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ATTACHMENT C SUMMARY OF ISSUES West Eugene Enterprise Zone Agenda Item July 18, 2005 1. Termination of the Zone: Included in Council's June 29, 2005 approved motion is direction to terminate the new West Eugene Enterprise Zone, and begin working with the County towards an application for designation of a zone next year. However, if the new zone is terminated prior to its 10- year maturity date, State statutes (ORS 285C.250{2}) would not allow Eugene to apply for a zone at any time in the future. 2. Unilateral Termination of the Zone: In 1995, the City of Coburg passed a resolution in support of terminating a new enterprise zone that was jointly sponsored by Lane County. The matter was reviewed by the State Attorney General, and the State required termination resolutions from both the City of Coburg and Lane County. Based on this prior opinion, and recent confirmation from the State, it does not appear that the City of Eugene can unilaterally terminate the newly formed West Eugene Enterprise Zone. 3. Currently Active Zone: The new West Eugene Enterprise Zone was designated effective July 1, 2005 by the State of Oregon (Director Order DO-05-130). Therefore, the zone is currently operating under State statutes. Given the inability of the City and County to reach agreement on interim local criteria, the zone is currently operating without local criteria. It is important to note that companies seeking the program's tax exemption are eligible for precertification as of July 1, 2005. Tax exemptions associated with precertification applications submitted prior to the City's and County's adoption of local criteria would be subject to the State's basic eligibility criteria, but not subject to any local criteria subsequently adopted. Consistent with State statutes, the zone sponsor does not have the discretion to deny precertification of an eligible application. As of this date, the City has received one precertification application under the new West Eugene Enterprise Zone. Heli-Tech, an existing, local helicopter product manufacturer, has submitted a precertification application for a new $2 million production facility to be located at Danebo Ave. and Pacific Ave. Although the investment appears to be eligible, the City and County have not yet taken action on the application. 4. Reduction of Tax Exemption Benefit Resulting from the Cap: On April 19, 2005, staff submitted a memo to the Mayor and Council in response to questions leading up to the April 20, 2005 Council meeting. The memo included a summary of the City Attorney's response related to the legality of the proposed per-job cap on the tax exemption benefit. Although the City Attorney opinioned that such a cap appears to be legal under statutes, concerns were raised regarding scenarios in which the cap resulted in a reduction in the tax benefit of more than one-third. Oregon Administrative Rules preclude reduction of the tax exemption benefit by more than one-third. Given this limitation, the ability of the L:\CMO\2005 Council Agendas\M050718\S0507184.doc