COOS BAY — If two proposed nonprofit corporations invest wisely, they could create multimillion-dollar endowment funds the community can pull from for education, infrastructure and economic development for future generations.
If Jordan Cove Energy Project gets a 19-year property tax exemption and the local governmental bodies approve a Community Enhancement Plan, the company will dole out nearly $413.3 million in community service fees to the North Spit taxing entities, South Coast Community Foundation and Bayfront Investment Corp. by 2034.
But with returns on investments in SCCF and Bayfront’s endowment funds, that could total closer to $540 million.
That’s almost $100 million more than SCCF, Bayfront and the taxing entities would have ever received in property taxes alone.
“But you don’t spend every dollar you get when you get it,” said Oregon International Port of Coos Bay CEO David Koch. “The board has to resist the temptation every year to spend everything.”
As they have been touted so far, SCCF and Bayfront would each invest half of the community service fees they receive every year in endowment funds. SCCF has been proposed to fund local education; Bayfront has been proposed to fund waterfront and economic development.
Starting in 2020, that 50-50 ratio starts to change: 70 percent goes into the endowment funds and 30 percent is distributed.
The gap continues to widen up to 2034, when 98 percent goes into the endowment funds and 2 percent is distributed.
“At that point, the foundation is on its own feet,” Koch said. “It doesn’t rely on continuing payments. It relies solely on earnings.”
That doesn’t mean less and less would go toward grants every year — in fact, distributions would increase.
Koch said these estimates come from discussions with Coos County Commissioner John Sweet about his experience with the Ford Family Foundation.
“Investment advisors told them to anticipate a 7 percent average rate of return,” Koch said.
That 7 percent is broken into three parts: 4.5 percent distributed, 2 percent reinvested back into the endowment, and 0.5 percent for fund administration fees.
That 4.5 percent feeds into grant distribution, replacing Jordan Cove’s yearly fee payments.
“How much return you’ll get on the investment will vary, and how much you put back for a hedge against inflation will vary,” Koch said. “That will all be a determination of the (SCCF and Bayfront) boards.”