Enterprise Zones – Status & Local Incentives Discussion

1. Enterprise Zones – Status & Local Incentives Discussion City of Woodburn March 8, 2010

2. City Council Actions • Council (February 8, 2010) supported proceeding with application to designate Woodburn an Enterprise Zone • Council approved Mid-Willamette Valley Council of Governments assisting with application

3. Enterprise Zone Application - Status • Mid-Willamette Valley Council of Governments is preparing the application • Consultation meeting scheduled – March 11, 2010 (4:00 – 6:00PM) • Seeking letters of support – Taxing Districts • Seeking letters of support – local businesses

4. Enterprise Zone - What Areas City Limits

5. How does an Enterprise Zone work? • Eligible businesses: • Provide goods, products, or services to other business operations or organizations • Conventional manufacturing or industrial activities • Processing plants, distribution centers • Maintenance facilities, warehouses • Operations that handle clerical or post sale technical support

6. How does an Enterprise Zone work? • Eligible businesses must invest in new property or equipment not already on the county’s tax rolls • Property must be owned or leased by the business firm locating in the enterprise zone • Investment must cost $50,000 or more, in total for qualified “real property” • Newly constructed buildings • Additions or modifications • Heavy-affixed machinery or equipment • Property tax exemption unavailable for any property already on the tax rolls

7. How does an Enterprise Zone work? • Does not include; • Land, non-inventory supplies, rolling stock, vehicles, and motor-propelled devices • Office supplies, furniture

8. How does an Enterprise Zone work? • First Source Hiring Obligation • Statutorily, must have first-source hiring agreement throughout exemption period • Must use resources offered by the Employment Division (Worksource Oregon) • Worksource provides testing, referrals, interview coordination • Not required to hire referrals

9. How does an Enterprise Zone work? • Existing businesses must increase and maintain an employment increase • One person or 10% full time employees over 3 yrs • Full time employees (32+ hrs) • Permanent year-round jobs • Working within the Enterprise Zone • New businesses to the area must employ at least one employee

10. How does an Enterprise Zone work? • What happens if they fail to maintain employment? • Back taxes on exempt property paid without penalties nor interest • Must provide timely notice to County Assessor to avoid penalties (20%) • Subsequent failure – business disqualified from Enterprise Program

11. How does an Enterprise Zone work? • Ineligible businesses • Construction • Retail goods or services • General office activities • Health care • Entertainment • Finance • Professional service (legal, engineering, etc) • Childcare • Housing • Property Management

12. How does an Enterprise Zone work? • Relocation into the Enterprise Zone • If business is beyond 30 miles – can’t relocate employees – closing or curtailing operation at original site • If business is within 30 miles – must increase overall employment by 10% within the Enterprise Zone

13. Types of Enterprise Zones • Standard Enterprise Zone • 3 year abatement based upon specific criteria • 4th & 5th year extended abatement based upon specific criteria (wages 150% County average) • Hotels & motels • Electronic Commerce • Retail/Financial Call Centers (customer base outside calling area)

14. Types of Enterprise Zones • Enterprise Zones • Standard Enterprise Zone (3 yrs) • Extended Enterprise Zone (4th & 5th yrs) – local option • 150% of Marion County average wage ($30,542*150%=$45,813) • Should the City offer businesses meeting 150% of the Marion County average wage receive an extended abatement for 4 or 5 years?

15. Types of Enterprise Zones • Enterprise Zones • Electronic Commerce Zone • Businesses engaged predominantly in transactions via the Internet or an Internet-based computer platform • Qualifying businesses receive credit against annual state income or corporate excise tax liability • Must have ready investment to qualify for Electronic Commerce zone • Hotels & motels eligible for deferral? • Should the City include hotels and motels in the Enterprise Zone?

16. Enterprise Zone - Local Incentives? • Should the City offer other incentives to qualifying businesses? • Many Enterprise Zones provide some level of local incentives • Reduced permit fees • Land use permits X% • Sign permits X% • Building permit X% • Revenue issues associated with building fees • Fast track permits • Planning permits • Building permits • Engineering permits • Staffing issues associated with fast tracking building permits

17. How does an Enterprise Zone work? • Should the City offer other incentives to qualifying businesses? • Reduced SDC fees • Based upon the number of employees • Water SDC X% • Sewer SDC X% • Transportation SDC X% • Parks SDC X% • Revenue issues associated with reducing SDC’s

18. How does an Enterprise Zone work? • Should the City offer other incentives to qualifying businesses? • Hook-up fees • Water • Sewer • Revenue issues associated with reducing hook-up fees • Reduction in monthly water and sewer user charges • Revenue issues associated with reducing monthly user charges

19. Where will the Enterprise Zone be located? • Where will this happen? • Industrial zones (Light Industrial & Industrial Park) • Commercial General • E-Commerce - citywide • Entire city or limited areas? • UGB added at later date

20. Next Steps • March 22, 2010 Council action – adopt resolution