Prosperity, with a catch, provided the theme for 2017 in Central Oregon business.

The pace of economic growth in the region slowed, signaling not an end to good times but a maturing business cycle, according to experts.

By September, the Central Oregon Business Index, for one, had climbed in two out of three quarters so far this year. By the third quarter, the index, which measures nine variables in the Central Oregon economy from building permits to tons of trash produced, stood nearly 4 percent higher than third quarter 2016.

A continuing tide of newcomers to the area and its accompanying demand for housing, a resurgent tourism sector and job growth in Central Oregon were but three indicators of a healthy economy.

Jobs, jobs, jobs

Deschutes County set the pace for job growth in Oregon, reaching 3.5 percent unemployment in May, its lowest rate since the 1990s, before rising by November by 4.1 percentage points.

In May, economists Josh Lehner of the Oregon Office of Economic Analysis and Tim Duy of the University of Oregon described Oregon’s economy as sitting in a “sweet spot” of low unemployment, low interest rates and rising wages. Interest rates have since crept up, but overall the economy continues to grow.

As long as unemployment remains low and inflation remains in check, economic growth on a national scale may continue, although at a slower rate, Duy said in May. The Oregon Economic Forecast, of which Lehner was one author, in November echoed that view.

“The economy is likely to begin to run into supply side constraints in the near future and how the economy adjusts, and how policymakers react to these changes, will go a long way toward determining when the expansion ends,” the forecast reads. “That said, the U.S. economy is beginning to hit the sweet spot like Oregon has in recent years. Employment and participation rates are rising some and wages continue to pick up. As such, household incomes are growing and poverty rates are falling. Oregon continues to transition down from peak growth rates seen a couple years ago to a more sustainable, long-term rate.”

Drinks beer, thinks beer

Central Oregon brewers illustrated continued prosperity with a year marked by expansion on several fronts, despite an overall slowdown in the brewing industry.

From the smallest to the largest, the area’s craft brewers continued to expand. For example, Steve Anderson, of Kobold Brewing LLC, one of Oregon’s smallest brewers, in January announced plans to open a taproom in downtown Redmond. Anderson was filling pints in a refurbished former savings-and-loan building by August.

Although growth in craft brewing around the country slowed to single digits, according to the Brewers Association, small brewers like Kobold and Monkless Belgian Ales, another Bend company, found new opportunity by opening local brewpubs and taprooms. Larger breweries took advantage of the bright economy to increase their production capacity and broaden distribution not only to other parts of Oregon but also to neighboring states.

Sunriver Brewing Co. pushed its distribution into Idaho and beefed up its brewery. Boneyard Beer, Silver Moon Brewing, Bend Brewing Co., Worthy Brewing, Bridge 99, 10 Barrel and Deschutes Brewery, to name a few, this year all expanded their production facilities, broadened distribution, renovated or opened new taphouses or a combination of the three.

Deschutes Brewery continued its plans to build its second production brewery in Roanoke, Virginia.

Beer may be synonymous with Bend, but Humm Kombucha, of Bend, announced it, too, would build a second kombucha brewery, in Roanoke, Virginia, in the coming year. That announcement followed the company’s expansion this year into a new, larger production facility on Bend’s north side. Humm Kombucha CEO Jamie Danek said kombucha would flow from the Virginia brewery in 2019.

And Atlas Cider, another Bend company, announced a new taproom and restaurant in Portland in the coming year.

Canna-culture

Bend in 2017 welcomed marijuana — legal marijuana, that is — into its business community. Deschutes County also opened its regulatory window to cannabis cultivators, although neighboring landowners weighed in periodically against what seemed a land rush for marijuana farms.

By year’s end, the county was home to 65 marijuana licensees, from growers to processors to testing labs to wholesalers and retailers. Bend had 20 recreational marijuana dispensaries, with more to come. The Oregon Liquor Control Commission Recreational Marijuana Program indicated 137 license applications from Deschutes County of all kinds in the works, including 64 for growers, as of Thursday.

Cannabis proved a boon to Oregon’s public treasury. Between January and November, the state Revenue Department collected about $62.3 million in taxes.

It collected another $9 million on behalf of cities and counties that imposed their own local sales taxes. Bend city officials estimated it would receive about $500,000 in local sales tax and another $240,000 from its share of $85 million in state taxes collected between January 2016 and August.

Money aside, business owners moved to change the image of cannabis. Lifestyle brand became the industry buzzwords. Cannabis retailers sponsored downtown street fairs and concerts while opening second and sometimes third locations. And the Bend Chamber of Commerce elected a marijuana business owner to its board of directors, what may be a first in Oregon.

Hazy, crazy summer

Tourism overall continued to flourish in Central Oregon. Collections of transient room tax, the primary measure of tourism in Bend and Deschutes County, posted continuously better numbers every month but one.

Bend in fiscal year 2016-17 collected $9 million in room tax, three times the amount collected in fiscal year 2008-2009. Deschutes County collected $6.3 million during the same period, nearly double the amount in 2008-09.

The good times paused in September, when smoke from wildfires up and down the Cascades mingled to create a blanket of haze that covered much of the region. Hotel, motel and resort stays dropped, and closures of popular trails and campgrounds in the Deschutes National Forest kept all but the hardiest backcountry through-hikers away.

In Sisters, the annual folk festival, a signature event that draws nearly 4,000 who spend $1.2 million during the event, was canceled for the first time in its 22-year history. Smoke from several fires kept Sisters blanketed, but the 24,025-acre Milli Fire, which stared in August, contributed the lion’s share.

Challenges and opportunities

The economic and business climate in Central Oregon provided obstacles and opportunities. A lack of affordable housing and of qualified job applicants presented two of the most often-heard complaints.

On the other hand, Central Oregon, and Bend, particularly, continued as places that embrace entrepreneurship.

The city for most of 2017 outpaced Oregon as a whole in the number of new businesses created each month, according to Jeff Eager, a lawyer and former Bend mayor who tracked business registrations.

And the 14th annual Bend Venture Conference in October produced a record number of investors and awarded a total of $1.65 million in new investments in startups and early stage businesses from around the Pacific Northwest.

— Reporter: 541-617-7815, 
jditzler@bendbulletin.com