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Mr. Braud explained that Hynix's proposed investment was concentrated in retooling and <br />equipment upgrades that would allow the company to remain competitive in the volatile memory <br />chip market. The proposed investment would not increase Hynix's production capacity. Mr. Braud <br />said the investment was necessary for the company to produce the next generation of memory <br />chip product. He said that because production volume at the facility was expected to be less than <br />recent volumes, a reduced labor force was anticipated. The company's employment was currently <br />approximately 645, a decrease from the 900- employee peak experienced early last year. The <br />company would be committing to an annual average of 650 full-time employees as a condition of <br />receiving the tax exemption on this new investment. Mr. Braud explained that, in absence of a <br />waiver, Hynix would need to reach an employment level of 986 (1ten percent of its 12-month <br />average prior to requesting pre-certification) in order to meet the standard employment increase <br />provision. <br /> <br />With regard to Hynix's request for a two-year extension of the property tax exemption, Mr. Braud <br />explained that the State Enterprise Zone Program's standard three-year property tax exemption for <br />qualified businesses may be extended an additional two years, subject to approval by the local <br />sponsors of the enterprise zone. He said that to receive the extended exemption, a business <br />must 1) provide all new employees an average annual compensation of at least 150 percent of the <br />county's average annual wage; 2) abide by any additional conditions that the sponsor may <br />reasonably request; and 3) enter into a written agreement with the zone sponsor confirming the <br />conditions associated with the extended exemption. Mr. Braud noted that Hynix's average <br />compensation (including benefits), as defined by the statutes, has been approximately $57,000, or <br />about 200 percent of the current County average annual wage. <br /> <br />With regard to the financial impact of Hynix's request, Mr. Braud explained that, based upon the <br />proposed investment of $156 million, the three-year total tax exemption has been estimated at <br />$4.8 million. He said the City's share of the proposed exemption represents a total of <br />approximately $2.4 million of forgone tax revenue over the three-year period. He said preliminary <br />estimates indicate that a fourth and fifth year of exemption would result in an additional tax <br />exemption of approximately $1 million. Mr. Braud stated that the City's total share of the two-year <br />extension exemption is estimated at $500,000. <br /> <br />In terms of public benefit criteria, Mr. Braud explained that prior to the expiration of the West <br />Eugene Enterprise Zone, the City and County adopted a local "public benefit criteria" policy for <br />investments qualifying for tax exemptions after the expiration of the zone. He said the "public <br />benefit criteria" policy is based primarily on the quality of "new jobs" resulting from a new <br />investment. He said that because a waiver of the job creation benefit requirement has been <br />requested, the public benefit criteria would not be applied; however, Hynix's existing jobs are <br />considered to be very responsive to the public benefit criteria based upon the above average <br />wage and benefit levels and its utilization of the local Employment Department. <br /> <br />Mr. Braud presented a brief overview of applicable market conditions, miscellaneous background <br />information, and deadlines associated with City and County action associated with Hynix's <br />request. Mr. Braud noted that in the event that Hynix's exemption is conditioned on an <br />employment waiver, the application must include a copy of the resolution granting the waiver. He <br />said this would make it necessary that the waiver be approved by the City and County prior to April <br />1, 2002. Mr. Braud stated that to receive the two-year extension, a resolution must be approved <br />prior to the zone sponsor's approval of the pre-certification and, therefore, the two-year extension <br />would also need to be approved prior to April 1, 2002. Mr. Braud noted that a follow-up City <br /> <br />MINUTES--Eugene City Council January 30, 2002 Page 2 <br /> Work Session <br /> <br /> <br />