunities to young people, but they are treading on thin ice by not paying them.

Federal law is clear that most interns should be paid at least the minimum wage plus overtime after 40 hours a week. Under the Fair Labor Standards Act(FLSA), covered and non-exempt individuals who are “suffered or permitted” to work must be compensated for the services they perform for an employer. According to the U.S. Department of Labor, internships in the “for-profit” private sector will most often be viewed as employment.

In June, federal District Court Judge William H. Pauley III of New York ruled that Fox Searchlight Pictures broke the law when it didn’t pay production interns working on the movie “Black Swan” because they were essentially regular employees. “Searchlight received the benefits of their unpaid work, which otherwise would have required paid employees,” the judge said.

Pauley said unpaid internships should be permitted only in very limited circumstances. He added that whether an intern is receiving college credit for the work matters little in determining whether an intern should be paid.

Pauley’s ruling isn’t a departure from precedent. There’ve been other cases, too, in which courts have ruled that interns must be paid.

You’d think companies would have learned by now and stopped trying to get free labor from interns, but many persist.

“In some industries, especially media, the unpaid internship is the risk many companies are willing to take,” Ed Reeves, a labor and employment attorney atStoel Rives LLP, told me. “Less so in other businesses. We counsel against that risk, but not every company asks.”

Some businesses that bring on interns without paying them may think it’s enough that they get experience, do some networking and get to hang around the fascinating people who do the “real work.”

But aside from the legal issues, that means students from well-off families can afford to take a career-building unpaid internship, but not the kid from an average family struggling to deal with potentially crippling college loan debt. That perpetuates inequality.

Fortunately, there are local models to copy. All the 259 interns placed so far this year by Beaverton-based Business Education Compact (BEC), are paid, according to Darrin Marks, BEC’s director of student services. There are varying rates based on their education level as well as what the company that places them would like to start them out at. Typical rates are $10 an hour for high school students and $12 to $14 an hour for college students.

Paid internships tend to pay off more for students too. According to the National Association of Colleges & Employers, class of 2013 graduates who had done paid internships outpaced their unpaid peers in job offers and salaries.

Among 2013 graduates who had applied for a job, those who took part in paid internships enjoyed a distinct advantage over their peers who undertook an unpaid experience or who didn’t do an internship.

An association survey showed that 63.1 percent of paid interns received at least one job offer. In comparison, only 37 percent of unpaid interns got an offer; that’s not much better than results for those with no internship — 35.2 percent received at least one job offer.

In terms of starting salary, too, paid interns did significantly better than other job applicants: The median starting salary for new grads with paid internship experience was $51,930 — far outdistancing their counterparts with an unpaid internship ($35,721) or no internship experience ($37,087).

So what should local businesses offering internships do? First, check with an attorney and/or the Oregon Bureau of Labor & Industries for guidance. Then do the right thing: Pay your interns. You’ll both be the better for it.

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Aug. 12, 2013

 

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Hillsboro reaches too far with investments

By Bill MacKenzie

When others are playing with bright and shiny things, it can be tempting to bend the rules to join the game.

A case in point — the city of Hillsboro’s decision to succumb to the allure of venture capital investment.

In 2009, some local investors began advocating a city of Portland fund that would make venture capital investments in local startups.

Portland Mayor Sam Adams and the Portland Development Commission(PDC) were enthused by the idea, but the Oregon constitution prohibits cities

and counties from investing directly in for-profit companies. As the saying goes, however, “where there’s a will there’s a way.”

The PDC came up with an end-run — have Portland’s contribution go to a fund created by the non-profit Oregon Entrepreneurs Network (OEN). Then pick a firm to manage the money as the Portland Seed Fund and make OEN a limited partner in the fund. That way, any return on investment in startups would go back to OEN, not the city of Portland. In 2010, Portland announced it would make an initial contribution of $500,000 — later expanded to $700,000 — and a search began for additional donations and investments. One target — the city of Hillsboro.

In January 2011, officials with the Hillsboro’s Economic Development Department brought the concept to the Hillsboro City Council. The fund would provide seed capital to entrepreneurs, they said, helping to fill early funding gaps for new companies and increasing the job creation prospects for startups.

The officials said their department had already budgeted $250,000 for the seed fund, with the money to come from fees generated by the city’s Enterprise Zone program.

Because Hillsboro was subject to the same prohibition on investing in for-profit companies as Portland, Hillsboro would follow the same circuitous route. Its money would go to the Portland Seed Fund and investment decisions would be left to the fund managers.

“The city of Hillsboro is interested in supporting entrepreneurship and business growth in the Portland region and in Hillsboro specifically,” the officials told the city council. “We anticipate that the proposed seed fund will ultimately generate considerable business investment and job creation in Hillsboro.”

The city council approved the seed fund donation without public discussion.

Venture capital has played a major positive role in innovation, but if its intent in this case was the fertilization of some startups in Hillsboro, the results have been dismal. Of the 36 startups receiving money from the seed fund so far, only one was located in Hillsboro.

That company, Good Works Now, Inc., was developing Cloud-based tools for non-profits to modernize how they manage fundraising, boards and online reputation. In late 2012, the company collapsed, and the seed fund wrote off its investment.

Looking forward, there are no guarantees Hillsboro will see any direct benefits from the seed fund. That’s because no investment recipient is obligated to invest in Hillsboro, and there is no guarantee that any startup supported by the fund in the future will do so.

Hillsboro also won’t get a payoff if a startup becomes wildly successful.

A venture capital fund stands to make money by owning equity in the companies it invests in when the companies are sold or go public. But Hillsboro’s $250,000 was a donation, not an investment in the fund.

Other American cities, including New York and Philadelphia, are heading down the same venture capital route, but not to universal acclaim. Critics assert that private venture capital firms will find promising startups without government interference.

“The question is whether it’s justifiable for government to be involved,” Gary Kunkle, founder and CEO of Outlier, a research firm focusing on innovative approaches to nurturing and retaining high-growth companies, told Inc. Magazine recently. “Markets take care of themselves much more efficiently than governments want to give them credit for.”

Portland economist Bill Conerly agrees.

“Portland would do best creating a good business environment for all companies, big or small, startup or established …” he recently told me. “The idea of city money for seed capital is simply corporate welfare done in small pieces.”

In 2009, Brad Jones, an executive of the Redpoint Ventures investment firm, wrote to President Barack Obama’s economic adviser, Lawrence H. Summers, questioning the wisdom of the government’s $535 million loan guarantee to Solyndra, a solar cell manufacturer.

“I can’t imagine it’s a good way for the government to use taxpayer money.” Jones said.

“I relate well to your view that gov. is a crappy v.c.” (venture capital investor),” Summers wrote back.

In 2011, Solyndra went bankrupt.

The Portland Seed Fund is now raising money for a second round of startup investments. The city of Hillsboro should sit this one out.

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  May 3, 2013