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

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

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

Enterprise Zone - What Areas City Limits

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

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

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

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

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

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

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

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

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

Types of Enterprise Zones  Enterprise Zones Standard Enterprise Zone (3 yrs) Extended Enterprise Zone (4 th & 5 th 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?

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?

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

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

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

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

Next Steps  March 22, 2010 Council action – adopt resolution