City left empty-handed.

Byline: The Register-Guard

By insisting on tight rules for a new enterprise zone, the Eugene City Council appears to have allowed the state's more permissive rules to take effect. A tough position in negotiations with the Lane County Board of Commissioners gained the council nothing - not even restrictions to which the county board would have agreed. It's a peculiar kind of victory when the winner loses all.

In enterprise zones, businesses that add jobs can qualify for substantial property tax breaks. Eugene allowed its enterprise zone to expire 10 years ago, but voted 7-1 earlier this year to apply to the state for permission to create a new zone. Several city councilors and Mayor Kitty Piercy had reservations about the effectiveness and fairness of enterprise zones, and said their continued support would depend on the adoption of rules capping the size of the tax breaks and encouraging job-creating investments on previously developed industrial land.

Oregon's Department of Economic and Community Development approved Eugene's application - but because part of the zone is in areas under county jurisdiction, any rules beyond those established by the state require approval by both the City Council and the county commissioners. The commissioners were willing to cap the size of enterprise-zone tax breaks, but wanted existing as well as new jobs to be counted in calculating the maximum benefit. The county board also wanted a policy that would allow the cap to be waived.

Negotiations failed to resolve these differences. Commissioner Bobby Green says he and his colleagues were ready to give the city 95 percent of what it wanted, but that still wasn't enough. Mayor Piercy says the county's position shifted in the course of the talks. On Monday the council voted 5-4, with Piercy casting the tie-breaking vote, to approve a motion calling for Eugene to end its participation in the enterprise zone unless the county commissioners approve the rules proposed by the city.

The enterprise zone, however, lives on. Coburg is the only city in Oregon that has tried to dissolve an enterprise zone, and that precedent strongly suggests that Eugene can't end its participation without Lane County's acquiescence. In the absence of a city-county agreement, the state's rules are in effect - which means there's no cap whatsoever on the size of property tax breaks.

It would have cost the City Council nothing to yield to the county commissioners - saying, in effect, "We think you're making a mistake, but some caps are better than none, so we'll do it your way." It would have cost the county commissioners only slightly more than nothing to yield to the City Council - saying, in effect, "We think you're making a mistake, but it's mostly your enterprise zone, so have it your way."

The lubricant of good will, however, is currently lacking in city-county relations. The county board is still smarting over the Eugene council's refusal to amend the regional land-use plan in a way that would have permitted the creation of a public safety district. It didn't help that in Monday's vote the council set a Friday deadline for action by the county. Green and Commissioner Faye Stewart were in the audience, and could have told the councilors that absences and out-of-town meetings would prevent them from making a decision this week.

Now the councilors with the strongest reservations about enterprise zones, joined by Mayor Piercy, have succeeded in giving Eugene an enterprise zone with the most wide-open rules possible. It would be possible to find amusement in such a result, were it not for the fact that it came at the cost of further damage to the city-county partnership. And even if the zone is technically able to operate under state rules, it would be far preferable for the zone to have the City Council's solid support. The council should take the absence of local enterprise zone rules as a lesson in the value of compromise, and act to improve cooperation with the county.