Item 3: Res/W.Eug.Enterpr.Zone - Laserfiche WebLink

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