The AOC Governance and Revenue Steering Committee will be handling economic development advocacy for the organization moving forward. According to ORS 258A.020, the purpose of Oregon’s economic development statutes is “to enable the creation, retention, expansion, and attraction of businesses that provide sustainable, living wage jobs for Oregonians through public-private partnerships and leveraged funding and to support economic opportunities for Oregon companies and entrepreneurs.” The statutes clarify that economic development includes engaging a skilled workforce and furthering efforts to retain and attract businesses. 

Property Tax Incentives for Economic Development

One tool local governments can use to pursue their economic development goals is property tax abatement designed to attract and retain businesses in economically distressed areas. Business Oregon administers a number of programs around property tax incentives and has just released a report highlighting their effectiveness. Counties can sponsor the programs listed below. The descriptions provided are sourced from a Legislative Policy and Research Office background brief. 

Standard Enterprise Zones

An eligible business receives a three year total exemption from the property taxes normally assessed on new buildings, structures, and equipment if it locates or expands within an enterprise zone and meets certain employment requirements. Tax abatement may be extended to four or five years if the project has a written local zone sponsor agreement and meets certain new employee compensation and wage requirements.

Long-Term Rural Enterprise Zones

Available in most rural enterprise zones located in a county that either meets certain criteria for per capita income, unemployment rate, or migration, or that is outside of all metropolitan statistical areas and has a relatively higher property tax rate. Business Oregon maintains an online list of eligible counties and zones based on these factors. The program offers property tax abatement during the entire construction period and then seven to 15 years after the facility is operational. Any type of business activity is eligible with local approval and minimum levels for investment size, job creation, and employee compensation.

Strategic Investment Program

Offers a 15-year property tax exemption on a portion of large capital investments. The program was created in the 1990s to induce large, capital-intensive facilities to locate and grow in Oregon. Projects must serve a traded sector industry and the actual exemption is on the property value in excess of a taxable portion. In urban areas, the taxable portion of a project’s market value must be at least $100 million, while in rural areas, the market value starts at $25 million. Projects are approved through an agreement between a business and the county and city (if applicable), or through designation of a Strategic Investment Zone by the Business Oregon commission that allows all eligible projects in an area to receive the tax exemption. Companies pay the respective county a community service fee equal to 25 percent of the abated taxes. Local governments receive a portion of the income tax generated through these programs via a mechanism called Gain Share.

Thirty Oregon counties currently sponsor enterprise zones. Business Oregon provides an Enterprise Zone Map to examine the details of each currently designated zone. Statutory authorization of those zones will expire in 2025 unless extended by the Legislature.

The AOC Governance and Revenue Steering Committee will be deeply engaged in economic development advocacy in the 2023 Legislative Session. For questions, or feedback, please contact AOC Legislative Affairs Manager, Tyler Janzen.

Contributed by: Tyler Janzen | Legislative Affairs Manager