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Item 3: Res/W.Eug.Enterpr.Zone
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Item 3: Res/W.Eug.Enterpr.Zone
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6/9/2010 12:45:24 PM
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8/3/2005 3:43:58 PM
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8/8/2005
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concur with the City's position, the council action called for the City to end the City's participation in <br />the Enterprise Zone. The date by which the council was seeking a reply from the County was later <br />amended to August 2, 2005. <br /> <br />The Board of County Commissioners met on August 2, 2005, and amended its prior action on interim <br />local criteria (resolution 05-8-2-5, attachment A) with the intent of reaching agreement with the City. <br />The principal changes to the County's position were the dropping of the retained jobs provision, and the <br />increase in the benefit per job cap to $96,000 or $32,000 per job, per year, whichever is less. <br />Additionally, the County resolution calls for the consideration of the retention of existing jobs and <br />support for existing businesses during the development of permanent standards and public benefit <br />criteria. All other aspects of the public benefit criteria remain unchanged. <br /> <br />Comparative examples of how various cap/retention options would impact a very large investment <br />scenario are included in Attachment B. These examples are based on a $500,000,000 investment, <br />$13,404,800 owed in taxes, creation of 95 jobs and a current work force of 950. An exemption cap of <br />$30,000 (Example 1) with no retention provision results in a "capped" exemption of $2,850,000. Since <br />the Oregon Administrative Rules preclude reduction of the tax exemption benefit by more than one- <br />third, the resulting exemption would be $8,981,216. This is an exemption of 67% of taxes and would <br />result in a payment to the zone sponsors of $4,423,584. <br /> <br />An exemption cap of $30,000 for all new and retained jobs, a total of 1,045 jobs in this case (Example <br />2), would result in a capped exemption that exceeds the taxes due. The company would therefore <br />receive an exemption for the full amount of the tax liability of $13,404,808 and no payment would be <br />made to the zone sponsors. <br /> <br />An exemption cap of $96,000 with no retention provision (Example 3) results in a capped exemption of <br />$9,120,000. This is an exemption of 68% of taxes and would result in a payment to the zone sponsors of <br />$4,284,800. This last example is based on the terms included in the latest County action. <br /> <br />In the examples, the impact of job retention in calculating the exemption is clearly significant. <br />However, the exemption difference between the $30,000 cap and the $96,000 cap is very narrow <br />because of the impact of the state's one-third rule on exemption reduction. The results achieved in <br />applying the different exemption caps will vary in other scenarios depending on the specific levels of <br />investment and job creation. <br /> <br />RELATED CITY POLICIES <br />The enterprise zone tax exemption addresses the following related City policies: <br /> <br />Sustainable Community Development - The council's Sustainable Community Development goal <br />addresses high quality of life and a healthy economy. The availability of quality jobs is a basic quality <br />of life issue. With a local unemployment rate that exceeds the national average, and local income levels <br />below state and national averages, the creation of new production sector jobs is fundamental to the <br />health of the local labor market. The creation of an enterprise zone will also provide an incentive for <br />redevelopment, infill development, and brownfield redevelopment, which are primary sustainability <br />goals. <br /> <br /> L:\CMO\2005 Council Agendas\M050808\S0508083.doc <br /> <br /> <br />
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