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Home My WebLink AboutResolution No. 4715 RESOLUTION NO. 4715 A RESOLUTION APPROVING A WAIVER OF EMPLOYMENT REQUIREMENTS FORA PROPERTY TAX EXEMPTION TO HYNIX SEMICONDUCTOR MANUFACTURING AMERICA, INC. FOR ITS OPERATIONS IN THE WEST EUGENE ENTERPRISE ZONE. The City Council of the City of Eugene finds as follows: A. The City of Eugene and Lane County are co-sponsors of the West Eugene Enterprise Zone, which terminated in 1997. B. Hynix Semiconductor Manufacturing America, Inc. (Hynix) is an eligible business firm as provided in ORS 285B.707 and has the right under ORS 285B.686(2) to seek additional tax exemptions in the enterprise zone. C. Hynix now seeks a tax exemption for its operations in the West Eugene Enterprise Zone under ORS 285B.704, and has requested a waiver subject to the conditions identified below. D. property. In 2001, Hynix completed an investment of more than $25 million in qualified E. In 2001, Hynix laid off a number of employees and presently employs approximately 250 fewer persons than were employed one year ago. F. ORS 285B.704(3) allows an eligible firm, with the zone sponsor's approval, to qualify for a tax exemption if it completes an investment of $25 million or more in qualified property, on or before December 31 preceding the first assessment year, even if the firm would otherwise be disqualified by a loss of employment. G. Under ORS 285B. 704(3)(b), a zone sponsor may require other conditions of a firm seeking qualification by waiver of the employment requirement. H. It is in the public interest to waive the employment requirement and set a new employment requirement for Hynix to be qualified for a tax exemption. I. The City Council desires to waive the employment requirements, pursuant to ORS 285B.704(3) and subject to certain conditions, so that Hynix may qualify for a three-year tax exemption under ORS 285B.698 and ORS 285B.704 beginning in FY03. Resolution - 1 NOW, THEREFORE, based upon the above findings, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a Municipal Corporation of the State of Oregon, as follows: Section 1. Pursuant to ORS 285B. 704(3 )(b), the City approves Hynix' s qualification for a property tax exemption under ORS 285B.698, subject to the following six conditions: a. To remain qualified for a tax exemption, Hynix shall maintain a minimum average annual employment level equal to 650 employees during the period of the exemption. The definitions of employee and employment in ORS 285B.650 and OAR 123- 065-4400 to -4410 shall govern the interpretation of this condition and the calculation of employment levels, except that the term "employee" shall not include persons who are leased, contracted for or otherwise obtained through another entity. Notwithstanding the previous sentence, for the first year of the exemption, the calculation of average annual employment shall be based on the seven months between April 1 and November 1,2002. For each year thereafter, the calculation shall be based on the 12 months preceding November 1 of that year. b. By November 15 of each year of the tax exemption, Hynix shall deposit into an interest-bearing escrow account established for that purpose an amount equal to the amount of taxes that would be due if the property were not exempt, which amount is to be determined from the tax assessor's office. For purposes ofORS 285B.728(6), this payment shall be considered a payment to the sponsor. c. F or each year of the tax exemption, local schools shall receive from the escrow account referenced in subsection (b) an amount equal to the sum of the permanent tax rates of Lane ESD, Lane Community College and School District 4-J, multiplied by the assessed value of Hynix ' s qualified property per thousand. That 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. d. For each year of the tax exemption, the City and County shall collectively receive from the escrow account an amount equal to: the payment referenced in subsection (b), less the payment of the funds to the local schools referenced in subsection (c), less the amount of Hynix' s financial benefit (as calculated pursuant to subsection (e) below). The City and County shares of this payment shall be based on the ratio of the city's permanent tax rate to the county's permanent tax rate. e. Hynix' s financial benefit, net of the school contributions described in subsection (c), shall be proportional to the average annual employment level it achieves relative to the employment level of 986 employees that would be required without this Resolution - 2 employment waiver. The financial benefit shall be calculated as follows. First, determine the percentage of employment that Hynix has achieved by dividing Hynix's average annual employment level by 986. Second, subtract the amount of payment to local schools under subsection (c) from the amount of the payment under subsection (b). Third, apply the percentage of employment to the amount calculated in step 2. The amount so determined is Hynix's financial benefit. That amount shall remain in the escrow account. f. At the end of the exemption period, if Hynix has fulfilled all the conditions set forth in this section, Hynix shall receive the balance of funds in the escrow account. If Hynix has failed to meet any of these conditions, the City and the County shall receive the funds in the escrow account based on the same criteria in subsection (d). Section 2. This Resolution shall take effect only if the following three conditions are met: a. The Board of County Commissioners approves the property tax exemption to Hynix with an employment waiver subject to the same six conditions set forth in Section 1 herein. b. Hynix indicates, by signing below, that, based on its own considerations: (1) Hynix accepts the costs imposed by the conditions set forth in Section l' , (2) The conditions of the tax exemption and employment waiver are reasonable and will be beneficial to it; and (3) Hynix is committed to satisfying the conditions and requirements set forth herein. c. An escrow account is established that includes escrow instructions to which the City, County and Hynix all agree. Section 3. In the event that Hynix fails to comply with any of the conditions in Section 1 herein, the City Manager shall notify the county assessor that Hynix has become unqualified for the exemption. The foregoing Resolution adopted the 13th day of March, 2002. ~~/. ~L-/ City Recorder Resolution - 3 ACCEPTANCE OF RESOLUTION NO. 4715 OF THE CITY OF EUGENE, OREGON TO THE MAYOR AND COUNCIL OF THE CITY OF EUGENE: Hynix Semiconductor Manufacturing America, Inc. (Hynix) hereby accepts Resolution No. 4715 of the City of Eugene, Oregon, and all the terms and conditions of the Resolution. Hynix specifically acknowledges its acceptance of the provisions of paragraph b of Section 2. Dated this day of , 2002. Hynix Semiconductor Manufacturing America, Inc. By: Title: Resolution - 4 ACCEPTANCE OF RESOLUTION NO. 4715 OF THE CITY OF EUGENE, OREGON TO THE MAYOR AND COUNCIL OF THE CITY OF EUGENE: Hynix Semiconductor Manufacturing America, Inc. (Hynix) hereby accepts Resolution No. 4715 of the City of Eugene, Oregon, and all the terms and conditions of the Resolution. Hynix specifically acknowledges its acceptance of the provisions of paragraph b of Section 2. Dated this .2. 2"d day of M aych , 2002. Hynix Semiconductor Manufacturing America, Inc. By: -<J~",*;r.....- Title: S1yafeCj;( p it'()J)1;nj 11t).)1lt-j~ {'I' (J V Resolution - 4