House Bill 2009 became the vehicle for negotiations that began early in session about several economic development and tax incentive programs long supported and utilized by counties. Negotiations centered on policy differences about the importance of these locally-driven tools to attract businesses to areas that need development and the alternative viewpoint that the subsidies in these programs needlessly reduce local revenues that could be used for other services, in particular schools.
AOC supported the efforts to keep these incentives as strong as possible and worked with other stakeholders, including the Oregon Economic Development Association and League of Oregon Cities to keep the programs intact.
After weeks of negotiation, public hearing testimony and advocacy from AOC members, and multiple rounds of amendments, a -15 amendment to HB 2009 was finally adopted and now goes to the governor for signature.
The compromise legislation does the following:
- Reinstates the research and development tax credit, which was discontinued by the legislature in past years
- Tax credit is in effect for 5 years, the percentage is 15 percent of the investment, and the maximum credit per taxpayer is $4 million
- Extends the Enterprise Zone and Long-term Rural Enterprise Zone programs through 2032
- “Fulfillment centers” are no longer eligible
- Increases the eligibility threshold for projects in the strategic investment program and indexes the eligibility threshold and the taxation threshold
- Adds a new “school impact fee” to the Enterprise Zone program
- Extends the Gain Share program through 2030
- Adds transparency and notice requirements
The most concerning part of HB 2009 for AOC was the addition of the new school impact fee. Fortunately, the initial proposal was negotiated down to be imposed only in years four and five for regular Enterprise Zones and year six for Long-term Rural Enterprise Zones. The fee will be negotiated between the school district and the zone sponsor and be between 15 percent and 30 percent of the property taxes that would otherwise be paid. Each fee negotiated would apply to all subsequent agreements.
Contributed by: Anna Braun, AOC contract lobbyist