Alliance kicks off effort to transform regional economy

            Clean air and water, beautiful lakes and streams, spectacular mountain views, creative restaurants, great skiing, biking, hiking, rafting and fishing. Are they really worth the price of walking a financial tightrope in a struggling Central Oregon economy?

            On the other hand, could it be that quality of life attributes and a productive economy with competitive wage jobs are not not mutually exclusive?

That’s the hypothesis underpinning the Deschutes Economic Alliance, a diverse group of business and community leaders who have mobilized in an effort to guide the region to economic recovery.

The DEA was co-founded by Lawnae Hunter, owner of Hunter Properties and Plus Property Management and Dave Lewis, chief executive of Jarno International of Bend.

The desired result, DEA leaders believe, should be an economy that extends beyond recent growth that mostly relied on housing construction driven by the retirement and vacation home markets.

Their objective is to leverage the region’s considerable natural attributes and human capital to target new businesses for the area as well as create an environment for growing existing ones.

Rather than “poverty with a view,” the pejorative label some stick on Central Oregon, they want to turn a new phrase, “possibilities with a view.”  

For the past three years the Center for Economic Research and Forecasting under the direction of Phd  Bill Watkins has presented forecasts for the Central Oregon economy.

In January of 2011 the center’s assessment was  presented in connection with a 1000 Day Road Map to Regional Transformation and Economic Vitality by Praxis Strategy Group, an national economic consultant with government and private clients.

             On April 30 the Deschutes Economic Alliance kicked off the first phase of the “road map” as leaders for teams focusing on six economic initiatives gathered in a training session for a 100 Day Jumpstart to Recovery lead  by former Deschutes County Sheriff Les Stiles, who teaches leadership development in the Concordia College masters program.

The six initatives identified in the recovery plan are:

·        A systems-built housing effort that would  focus on development of a systems-built, “green” housing industry.

·        A Warm Springs Tribes partnership to develop joint busines opportunities.

·        An applied research and creative activities center to promote professional development and support for for public-private research and partnerships.

·        A leadership roundtable to promote business, government, educational and civic cooperation to tackle new and emerging opportunites.

·        A task force to address DURT, or delay, uncertainty, regulations and taxes that impede economic growth.

·        An elite athletic initiative to explore and develop an industry drawing on the region’s recreational resources.

           

The teams will work on strategies to implement each of the initiatives and deliver their findings at an Action Summit scheduled for August.

The 1000 Day Road Map to Recovery

Salem bill aimed to streamline Central Oregon job-producing projects

            A bill sponsored by Central Oregon legislators could provide a method to streamline industrial development in “high-value employment sites” to attract job- producing companies in Deschutes, Crook and Jefferson counties.

            Senate Bill 792, sponsored by Sen. Chris Telfer and Rep. Jason Conger, R-Bend, and Rep. Gene Whisnant, R-Sunriver, notes that some Central Oregon cities and counties are now working on industrial development strategies for larger industrial sites.

            In the past, the bill notes, some projects have been held up through “technical flaws and lack of a clear state policy...”

            Among the key provisions of SB 792 is a requirement that county and city  governments create a regional economic development plan. 
            The bill directs the Land Conservation and Development Commission to revise existing state land use goals for "access and mobility" for high-value employment sites that comply with the regional plans.

            Another provision would prohibit retail and residential uses in the employment sites unless they follow objectives set forth in the overall economic development plan.

One effect of the bill would be to allow governments to identify land outside urban growth boundaries for industrial development if they follow state land use goals requiring 20-year plans to accommodate population growth. The employment sites would either need to have infrastructure and services in place, or a financing plan for them.

Economic development officials have said the region lacks read-to-build industrial land to attract major employers. They say several potential employers have decided to relocate elsewhere due to the time required in the permitting process.

The 1,500 acre Juniper Ridge industrial and mixed-use project on Bend’s northern boundary experienced delays related to transportation access in the Highway 97 and Cooley Road area. The project would be the largest in Central Oregon when built out, but thus far has only three major tenants, Les Schwab Tires, Suterra Corp. and PacificCorp.
            The city hopes Juniper Ridge could create as many as 15,000 to 20,000 jobs and also be home to a university campus, light industrial firms and a high quality residential community. About 500 of the 1,500 acres is now in the Bend Urban Growth Boundary.

            The legislation comes as the three-county Central Oregon unemployment rate is 13 percent, 3 percent higher than statewide. Crook County has the highest in the state at 15.4 percent according the state’s March 2001 statistics.

            SB 792 is now in the Senate Committee on Business, Transportation and Economic Development.

The Juniper Ridge plan map

Deschutes County's proposed first winery gains liquor license

             Faith Hope & Charity vineyard in Terrebonne has come a step closer to establishing an onsite winery with approval of its liquor license application by the Oregon Liquor Control Commission.

            The OLCC approved the license at its April 21 meeting for what would be Deschutes County’s first winery associated with a producing vineyard.

            Cindy and Roger Grossmann,  principals in Faith Hope & Charity, have planted 15 acres of grapes on a 164 acre parcel of their agricultural land on Lower Bridge Way. The parcel is part of 315 acres owned by the Grossmanns, including some in hay production.

            Faith Hope & Charity is awaiting a decision by Deschutes County hearing officer Karen Green on their application for a county permit to build the winery.

            State law, ORS 215.452 appears to clearly state the property would qualify for a winery under a provision that 15 acres of grapes be planted.  But the county planning staff have interpreted the law to require that grapes already have been harvested.

            Maragas Winery, in Jefferson County on Highway 97 near Smith Rock State Park, is the only other commercial onsite winery and vineyard in Central Oregon.

Is that bouquet from the glass or cow pasture?
 (a report on the county hearing for FHC winery application)

Northwest's leading metro area housing prices in slump

            Portland and Seattle are lagging the rest of the country in one of the most widely-followed indexes of housing prices for metropolitan statistical areas (MSAs).

            The S&P/Case-Schiller index report released this week shows that among 20 metro areas the Northwest’s leading cities have experienced the largest one-year decline in comparable February home prices.

            Portland prices sank by 7.0% while Seattle was down 7.5%, putting them among the worst national markets year-to-year.

            Phoenix led the nation in February to February declines, at 8.4%, followed by Minneapolis, 8.3%, and Chicago, 7.6%.

            Half of the 20 MSAs, including Seattle and Portland, experienced third consecutive monthly lows. The others were Atlanta, Charlotte, Chicago, Las Vegas, Miami, New York, Phoenix and Tampa.

            Atlanta, Cleveland, Las Vegas and Detroit all had home prices below their 2000 levels while Phoenix was barely above its January 2000 number.

The 20-city composite index was off 3.3% from February of 2010 to 139.26, which was nearly dead even with the April of 2009 bottom value of 139.26, indicating housing prices are in a “double-dip” nationally.           

            Only the Washington, DC market notched a yearly gain—up 2.7%. The nation’s capital also had the largest 11 year gain of  81.33% since the base for the index of January 2000.

 However, in putting the currently dismal market in perspective, Case-Shiller noted there have been large gains in housing prices over the past 11 years in cities that have performed poorly of late, citing Los Angeles, up 68.25%, New York, 65.19%, and San Diego, 55.05%.     

            The Case-Shiller index  is a weighted value pegged to January of 2000 prices. For example, Portland’s index as of February was 133.66, or up 33.66% since 2000, and Seattle’s 132.85, which was 32.85% higher. Calculating the 11-year performance, Portland's housing prices gained 2.67% annually over the period and Seattle 2.62%.

(click to expand chart, use back button to return to blog)





ANALYSIS: Legislation creates loopholes in state land use

       As with many good ideas Oregon’s oft-praised and emulated land use law is coming up against the the passage of time and changing circumstances, not the least of which are economic in nature.

In 1973 Senate Bill 100 essentially established statewide goals intended to channel growth into higher density urban areas while protecting agricultural land and open space.

Every city and county was required to create a comprehensive plan that would reflect the original 10 goals, later expended to 14.

The Oregon effort became a paradigm for other states such as Washington. It burnished the reputation of then Gov. Tom McCall who had decried the trend of, “....sagebrush subdivisions, coastal condomania and the ravenous rampage of suburbia in the Willamette Valley...”

Since its passage the original law has confronted challenges through various referendums over nearly four decades. It survived ballot measures by comfortable margins in 1976 and 1978, and another in 1982 that attempted to abolish the Land Conservation and Development Commission which administers the law.

It recently faced a more serious, yet temporary, setback. In 2004 Measure 37 won approval as a ballot issue with substantial support not only in largely agricultural areas but also in urban areas such as Portland.

It would have gutted statewide planning by requiring governments to compensate landowners for lost value resulting from regulations imposed on property after it was acquired.

Faced with potentially staggering compensation demands, many counties and cities waived existing land use regulations. The impact gave rise in 2007 to Measure 49 which mitigated the effect of Measure 47 and limited compensation payments. It also provided relief for landowners in the form of allowing homes on some land where building was previously restricted.

At the core of the debate some proponents of greater flexibility in the land use law say it may have been flawed from the start. They believe the 1973 standards were intended more to preserve “high value” agricultural land in the rich Willamette Valley but were not as reasonable when applied to less fertile land east of the Cascades.  By this reasoning, the “one-size-fits-all” approach was not workable in the longer term.

The more recent attempts to chip away at or  tweak provisions of  the 1973 law have emerged not through ballot initiatives but in the form of targeted legislation that has gained surprising traction in Salem.

Most  of the bills have not made their way from committees and through both legislative chambers to be signed into law. But a few have succeeded, and others show promise as the result of continued support from legislators willing to reintroduce them in succeeding sessions. If nothing else they’ve spurred new dialogue about statewide planning in relation to local conditions.

The efforts have gained momentum as a result of brutal economic conditions straining farmers and ranchers, many who view greater flexibility in how they can use their agricultural land as a means of financial survival.

To one extent the  issue has also widened the rift between urban and rural areas, although in some cases conservation groups and landowners have formed alliances that would allow limited development through land swaps and tradeoffs to achieve a larger purpose in preserving other land.

Altogether, the new wave of legislation is generally aimed at loosening restrictions to prohibit expanded activity and development on agricultural and forest land.

But not all the bills would relax state control, among them HB 3298 which became law  in 2009. It circumvented existing state law to effectively end plans for one resort and force the downsizing of another by declaring the Metolius River basin an “area of critical state concern,” the first use of this designation. The bill overturned decisions by the Jefferson County Commission which had complied with state law requiring mapping of resorts in the county planning process.

Then Gov. Ted Kulongski made a trip to Camp Sherman to highlight his signing of the bill. The legislative effort was lead in part by state Sen. Betsy Johnson, D-Scappoose whose family has long had property at the headwaters of the Metolius.

Among proposed bills in the 2011 legislative session that would affect land use are:

• HB 3347 to suspend requirements for nightly rental units in a new project in the Sunriver area in exchange for the developers offering to make payments that could be used for upgrading waste treatment in south Deschutes County.
• HB 3465, approved by a wide 54-6 house majority, that would greatly expand existing standards established by 1997 legislation intended to allow “guest ranches” on lands zoned primarily for agriculture. The legislation would specifically allow the Silvies Valley Guest Ranch near Burns in Grant County to build 575 units restricted to nightly lodging along with related services such as a spa and restaurant.
• HB 3615, setting up a pilot program for Jackson, Josephine and Douglas counties that would permit such uses as bed and breakfast and small cafes catering to “agricultural tourism.”  Deschutes County commisisoners have asked that the county also be included in the program and others are likely to follow.
• Several other 2011 Senate and House bills would redefine and expand permitted uses for events such as weddings on agricultural land. Among them are SB 960 which would allow counties to approve “limited use” permits to hold events on agricultural land. Thus far, the state law provides little guidance to the Land Conservation and Development Commisison.
• HB 2228, the “Skyline Forest” legislation signed by Gov. Kulongski in June of 2009, provides several development scenarios allowing from 137 up to 282 homes on 3,000 acres of 33,000 acres of timberland between Bend and Sisters.  In exchange Cascade Timberlands LLC agreed to sell about 30,000 acres there and another 34,700 acres in southern Deschutes and northern Klamath counties to a land trust or government agency.

 Among the 2011 bills, the language in HB 3465 pertaining to guest ranches provides a pointed example of the challenge to the state land use law.

            A staff summary for a memeber of the House Committee on Agriculture and Natural Resources notes that the LCDC is directed to adopt new rules to implement the pilot program.

            “Rules do not need to be in impliance with statewide land use planning goals,” the staff summary concludes.

            The reaction to HB 3465 from conservation and environmental advocates has been expectedly unfavorable.

            As quoted in a report by an Oregon daily newspaper, an attorney who has been involved key land use battles questioned, “the public benefit for such an extreme measure...”

            Perhaps ironically, though, a Democratic state legislator who championed legislation that impeded resorts in the Metolius River Basin is leading the way for the expanded guest ranch law. He says it could stimulate rural economies without dodging the state’s orginal land use goals designed to limit those “sagebrush subdivisions.”

           

Deschutes grapples with rules to allow events on farmland

            It’s a thorny issue, one that could have the state looking over their shoulders as  Deschutes County officials grapple with regulations to govern weddings and other events on agricultural land.

            In a work session Wednesday afternoon, April 20, County commissioners waded through a “matrix” of options put forth by county planning staff for crafting new event rules.

As a starting point, commissioners must decide whether or not to allow any events on agricultural land. There are those who would prefer an events ban but commissioners appear to have eliminated that option.

Such issues as minimum acreage, the size of events, setbacks from adjoining land, access, traffic, parking, the number of events in a given period, their duration, and noise limitations are all part of the deliberations.

Complicating the process is the lack of firm guidelines in state rules for events on farmland.

In the words of county planning director Nick Lelack, “We could very well be the test case (for state guidelines) for whatever path we take” in the form of a text amendment to the county development code.

A memo to the commissioners from Lelack and senior planner Paul Blikstad noted that staff of the state Department of Land Conservation and Development have said, “that they are interested in the proposed text amendment (s) and process as it may have statewide relevance.”

Counties left to "proceed at our own risk"

Lelack said that given the uncertainty Deschutes and other counties “can proceed at our own risk” as the state works through the issues and develops new regulations. There have also been bills pertaining to farmland events circulating in the legislature.

Lelack noted that some counties have initiated guidelines for weddings and other events that may eventually be found at odds with state land use laws.

The controversy is emphasized in the planners' outline of opinions for and against commercial events on farmland. As an example, proponents were said to “not want a minimum parcel size..” while opponents, “did not want event venues at all, so the minimum parcel size wasn’t a factor in their opposition.”

Although the work session was only the starting point to give county staff direction for drafting rules, several options emerged in the discussion.

The commissioners favored limiting to 10 the number of events in a single year, and stipulating they be held from 11 am to 10 pm.

Also discussed were requirements that would limit permits to four years before required renewal; that notice of scheduled events be given to neighbors and fire and safety agencies; that events have 100 foot setbacks from property lines; and that MUA 10 and RR10 zones be excluded from consideration.

 Commissioners debated issues of temporary event structures such as tents and how long they could remain in place; vehicle access and parking; event setup and takedown time limits; and hours that music could be amplified. They favored restricting events to land on which the permit holder lives or on adjacent land rather than on remote unoccupied property.

Regarding the type of buildings allowed, commissioner Tammy Baney observed, “My sense is that it be no added structures...that it be temporary unless there is an existing facility that has been brought up to county standards.”

Commissioners asked if permits for events could be based on a case by case basis taking into consideration size of  the venue, neighboring properties, access and other criteria.

Commissioner Al Unger said he preferred an approach that would result in activity being compatible with neighbors.

However, county assistant legal counsel Laurie Craghead and planners cautioned that there should be objective standards that could be applied uniformly for all applicants.

A long running controversy on both sides of the Cascades

Holding events on farmland has been controversial for several years not only in Central Oregon but in the Willamette Valley where vineyards and wineries often host weddings, concerts and other public events.

Some counties have issued permits under state law allowing private parks, which are not allowed by the Deschutes county code. The county code also prohibits holding commercial events such as weddings on land zoned for exclusive farm use, or EFU.

Some landowners say allowing additional uses on farmland supplements their income to offset uncertainties with crops and livestock operations arising from fluctuating market demand, weather and other variables.

In August of 2010 a Deschutes County landowner was fined $500 by the circuit court for holding a wedding in 2009 at her Gardens and Flying Diamond Ranch in Redmond. The year before county commissioners denied a permit to hold weddings on farmland east of Bend that was zoned multiple use agriculture, or MUA.

Following those decisions, in 2009 some landowners acting as Country Gathering Associates, pressed the county for a code change to allow events as a conditional use on EFU land, but later backed off on the effort. Now the state DLCD has taken up the issue and there have been related bills introduced in the legislature.

Senate Bill 960 in the 2011 legislative session would allow events “subordinate to the primary use of the lot or parcel for farm use.”

It would permit counties to issue “limited use” permits for up to six events lasting no more than 72 hours over a two-year period.  It would also allow “single-event” permits for one year. The bill has various provisions for noise control, hours of events, structures, vehicle access and others but does not specifically mention weddings.

Senate Bill 325 introduced in the 2009 regular session would have allowed weddings and other commercial activities on EFU land in counties that have provisions for “private parks,” which Deschutes county does not.

Legislation would accommodate winery events on farmland

Current proposed legislation, HB 3264, is aimed more at accommodating events on larger winery operations in the Willamette Valley than areas east of the Cascades.

However it would also provide local governments with additional direction in authorizing commercial events related to wineries that have been approved as an outright use on EFU land under existing state laws. The bill appears to provide additional discretion for local governments to expand the types of events beyond those related specifically to wine production and sales.

Deschutes County hearing officer Karen Green is now considering public comments regarding an application by Faith Hope and Charity Vineyard to establish a winery on a 164-acre parcel in Terrebonne. Vineyard owners Cindy and Roger Grossmann have previously hosted weddings on the property while awaiting a decision on their application.

ORS 215.452 allows an onsite winery as an outright use on the Grossmann’s EFU-zoned land as the result of their having planted a minimum 15-acres in wine grapes. However, county planning staff have interpreted the legislation to require that a vineyard already be producing grapes to qualify for a winery. A decision on the FHC application is expected in the next few weeks.

In the county's next step, commissioners will review the upcoming draft text amendment from the planning staff and refer it to a public hearing after a 45-day notice period.

Resort bill for Sunriver area would revise nightly rental rules

Proposed state legislation related to a Sunriver area project is spurring discussion as to whether targeted bills should be used to provide flexibility under Oregon’s decades-old land use goals.

 The owner of Sunriver Resort has proposed a new community, at present known as Pine Forest, of 925 homes and home sites on 617 acres south of its existing Caldera Springs community and across from Crosswater, also developed by the resort owner.

 As a tradeoff for removing deed restrictions requiring nightly rental units at Caldera Springs and Pine Forest, Sunriver developers would contribute approximately $3,000,000 over a number of years. The original intent was for the payments to support a South County Sanitary Authority in the area which has been plagued by excessive nitrates resulting from septic systems.
            State and county regulations require that resorts provide nightly rental units indexed to the number of homes. State law requires a ratio of one nightly unit for each 2.5 homes, but DeschutesCounty’s more restrictive code mandates a 1:2ratio.

The state's land use Goal 8 that applies to resorts larger than 160 acres also requires a minimum of 150 nightly lodging units and that 50 of those be built before other home sites can be sold. It also stipulates that 50 of the remaining 100 units be bonded for construction within five years and the other 50 within 10 years.

Sunriver officials have maintained bonding fees might be better spent on improvements that could benefit the larger community. They also say that deed restrictions requiring units be available on a rental program for 45 weeks each year effectively deter potential buyers. And lenders view the units as income properties with tighter loan requirements, rather than owner-occupied homes.

A Sunriver spokesman has noted that only about 14 percent of existing homes in the resort are fulltime residences, leaving 86 percent that are potentially available for rentals.  It’s not clear how many of that percentage are available on a nightly rental program.

With its proposed Pine Forest project on the drawing boards, Sunriver officials had decided to upgrade their 40-year-old treatment system to accommodate their existing communities and new development. They say the state Department of Environmental Quality approached them regarding some way to also participate in solving the nitrate issues in the area before proceeding with improvements.

Sunriver has said it needs to move ahead with upgrading the system whether or not the larger community based sanitary authority is created. The timing will depend on a decision by DEQ and the fate of HB 3347.

Even if nightly rental restrictions are waived for Sunriver’s projects, other provisions of the state’s land use Goal 8 applying to resorts would remain, including at least 50 percent open space. HB 3347 would limit lot sizes in Pine Forest to 7,000 square feet and homes to 2,000 square feet.

The Sunriver Owners Association board of directors has raised a number of questions regarding the legislation, sponsored by Rep. Gene Whisnant, R-Sunriver. Many of the questions listed by the board address economic impacts of new development on existing Sunriver lodging facilities along with traffic impacts and demands on fire, public safety, schools and other services.

The board’s list also asked for details regarding a sanitary authority’s voting structure and powers including bonding, taxes and fees, and employment as well as information related to the existing Sunriver treatment system including planned improvements and the costs; funding sources and timing of construction.

Oregon's Goal 8: land planning related to resorts

HB 3347: Bill to revise nightly rental requirements

Wine basics event hosted by Central Oregon Winegrowers

The basics of appreciating and making wine will be featured topics at an April 30 meeting of the Wine Growers Association of Central Oregon at the new Faith Hope and Charity Vineyard in Terrebonne.

            Laura Cooper will lead the discussion of wine appreciation and tasting and Linda Donovan will concentrate on the basics of juice and chemistry that go into winemaking. 

Faith Hope & Charity Vineyard in Terrebonne

            Cooper, an attorney, conducts classes on the essence of wine appreciation. Donovan has many years experience as a winemaker and has made wine for  Faith Hope and Charity at a location in Medford while its vineyards are being established.

The event will be from noon to 4:00 pm on Saturday April 30 at Faith Hope and Charity’s facility, 70455 NW Lower Bridge Way in Terrebonne.

Directions: from Hwy 97 south of Terrebonne, west nine miles on Lower Bridge Way, then south (left) on the paved road for 0.5 miles to a gravel driveway, then left past the vineyard on the right to the white barn. Alternately, from Hwy 126 between Redmond and Sisters, take Holmes Road to NW Lower Bridge Way, then east to the paved road access.

The event is open to the public. RSVPs are requested by April 23 to either Cindy Grossmann of Faith Hope and Charity Vineyard, 541-350-5384, or Kerry Damon, of Monkey Face Vineyard at Ranch at the Canyons, 541-771-7187.

First Quarter 2011: single family sales up & prices down

            Closing out the first quarter of 2011 Central Oregon’s real estate market continued to show some signs of stabilizing but sale prices continued weak across most sub-markets and property categories.

            Distressed properties continued to grab the bulk of single family sales in Bend and Redmond, which together comprise nearly 80% of total sales among the eight sub-markets that also include Sisters, Sunriver, Jefferson and Crook counties, Three Rivers South and LaPine.

            Single family sales edged higher in Bend through the first three months ending March 31 as compared to the same period of 2010. But median prices slipped by 7.89% fdrom $190,000 to $175,600.

            Total unit sales, including distressed properties, increased by 9.14% year to year. The share of total sales in Bend that were either short sales or foreclosures was almost dead even, at 63%, in the first quarters of 2011 and 2010. 

            In Redmond total sales declined by 6.39% in the comparable first quarter and prices also dropped by slightly more than 5% to $119,500 from $125,816. Distressed sales increased from 71.5% of the total in the first quarter of 2010 to 77% in 2011.

            Of the 221 pending sales in Bend as of mid-April, there were 130, or 58.82%  recorded as short sales or foreclosures. In Redmond, 57 of 74 pending sales, or 77%, were distressed properties.

Broader market reflects Bend and Redmond

            Altogether in the eight sub-markets of Central Oregon, there were 711 single family homes sold in the first quarter of 2011 at a median price of $145,000, compared with 666 sales at a median of $162,000 in the same quarter of 2010--a 6.76% rise in unit sales but a continuing decline of 10.49% in median price.

Distressed properties accounted for 459 sales in Q1-2011, an identical share of 65% after rounding to the 431 out of 666 total sales in Q1-2010. Median prices of distressed properties  in the broader eight-market area declined by 11.81% from $144,000 to $127,000.

            Of the 379 pending single family home sales in Q1-2011 listed on the Central Oregon MLS on April 14, there were 238—or 62.80%-- that were either short sales or foreclosures.

First Quarter 2011-2010 Single Family Home Sales

Q1 Market Statistics Bend and Central Oregon Single Family Home Sales
Source: MLS of Central Oregon (click to enlarge)

 

From vine to bottle: vineyards are a growing trend in Central Oregon agriculture

Vineyards in Central Oregon?

There are skeptics, as often happens with new ideas germinated from thinking “out of the box,” or maybe “out of the bottle,” in this case.

 It’s too cold; the soil won’t work; it’s too dry; the growing season is too short; it’s “experimental” are among the misgivings.

Yet a small group of agricultural entrepreneurs are tilling a new frontier of viticulture in Central Oregon that is already showing substantial promise. Experimentation, they believe, is the mother of invention—or perhaps fermentation.

In northern Deschutes and southern Jefferson counties several vineyards are either in the early planting phases or have already produced grapes that have been transformed into bottled wine.

These homegrown viticulturists can point farther north to Washington state and British Columbia for examples of how similar agricultural diversification  has succeeded remarkably in areas once thought inhospitable to growing quality wine grapes.

Beyond creating a viable and sustainable crop that has enjoyed steady demand even in a difficult economy, the Central Oregon vineyard growers also want to be an integral part of a larger effort to support the region’s critical visitor industry through what is now widely known as  “agri-tourism.”

 The initial investment in vineyards and associated wineries can be substantial. One of the Central Oregon vineyard owners estimates their startup costs at nearly $25,000 per acre. But the potential per acre yield of $2,500 - $3,000 or more can be significantly higher than hay, a traditional Central Oregon crop which produces under  $1,000 an acre.

Veteran viticulturists say it takes adequate capital and considerable patience to succeed.  It will typically take up to five years for a vineyard to produce 2.5 to 3.0 tons of grapes per acre at today's prices of about $1,000 per ton. 

In the Spring of 2011, four vineyards are in progress in northern Deschutes and neighboring Jefferson County. Two of these now produce grapes nearby each other on acreage east of Highway 97 near Terrebonne.

Another vineyard is entering it’s second year in the Lower Bridge area south of Hwy 126 near the Deschutes River with full production of wine grapes anticipated in 2012.

 A fourth is in its third growth year just above the Deschutes River on Lower Bridge Road at Borden Beck State Park.

Much smaller hobby-type vineyards have sprung up near Madras and even around Fossil in Wheeler County.

None of the local vineyards will make a noticeable dent in Oregon’s estimated $76 million viticulture industry (not including retail sales) concentrated largely in the Willamette Valley and  along the Interstate-5 corridor, and to the north near Hermiston and the Columbia River. Altogether in Central Oregon there are fewer than 50 acres in current grape production with 40,200 acres in 2009 statewide, according to industry statistics. In fact the 2009 Oregon Vineyard and Winery Report, a combination state and federal agency data, doesn’t list any vineyard acreage for Central Oregon.

Vineyard rows at Monkey Face mid-April

 Leading the way at Monkey Face

            The pioneer established vineyard in Central Oregon is Monkey Face Vineyard in the private 1,700 acre Ranch at the Canyons community. It benefits from a spectacular location along the Crooked River that draws on the heat radiated from the adjacent towering Smith Rock State Park. On some days vineyard workers can hear rock climbers ascending the namesake Monkey Face spire across the river.

Kerry Damon came to Monkey Face in 2005, bringing many years of experience in the California grape industry. It was something he had dreamed of years before on first seeing the location.

Prior to Damon’s arrival a small vineyard had been planted with Concord, Reisling and Cabernet Franc varietals, but had not done well. Damon replanted the existing vine acreage, and added more in 2006, emphasizing hybrid grapes in the French-American category. There are now about 5 acres in production with the possibility of more being added in the future.



Kerry Damon prunes Marechal Foch
vines at Monkey Face Vineyard

 Going into 2011 Monkey Face has four red wine grapes known to tolerate colder climates including Marechal Foch, St. Crois, Leon Millot and Frentenac, along with three whites, Vignole, Le Crescent and a small planting of Frontenac Gris.

In 2010 Damon sold some grapes on contract to Faith Hope and Charity vineyard, which is just getting established and also has an application pending before Deschutes County to begin a winery at its site off Lower Bridge Road. Monkey Face has also sold grapes to Maragas Winery.

Of the varietals he has planted, Damon says, “Marechal Foch is definitely going to be a wine of choice in Central Oregon.”

Maragas vineyard and winery, along Hwy 97 in Culver just south of Terrebonne and only a few miles from Monkey Face  is the first onsite winery located in a vineyard in Central Oregon.

Doug Maragas began making wines with grapes from California and elsewhere in Oregon in 2003 and later opened a tasting room at the corner of Colorado Avenue and Bond Street between downtown Bend and the Old Mill District. It now doubles as his in-city tasting room and a Greek -inspired restaurant.

Maragas purchased 40 acres in Jefferson County in 2004 and planted approximately two acres in grape varietals to test which would fare best in the location. His winery opened in the Fall of 2006 in time to celebrate his first crush using grapes grown elsewhere in Oregon.

The winery faced some issues in the permitting but won approval from Jefferson County under state law allowing a commercial operation on farmland that complements agricultural use.

Maragas says his sole mission is to grow grapes and make wine, which distinguishes it from vineyards that are operated as amenities in projects with real estate for sale.

Today Maragas has more than 40 grape varieties planted on 2.5 acres and acknowledges he is experimenting to find varietals most adaptable to his location. Maragas has planted European style vitis vinifera varietals such as Merlot, Cabernet Sauvignon and Chianti, and also has purchased Vignole grapes grown at neighboring Monkey Face. He plans to plant another 15 acres.

            Among other varietals Maragas has planted Reisling, Chardonnay, Gewurtztraminer, Pinot Noir, Pinot Munier, three Muscats.  

Thus far he has bottled one wine made from the local grapes, a red dessert wine, known as Beet Red. Several of Maragas' wines made from outsourced grapes have been recognized at the San Francisco Chronicle wine competition, including bronze medals in 2007 and 2008 for his Legal Zin, a name play on the founder's previous career as an attorney.  A Pinot Gris has also bested in a competition one bottled by Kings Estate, one of the Willamette Valley's oldest estate wineries.

State law sets winery standard 

Cindy and Roger Grossmann of Faith, Hope & Charity have planted a 15- acre vineyard on 164 acres of their farmland off Lower Bridge Road west  the Deschutes River and only a few minutes drive from Maragas and Monkey Face vineyards.
        Thus far the vineyard includes four red wine grapes, Marquette, St. Crois, Leon Millot and Marechal Foch, and four whites, Le Crescent, La Crosse, Frontenac Gris and Traminette.

The Grossmann’s are awaiting a hearing officer’s decision on their application to establish on onsite winery as part of their business plan. One issue in the process is a determination by Deschutes County planners that the vineyard must have grapes in production to qualify for having and onsite winery.

Faith, Hope & Charity is the only Deschutes County vineyard to date that would meet the minimum 15-acre standard under ORS 215-452  to have a winery associated with a vineyard on agricultural land.
            The Grossmanns now have wine in barrels that was processed by a Medford vinter with grapes purchased from Monkey Face, and plan to do the same in 2011 as their own vineyard gets established. The first crush from their onsite grapes would come in 2012, by which time they hope to have all permits in place for an integrated vineyard-estate winery operation.
            At a recent Deschutes County hearing on the Grossmann’s winery application a neighbor expressed some concern over additional traffic that might be generated. But he praised the effort the couple has put into the project.

 “I’m on both sides of the fence. I hope it works out for them. And if it does, I’ll plant bananas,” he quipped. 


The DoubleEagle vineyard near
the Deschutes River

 The fourth vineyard has been started by Doug and Betty Dunn on a south facing slope on the north side of Lower Bridge Road as it  crosses the Deschutes River. The Dunn’s now have seven acres planted and altogether could have 15 acres in production, which would qualify them under state law to have a winery on site.

Doug Dunn says he’s approaching the venture step by step, as with his fellow growers experimenting to see what works at his site. As with the others he’s aware temperature is an important issue and takes measures to blunt the effects of potential frost.

In addition to a Marquette varietal, Dunn and wife Betty have also planted Pinot Gris and Pinot Noir and a white varietal from Portugal that has produced well in the foothills of the Pyrennes in conditions similar to Central Oregon.

The Dunns farm more than 400 acres in the lower bridge area, the bulk of it in hay and pasture for livestock.

“We’re in the experimental stage trying a bunch of different varietals,” Doug notes.

Eventually the Dunn’s effort, on their DoubleEagle Ranch, could be joined by his daughters and their husbands. Each couple has purchased separate acreage around Terrebonne with an eye to planting grapes.

“This could be a family-type development to include making wine at some location we have here,” Doug says. “it all depends on how things go on growing. We don’t have the confidence as yet to go ahead with that part of a master plan, where to locate (a winery) and handle all the business processes.”

Dunn credits Damon at Monkey Face with being a driving influence among the local vineyardists.

“He’s a champion to all of us who are trying to do something. He puts in his own time to help people. He’s our mentor.”

Events at wineries an unresolved issue

With the county’s consideration of the Grossmann’s winery application another issue has surfaced regarding the type of events, and their frequency, that should be allowed on land zoned for Exclusive Farm Use, or EFU.

It’s a conflict that emerged in Deschutes County and the Willamette Valley where many wineries were hosting weddings and other events as part of their operation. Increased scrutiny has forced counties to begin requiring special use permits, and several proposed bills that would address the issue have circulated in the state legislature.

For the most part counties have been left to interpret the language of state law governing activities on agricultural land. The interpretation promises to be a major issue as Deschutes County works through an update of the county comprehensive plan expected to conclude by this summer.

At the crux of the conflict is what type of activity meets the standards of state law for activities on EFU land. In January the state’s Land Use Board of Appeals addressed the issue by noting that a nonfarm activity “must be either exclusively or primarily a customer or supplier of farm uses in the area and essential to the practice of agriculture.”

Although the LUBA opinion related to food service at  wineries the implications of the decision could influence counties as they address the type of events on all farmland.

Even with the various issues confronting their efforts, the groundbreaking Central Oregon viticulturists are finding cooperation and potential strength in numbers with formation of the Winegrowers Association of Central Oregon.          

The regional grape growers might also take comfort from the experience of their counterparts in the Lake Chelan area of Washington and Okanagan country of southern British Columbia.

Both of those areas were not considered prime growing areas for vitis vinifera grapes that comprise the bulk of European-style varietals most popular in wine outlets, restaurants and private cellars.

The Chelan area and the BC Okanagan experience temperature swings similar to those of Central Oregon. Each is on the “dry side” of mountain ranges that protect them from drenching rains and clouds of coastal Washington and BC. Each is an area where other crops have long been the dominant agriculture.

In both of the northern areas, which also have a common link along Hwy 97 with Central Oregon, existing agriculture was struggling financially when decisions were made to try something new.

In the 1980s, the British Columbia government provided subsidies for growers to remove old style hybrid grape vineyards and replant with vitis vinifera vines more conducive to growing seasons with cool nights and warm days.

The Okanagan Valley Designated Viticulture Area (DVA) encompasses nearly 100 vineyards and wineries, today producing such well-recognized wines as Cabernet Sauvignon, Cabernet Franc, Merlot, Syrah, Chardonnay, Pinot Gris and Pinot Noir.  The Okanagan area has also carved a reputation for superb ice wines, made from grapes frozen on the vine.

The southern Okanagan Valley  accounts for 50 percent of all BC wine grape production on an estimated 10,000 acres throughout the province.

To emphasize the tourism benefits of the viticulture industry, in the late 1990s several wineries from the Okanagan region of Canada participated in a winemaker’s dinner at Sun Mountain Lodge,  in Washington’s spectacular Methow Valley near the Canadian border and north of Lake Chelan. Similar cross-border events have continued even as the viticulture industry has developed 50 miles south of the Methow Valley around Lake Chelan.


    Matching grapes with mesoclimates

In Chelan it was unreliable prices of apples that prompted orchardist Steve Kludt of Lake Chelan Winery to tear out some of his apple and cherry trees and plant grapes in 1998. Today the Chelan area now boasts its own American Viticultural Association, or AVA, designation, and has nearly 20 producing vineyards and associated wineries.



A vineyard that replaced
orchard trees at Lake Chelan



Among grapes now grown for Chelan AVA wines are Chardonnay, Viognier, Pinot Gris, Syrah, Pinot Noir, Merlot Cabernet Franc, Sangoivese and Nebbiolo.

In an early April conversation with Kludt the temperature in Bend was 35F  with intermittent snow flurries, while at his winery in Chelan it was 51F and sunny. Even with that disparity, there are similarities in the climates as both areas are at risk for late Spring and early Fall freezes that can affect grape maturity. A early Fall freeze before vines go dormant can immediately wipe out a season’s production, Kludt says.

Growing degree days (GDDs) are one climatic measure of a vineyard’s potential and are generally computed from April 1 through October 31 using a baseline, such as 50F for wine grapes. The Chelan area has about 2,300 GDDs, almost comparable to Napa Valley, Kludt notes. But Chelan degree days are greatest in the heat of summer, and much lower in Spring and Fall.

            Chelan and the BC Okanagan benefit from large lakes that act as heat sinks, absorbing warmth during the day and acting to moderate nighttime temperatures. 

Kludt’s success with his Lake Chelan vineyards has been with Pinot Noir and Pinot Gris, both cooler climate varietals, although the winery has won praise for its Cabernet Sauvignon from grapes grown in another vineyard at Benton City, in southern Washington. Last year the industry publication Wine Press Northwest rated Kludt’s Pinot Noir as the only outstanding bottling of that varietal in Washington state.

 “You can grow anything but you have to make them mature,” Kludt says. “They have to be ready to pick with the acids, the ph, all balanced out. You can grow grapes in Seattle but you can’t mature them.”

Kludt says that among the warmer climate varietals Syrah would be “about as far out” as he would want to test the climate potential in the Chelan area.

A guide for prospective wine grape growers published by Oregon State University specifies a range of  climate growing degree days for different varietals: 1,800 – 2,500 for Pinot Noir, Pinot Gris, Riesling, Gewurztraminer, Muscat and Chardonnay; 2,500 – 3,000 GDDs for Cabernet Sauvignon, Merlot, Viognier, Tempranillo and others; and more than 3,500 GDDs for “hot climate” varietals for table grapes and sweet dessert wines.

The guide’s author,  Dr. Patty Skinkis, viticulture extension specialist and assistant professor in the Horticulture Department of Oregon State University, has reviewed some of the Central Oregon vineyard efforts. She cites climate as a  challenge but perhaps not an insurmountable obstacle.

“Central Oregon faces climate issues being on the lower end of the scale to grow wine grapes. It’s highly experimental at this point,” Skinkis observes.

As with vinter Kludt in Chelan, Skinkis emphasizes the risk of frost during Spring “bud break” and the critical Fall harvest period.

“It’s highly unlikely the warmest climate grapes, Syrah and Cabernet for example, would grow well in Central Oregon,” Skinkis says.. However, she qualifies that, “there could be mesoclimates that could vary significantly” to make growing them more feasible.

In viticulture a mesoclimate is considered unique to a specific vineyard site. A macroclimate would apply to an entire region, or AVA, and a microclimate to areas as small as a row of vines.

At Monkey Face Vineyard, manager Damon concurs that temperature—especially the threat of Spring or Fall frosts—is a sensitive component in growing grapes in Central Oregon.

“It’s paramount that you have some form of frost protection in your plans, on both ends, not just the Spring but also Fall,” Damon emphasizes. At Monkey Face Damon draws water from lakes at Ranch at the Canyons to mist the vines at the threat of frost. It can be a tense time, especially with a Fall frost that could wipe out the entire season’s production.

Up north in Chelan, Kludt stresses that specific sites can have much different growing climates.

“If I were in Bend (the area) or even in Chelan, and someone came to me with a site looking for what grape is going to be best, it could be different across the road or the river,” Kludt says.

After Kludt’s vineyard and winery were established, he says a second and a third followed.

“With the third one, people saw things to do on a tour. We accomplished our goal. We wanted to establish an industry.”

And that would be a goal the Central Oregon viticulturists would  like to reach.

“We will be a wine region because we have the right climate and the right soil, in pockets.” Doug Maragas believes.