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HomeMy WebLinkAboutItem 6: Ordinance on Local Criteria for West Eugene Enterprise Zone ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY An Ordinance Establishing Local Criteria in the West Eugene Enterprise Zone and Adopting a Public Benefit Scoring System; Repealing Resolution 4851; and Providing an Effective Date Meeting Date: May 22, 2006 Agenda Item Number: 6 Department: Planning and Development Staff Contact: Denny Braud www.eugene-or.gov Contact Telephone Number: 682-5536 ISSUE STATEMENT The council is asked to consider adoption of an ordinance (Attachment A) concerning the establishment of local criteria that would apply to tax exemptions granted in the West Eugene Enterprise Zone. BACKGROUND On August 8, 2005, the council approved Resolution No. 4851, which established interim local criteria applicable in the proposed West Eugene Enterprise Zone (Attachment B). The resolution provided that the City of Eugene and Lane County, joint sponsors of the zone, undertake a process to develop and adopt permanent standards and public benefit criteria. The resolution provided for the establishment of the Enterprise Zone Committee composed of two elected officials from each governing body, and a total of four community representatives, two of whom were appointed by each governing body. The resolution also provided that opportunities for stakeholder participation and community involvement, including public hearings, be included in the process. The elected officials appointed to the committee included City Councilors Andrea Ortiz and Chris Pryor, and Lane County Commissioners Bobby Green and Faye Stewart. The City-appointed community members included Claire Syrett and Rusty Rexius, and the County-appointed community members included Lou Christian and Steven Korth. The committee met on six occasions between November 2005 and February 2006. The committee also hosted a public workshop on December 7, 2005, and a public hearing on January 31, 2006. Public input gathered at the workshop and public hearing was instrumental in shaping the committee’s recommendation. The City Council held a public hearing on the ordinance on May 8, 2006. The Lane County Board of Commissioners is scheduled to consider the proposed criteria on May 17. ORS 285C.150 provides that a sponsor of an urban enterprise zone may require an eligible business firm to satisfy other conditions. These conditions must be reasonably related to the public purpose of providing opportunities for groups of persons to obtain employment, and can only be imposed based on an adopted policy that establishes standards for imposition of the conditions. The standards recommended by the committee include “Public Benefit Criteria” focused in nine areas: Small Business, Health Insurance, Training and Advancement Opportunities, Wages, Employee Benefits, Redevelopment, Referral Agency Hiring, Construction Practices, and Investment Size. Consistent with the direction from the council and County Board, 25% of the tax exemption benefit would be conditioned on these Public Benefit Criteria standards. The committee recommended a point system L:\CMO\2006 Council Agendas\M060522\S0605226.doc similar to the existing interim criteria. Companies scoring 25 points or greater would receive 100% of the tax exemption benefit. Companies scoring fewer than 25 points would be required to make a public benefit contribution. The committee recommended that funds collected as public benefit contributions be disbursed directly to the City (20%), County (20%), and educational institutions (60%). The designated educational institutions would include Eugene School District 4J, Bethel School District, Lane Community College, and Lane Education Service District, with funds distributed proportional to the then-current permanent property tax rate for each education institution, and prorated between 4J and Bethel school districts based on enrollment. RELATED CITY POLICIES The enterprise zone tax exemption addresses the following related City policies: Eugene City Council Vision and Goals Statement: Encourage a strong and vibrant economy, ? fully utilizing our educational and cultural assets. We will ensure that every person can achieve financial security, enjoy the fruits of their labor, and operate within a sustainable economic structure where business thrives. Growth Management: The enterprise zone advances the City’s Growth Management goals by ? encouraging more intensive industrial development in a defined area that has been zoned accordingly, and where existing public infrastructure investments have already occurred. Fair, Stable, and Adequate Financial Resources: The long-term property tax revenues that result ? from new investments that are encouraged by the short-term tax exemption address Council’s goal for financial resources adequate to maintain and deliver municipal services. COUNCIL OPTIONS 1. Adopt the proposed ordinance. 2. Amend the ordinance. 3. Delay action on this item until a later date. 4. Take no action and continue to utilize interim criteria. CITY MANAGER’S RECOMMENDATION The City Manager recommends that the council adopt the proposed ordinance. SUGGESTED MOTION Move to adopt an ordinance establishing local criteria in the West Eugene Enterprise Zone and adopting a Public Benefit Scoring System; repealing Resolution 4851; and providing an effective date. ATTACHMENTS A. Proposed Ordinance B. Resolution 4851 Establishing Interim Local Criteria (2005) FOR MORE INFORMATION Staff Contact: Denny Braud Telephone: 682-5536 Staff E-Mail: denny.braud@ci.eugene.or.us L:\CMO\2006 Council Agendas\M060522\S0605226.doc ATTACHMENT A ORDINANCE NO. _____ AN ORDINANCE ESTABLISHING LOCAL CRITERIA APPLICABLE IN THE WEST EUGENE ENTERPRISE ZONE AND ADOPTING A PUBLIC BENEFIT SCORING SYSTEM; REPEALING RESOLUTION 4851; AND PROVIDING AN EFFECTIVE DATE. The City Council of the City of Eugene finds that: A. On April 20, 2005, the City Council adopted Resolution No. 4832 authorizing the City Manager to make application to the State of Oregon for designation of a West Eugene Enterprise Zone. B. On August 2, 2005, the Board of Commissioners adopted Order #05-8-2-5, and on August 8, 2005, the City Council adopted Resolution 4851, in which the Board and Council adopted interim local criteria. C. On June 28, 2005, by Director’s Order No. DO-05-130, the Oregon Economic and Community Development Department approved the application and designated the West Eugene Enterprise Zone, effective July 1, 2005. D. As provided by Resolution 4851, the City of Eugene and Lane County undertook a process to develop and adopt permanent standards and public benefit criteria for the West Eugene Enterprise Zone. The process began with the convening of a joint City/County committee composed of two elected officials from each governing body and a total of four community representatives, two of whom were appointed by each governing body. The committee met through January, 2006, providing opportunities for stakeholder participation and community involvement, including public hearings, and developed a proposal for permanent standards and public benefit criteria, which is attached as Exhibit A. E. In developing its recommendation the Committee gave consideration to the support of existing businesses and retention of existing jobs as important elements of the West Eugene Enterprise Zone. NOW, THEREFORE, THE CITY OF EUGENE DOES ORDAIN AS FOLLOWS: Section 1. Based on the above findings, which are hereby adopted, the City Council hereby establishes the Local Public Benefit Criteria and Scoring System for the West Eugene Enterprise Zone, as set forth in Exhibit A attached hereto. Section 2. Public benefit contributions shall be distributed on an annual basis to the following entities: ?20% to Lane County; ?20% to the City of Eugene; and ?60% to support local education. The amount shall be distributed proportionally (based on permanent tax rates) to K-12 education, Lane ESD, and Lane Community College. The K-12 contribution shall be distributed to the 4-J and Bethel school districts in amounts proportional to the districts’ enrollments. Section 3. Enterprise Zone data will be reported to the Eugene City Council and the Lane County Board of Commissioners on an annual basis and will include information on new investments, tax exemptions granted, job creation, and public benefit criteria. Section 4. Resolution 4851 is repealed upon the effective date of this Ordinance. Section 5. Notwithstanding the effective date of Ordinances as provided in the Eugene Charter of 2002, this Ordinance shall become effective 30 days from the date of its adoption by the Council and approval by the Mayor or upon the adoption of a Resolution or Order of the Lane County Board of Commissioners containing substantially similar provisions, whichever date is later. Passed by the City Council this Approved by the Mayor this ____ day of ___________, 2006 ____ day of ________________, 2006 ___________________________ _______________________________ City Recorder Mayor EXHIBIT A Public Benefit Criteria West Eugene Enterprise Zone 1. 9 points Small Business maximum Number of permanent, full-time employees after project completion, at submission of the Oregon Enterprise Zone Claim. Less than 25 employees = 9 points Between 25 and 49 employees = 7 points Between 50 and 99 employees = 5 points Between 100 and 499 employees = 2 points 2. 7 points maximum Health Insurance . Medical benefits for all eligible employees * = 4 points (Employer pays not less than 70% of the premium) . Medical benefits for family = 3 points (Employer pays not less than 50% of the premium) * An eligible employee works 32 hours or more per week in a permanent position and has completed all necessary probation period. 3. Training & Advancement Opportunities 7 points maximum greater than or equal to . Annual training expenditure the U.S. average (as a percentage of total payroll). Annual training expenditure = 2.34% = 4 points (Benchmark source: American Society for Training and Development) . Company has a comprehensive written policy for wage or position advancement. Written advancement policy = 3 points (Shall include details such as job descriptions, position classifications, regular performance evaluations, step advancement, progression pay schedule) 4. 7 points Wages . For companies with 25 or more employees, median wage for ALL employees is equal to or greater than the median wage for the traded sector industries* within Lane County. 2005 Median wage = $ 14.95 per hour . For companies with less than 25 employees, median wage for ALL employees is equal to or greater than 85% of the median wage for the traded sector industries within Lane County. 85% of 2005 Median wage = $ 12.70 per hour * Traded sector industries include manufacturing, wholesale trade, and transportation / warehousing as defined by the Oregon Employment Department. 5. 6 points maximum Employee Benefits Company provides non-mandated employee benefit(s) to all employees. Childcare = 1 point Life Insurance = 1 point Employer Paid Time Off * = 1 point Profit Sharing = 1 point Retirement Plan = 1 point Transportation = 1 point * Includes holiday, vacation, sick leave, undesignated leave (minimum of 10 days) 6. 5 points Redevelopment New investment is an expansion of the current site or a redevelopment of a brownfield or vacant building(s). 7. 3 points maximum Referral Agency Hiring Percentage of new jobs hired through local, training/referral agencies. Greater than 10% = 1 point Greater than 30% = 2 points Greater than 50% = 3 points Examples: Department of Human Services, Catholic Community Services, Goodwill Industries, Lane Workforce Partnership, Lane Community College, local unions, Oregon Employment Department, Private Rehabilitation Agencies, St. Vincent de Paul, Salvation Army, Vocational Rehabilitation, other. 8. 3 points maximum Construction Company takes steps to ensure a positive work environment during construction of a qualified enterprise zone investment. . Utilization of State approved (Oregon Apprenticeship 2 points and Training Division) apprenticeship programs for construction trades during construction. . Qualified firm signs a “Build Oregon Responsibly” 1 point agreement (see Appendix I). 9. 2 points maximum Investment Size Size of new investment. Assessed value equal to or greater than $2,500,000 1 point Assessed value equal to or greater than $5,000,000 2 points The criteria above will determine if a company is required to make a Public Benefit Contribution. Companies scoring below 25 points will be required to make a Public Benefit Contribution. The formula for calculating the Public Benefit Contribution is described below. Calculating the Public Benefit Contribution Companies that score below 25 points will make a public benefit contribution based on the following formula: - 25 Criteria Points Earned xTax Exemption=Public Benefit Contribution 100 Example If a company scores 20 points and has a tax exemption of $100,000, the company will make a $5,000 Public Benefit Contribution (5% of the tax exemption). - 20 25 xTax Exemption=Public Benefit Contribution 100 - 20 25 $ 100,000 x=$ 5,000 100 Job Creation Cap – Additional Public Benefit Criteria The three-year tax exemption benefit shall be limited to a maximum of $96,000 per job created or $32,000 per job created per year, whichever is less. Tax exemption benefits in excess of that amount shall be paid as a public benefit contribution. Public benefit contribution payments made with the criteria points formula (above) will be credited towards the payment required by the job creation cap. The maximum public benefit payment shall be one-third of the tax exemption benefit.