Strategic Investment Program (SIP) Property Tax Abatement: Manufacturers and other traded sector businesses that make significant capital investments above certain threshold amounts ($25 million in a rural area; $100 million elsewhere) may qualify for a 15-year abatement on real property taxes levied on that portion of their investment above the threshold amounts. Thus to benefit from this program companies will need to make investments that are considerably larger than the statutory minimums. A community service fee equal to 25% of each year’s tax savings (capped at $2.5 million) will be assessed annually to help offset some of the costs of public services.
Oregon Investment Advantage: Qualified companies that establish a new business operation in one of 20 eligible counties and create at least 5 full-time jobs, permanent jobs paying 100% or more of the average county wage, can enjoy an up to 10-year state income tax holiday. To be eligible the facility operations must be the first of its kind in Oregon for that business and cannot compete with a local business. Applications must be filed before any hiring or work commences on the new facility. The new operations must be up and running for a minimum of 24 months and recipients must subsequently certify each year (up to 10 years) that they choose to claim the exemption.
NOTE: As of this writing, Oregon is expected to add certain public benefits conditions to all incentives programs. This could include requirements for community engagement, or social policy goal obligations such as local procurement, diversity, etc. BLS & Co. will continue to monitor the situation and will provide updates as appropriate.
Enterprise Zones: Businesses locating or expanding in one of 69 Enterprise Zones may be eligible for an exemption of real and/or personal property taxes on new plant and equipment for three to as many as five years (longer terms will result in greater jobs and investment obligations). The benefit is limited to new buildings, new machinery and equipment and personal property of high value (e.g., minimum of $50,000). Tenant improvements are eligible if the company is occupying a shell building. In the event of a leasehold the building owner must be a party to any agreement as the abatement will be passed thru to the tenant. Individual jurisdictions may impose additional obligations, including minimum investment levels and minimum average wages, as well as a community service fee that can vary by the size and the duration of the abatement. The program also provides a “Construction-in-Process” exemption for up to 2 years when qualified property may be exempt from local taxation before it is placed in service. In addition, an extended 15-year property tax exemption is available for companies that locate or expand in one of 54 rural enterprise zone locations. All Enterprise Zone agreements also require recipients to enter into a “First Source Hiring Agreement” that commits the company to listing new positions with WorkSource Oregon.
Business Expansion Program (BEP): The objective of the BEP program is to incent high wage jobs in high growth industries. Forgivable loans may be provided to businesses that create at least 50 new full-time, permanent jobs with wages at or above 150% of the state or county average wage, whichever is less. Applicants must employ a minimum of 150 in the United States and operate in a “traded” industrial sector (not local-serving) to be eligible. The amount of the forgivable loan will correlate closely with the estimated increase in personal income tax revenue over two years resulting from the new job creation. Applicants generally are given two years to fulfill their job creation commitment, they must then maintain that level for eight additional quarters.
Governors’ Strategic Reserve Fund: A discretionary incentive (most often in the form of a forgivable loan) approved by the Governor and administered by the Oregon Business Development Department to encourage new, or retain existing jobs and investment in targeted industries.
Recipients generally have two to four years to fulfill job creation or retention obligations or they must reimburse the funds. Total funding is approximately $10 million for FY 2019 – 2021. A community and/or public benefit will be negotiated with the company in order to receive the forgivable loan.