Item 7: Resolution on E-Commerce in West Eugene Enterprise Zone

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Action: Resolution Authorizing Application for an Electronic Commerce Designation in the West Eugene Enterprise Zone Meeting Date: July 23, 2012 Agenda Item: 7 Department: Planning and Development Staff Contact: Denny Braud www.eugene-or.gov Contact Telephone Number: 541-682-5536 ISSUE STATEMENT The council is asked to consider a resolution that would add an electronic commerce designation to the existing West Eugene Enterprise Zone. BACKGROUND The Oregon Enterprise Zone Program is a State program established by the legislature in 1985 for the primary purposes of job creation, encouraging new investment, diversification, and competitiveness. The existing West Eugene Enterprise Zone (see Attachment A) was designated in 2005 and is jointly sponsored by the City of Eugene and Lane County. The program offers a three-year property tax exemption for new buildings, renovation and expansion of buildings, and equipment investments made by qualified businesses located within a designated area defined by the zone sponsor. The exemption is designed to encourage new investment via a short-term exemption, with the long-term goal of job creation and increasing tax revenue for taxing districts following the exemption period. A qualified business is basically a (non-retail) manufacturing, processing, call-center, headquarters, distribution, or warehousing business that will increase its base employment by at least 10 percent. Businesses can request two additional years of tax exemption if they agree to specific wage requirements and other conditions that the zone sponsor may impose. The West Eugene Enterprise Zone designation expires in 2015. Oregon State Statutes (ORS 285C.095) allow enterprise zones to receive a special overlay to further encourage electronic commerce ("e-commerce") investments. The overlay applies to all of an existing enterprise zone boundary. E-commerce is defined as engaging predominantly in transactions via the internet or an internet-based computer platform. These transactions can include taking orders, closing sales, making purchases, providing customer service or undertaking other activities that serve the business's overall purpose. The most significant feature of these e-commerce designations is that qualifying businesses may receive a state income tax credit against the business's annual state income or corporate excise tax liability. State Income Tax Credit The state income tax credit available to qualified e-commerce businesses equals 25 percent of the investment cost made in capital assets used in e-commerce operations inside the enterprise zone. The investment must be incurred in that income tax year. Qualified investments include property used in the S:\CMO\2012 Council Agendas\M120723\S1207237-and att A.doc