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HomeMy WebLinkAboutItem B: Local Criteria for West Eugene Enterprise Zone EUGENE CITY COUNCIL AGENDA ITEM SUMMARY c Work Session: Resolution 4865 Establishing Local Criteria Applicable in the West Eugene Enterprise Zone and Adopting a Public Benefit Scoring System; and Repealing Resolution 4851 Meeting Date: April 10, 2006 Department: Planning and Development www.eugene-or.gov Agenda Item Number: B Staff Contact: Denny Braud Contact Telephone Number: 682-5536 ISSUE STATEMENT The council is being asked to consider the Enterprise Zone Committee's recommendation regarding the establishment of local criteria that would apply to tax exemptions granted in the West Eugene Enterprise Zone, and consider a resolution (Attachment A) establishing the local criteria proposed by the committee. BACKGROUND On August 8, 2005, the council adopted Resolution No. 4851, which established interim local criteria applicable in the proposed West Eugene Enterprise Zone (see 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 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 Guiding Principles for Local Standards (see Attachment C) and final recommendation. 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 the following nine areas: 1) Small Business, 2) Health Insurance, 3) Training and Advancement Opportunities, 4) Wages, 5) Employee Benefits, 6) Redevelopment, 7) Referral Agency Hiring, 8) Construction Practices, and 9) 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 similar to the existing interim criteria. Companies scoring 25 points or LICMOl2006 Council Agendas1M0604101S060410B.doc greater would receive 100% of the tax exemption benefit. Those 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 4J School District, 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. Approve the resolution in support of the Enterprise Zone Committee's recommendation. 2. Amend the resolution. CITY MANAGER'S RECOMMENDATION The City Manager recommends that the council adopt Resolution 4865 in support of the Enterprise Zone Committee's recommendation. SUGGESTED MOTION Move to adopt Resolution 4865 establishing local criteria applicable in the West Eugene Enterprise Zone and adopting a Public Benefit Scoring System; and repealing Resolution 4851. ATTACHMENTS A. Proposed Resolution B. Resolution 4851 Establishing Interim Local Criteria (2005) C. Enterprise Zone Committee's Guiding Principles for Local Standards FOR MORE INFORMATION Staff Contact: Denny Braud Telephone: 682-5536 Staff E-Mail: denny.braud@ci.eugene.or.us LICMOl2006 Council Agendas1M0604101S060410B.doc ATTACHMENT A RESOLUTION NO. A RESOLUTION ESTABLISHING LOCAL CRITERIA APPLICABLE IN THE WEST EUGENE ENTERPRISE ZONE AND ADOPTING A PUBLIC BENEFIT SCORING SYSTEM; AND REPEALING RESOLUTION 4851. 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 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. C. 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. 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, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a Municipal Corporation of the State of Oregon, 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 Resolution. Section 5. This Resolution shall become effective immediately upon its adoption, or upon the adoption of a Resolution or Order of the Lane County Board of Commissioners containing substantially similar provisions, whichever date is later. The foregoing Resolution adopted the _day of , 2006. City Recorder EXHIBIT A Public Benefit Criteria West Eugene Enterprise Zone 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 . 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. . Annual training expenditure greater than or equal to the U.S. average (as a percentage of total payroll). Annual training expenditure 2': 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) . 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% of2005 Median wage = $ 12.70 per hour * Traded sector industries include manufacturing, wholesale trade, and transportation / warehousing as defined by the Oregon Employment Department. 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) New investment is an expansion of the current site or a redevelopment of a brownfield or vacant building(s). Percentage of new jobs hired through local, training/referral agencies. Greater than 10% Greater than 30% Greater than 50% 1 point 2 points 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. Company takes steps to ensure a positive work environment during construction of a qualified enterprise zone investment. . Utilization of State approved (Oregon Apprenticeship and Training Division) apprenticeship programs for construction trades during construction. 2 points . Qualified firm signs a "Build Oregon Responsibly" agreement (see Appendix I). 1 point Size of new investment. Assessed value equal to or greater than $2,500,000 Assessed value equal to or greater than $5,000,000 1 point 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 x Tax 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). 25 - 20 100 x Tax Exemption = Public Benefit Contribution 25 - 20 100 x $ 100,000 = $ 5,000 I APPENDIX I "BUILD OREGON RESPONSIBLY" MISSION STATEMENT "Build Oregon Responsibly" was established by recognizing the benefits construction jobs provide to the residents and businesses of the State of Oregon. It is of mutual benefit to all parties that construction work be performed in a responsible manner. Being a responsible contractor, contracting agency, or project owner is defined as providing familylliveable wage jobs, full family health care, a trained and qualified workforce, quality/ professional workmanship, and a safe work environment. To the end that these values can be maintained, a Partnership Agreement has been developed insuring that only responsible contractors be involved in the building and rebuilding of any given area in the State of Oregon. It is only through private/public agencies, project owners, contractors, labor organizations, and the community at large working together coopemtively, that all construction work in Oregon be performed responsibly. Only construction work performed responsibly, by Construction Managers, Geneml Contractors, Sub-Contractors and Builders, will be a boost to the State's economy, lessen the burden to its taxpayers, and improve the overall quality of life in the State of Oregon. "BUILD OREGON RESPONSmLY" PARTNERSHIP AGREEMENT The undersigned parties hereto agree that all work at the project, located at ,Oregon will be performed only by contractors and/ or sub-cootractors who meet the following criteria: Be an equal opportunity employer and actively seek participation from Small, Small Disadvantaged, Minority, Women-Owned, Service Disabled Veteran-Owned, and Veteran- Owned Business Concerns. Encourages hire of local area workforce which will return long-term community benefits. · Provide fuII family health care for worker and hislher family. Premiums paid by employer. Have good safety record with no flagrant or repetitive OSHA violations. · In compliance with all Construction Contractors Board and Workmen's Compensation requirements. Not on B.O.L.I.'s (Bureau of Labor and Industries) debarred contractor list. · Licensed training agent with B.O.L.!. when employing apprentices and/or encourages participation in apprenticeship program(s) where applicable. · Compliant with DEQ, EPA, and all other environmental regulatory agencies. Encourages use of local area vendors, suppliers, other contractors/sub-contractors, etc. Pay liveable family wage defined as equal to the most current total wage/fringe package listed in Prevailing Wage Survey ofB.O.L.I. for applicable craft(s) in geographical area of project. · Does not hire/employ illegal (non-visa) workforce. · Participate in regularly scheduled meetings with owner, contractor, and labor representatives throughout duration of project. · To post contractor/subcontractor list upon award ofbid(s). Dated this day of .2004 A TT ACHMENT B RESOLUTION NO. 4851 A RESOLUTION ESTABLISHING INTERIM LOCAL CRlTERIA APPLICABLE IN THE WEST EUGENE ENTERPRISE ZONE AND ADOPTING A PUBLIC BENEFIT SCORING SYSTEM; AND REPEALING RESOLUTION 4845. The City Council of the Cit~. 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. At the time Resolution 4832 was approved, the Council directed the City Manager to bring back to the Council, prior to July I, 2005, a resolution adopting interim local criteria consistent with the Public Benefit Criteria adopted in 1997. It was the understanding that new job quality standards would be adopted as soon as practical following notification of a successful designation application, with the intent that 25 percent of the tax exemption benefit for qualified enterprise zone investments would be subject to the job quality standards. C, On June 27, 2005, the Council approved Resolution 4845, adopting Interim Local Public Benefit Criteria and other provisions pertaining to the West Eugene Enterprise Zone in anticipation of the designation of the Zone. Resolution 4845 provided that it would become effective upon adoption by the Council and adoption of a substantially similar resolution by the Lane County Board of Commissioners. On June 29 and on July 12, 2005, the Board of Commissioners adopted orders, but they were not substantially similar to Resolution 4845. This resolution replaces Resolution 4845. D. On August 2, 2005, the Board amended its July 12, 2005 order revising the interim local criteria. This Resolution is substantially similar to Order #05-8-2-5. E. On June 28, 2005, by Director's Order No. 00-05-130, the Oregon Economic and Community Development Department approved the application and designated the Wcst Eugene Enterprise Zone, effective July 1,2005. F. The Public Benefit Criteria attached as Exhibit A hereto reflects the scoring system adopted by Resolution No. 4548 on December I, 1997 with the fonnula for calculating the public benefit contribution adjusted to reflect the Council's desire to condition 25 percent (formerly 15 percent) of the tax exemption on the public benefit eritcria. G. Support of existing businesses and retention of existing jobs are important elements of the West Eugene Enterprise Zone, and those elements should be discussed during the development of pem1anent standards and public benefit criteria. Resolution - I NOW, THEREFORE, BE IT RESOLVED BY TilE CITY COUNCIL OF TIlE CITY OF EUGENE, a ;\Iunicipal Corporation of the State of Oregon, as follows: Section 1. Based on the above findings, which are hereby adopted, the City Council hereby establishes the following Interim Local Benefit Criteria for the proposed West Eugene Enterprise Zone: (a) Qualifying companies shall be required to make a public benefit contribution based on the following criteria: I. The extent to which the company hires from local training/referral agencies; 2. The extent to which the company hires persons with barriers to employment; 3. The extent to which the average compensation of new jobs is equal to or greater than the average county wage; 4. The extent to which the company dedicates funds for non- mandated training and benefits; 5. Whether the company is utilizing a previously developed site, including expansion of an existing site, or redevelopment of an industrial or brown field site; o. The extent to which the assessed value of new investment exceeds $500,000 per acre; 7. Whether the company is a small and/or local business or small and/or local start-up company. (b) Except as provided in subsection (c), in no event shall the amount of the contribution exceed 25% of the tax exemption. (c) Notwithstanding the provisions of subsections (a) and (b) of this section, the three-year tax exemption benelit shal1 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 paicl as a public benefit contribution. A business whose tax exemption benefit is anticipated to exceed the job cap limitation described in this subsection (c) shall make a public benefit contribution based on the anticipated excess, with a reconciliation of the contribution amount to the extent allowed by law to occur in the third year of the exemption. based on records of actual employment. (d) During the period these Interim Criteria are in effect, the per-job limit on the three-year tax exemption benefit described in the first sentence of subsection (c) of this section may be waived or modified for a specific applicant if the City Council and the Lane County Board of Commissioners each agree to the waiver or modification. The co-sponsors' decision to waive or not 10 waive the limit shall be based on consideration Resolution - 2 of the applicant's proposed capital investment in the West Eugene Elllerprise Zone; the anticipated employment resulting from the applicant's investment; the applicant's commitment to make other beneficial community investments; local economic conditions at the time of the application, including but not limited to the unemployment rate, market trends, and competition for altracting new businesses to the community; the co-sponsors' budget circumstances at the time of the application and the eITect of reducing the public benefit contribution on the co-sponsors' ability to provide public services to their citizens; and lhe co-sponsors' judgment as to the reasonableness of the public benefit contribution in light of the foregoing factors and in comparison to the public benefit contribution paid by other companies in the West Eugene Enterprise Zone. Section 2. The City Council adopts the Public Benefit Criteria Scoring System contained in Exhibit A altached hereto and incorporaled herein, to implement the Interim Local Criteria set forth in Section 1 of this Resolution, for detemlining exemptions for future investments made by companies participating in the proposed West Eugene Enterprise Zone. Section 3. Beginning in August, 2005, the Cily of Eugene and Lane County will undertake a process to develop and adopt pennanent standards and public benefit criteria for the Wesl Eugene Enterprise Zone. The process will begin with convening a joint CitylCounty commiltee composed of two elected officials from each governing body and a total of fOllr community represelllatives, two of whom shall be appointed by each govcrning body. The committee will meet through January, 2006, as needed, to develop a proposal for pemlanent standards and public benefit criteria, and il will provide opportunities for stakeholder participation and community involvemelll, including public hearings. Section 4. Resolution 4845 is repealed. Section 5. This Resolution shall become effective immediately upon its adoption. The foregoing Resolution adopted the 8th day of August, 2005. -Jill, [{ ~\ t.^'-. . t ity ecordcr Resolution - 3 Exhibit A PUBLIC BENEFIT CRITERIA (2005) The average wage for all new jobs is: ~ 100% and .s; 110% of average county wage > 110% and .s; 115% of average county wage > 115% of average county wage Points 25 35 40 Tbe extent to which the companv hires from local training/referral agencies.* ~ 10% - .s; 35% of all lIew jobs > 3501.. - .s; 50% of all new jobs > 50% of all new jobs Points 5 15 25 The extent to wblch tbe company hires persons with barriers to em 10 ment. ** ~ 5% -.s; 10% of all new jobs > 10% - .s; 20% of all new jobs > 20% of all new jobs Points 5 10 15 The extent to which the company dedicates funds for Don-mandated training and benefits. *** Points ~ 1% - .s; 5% of entire company payroll is dedicated 5 to non-mandated training & benefits > 5% - .s; 10% of entire company payroll is dedicated 10 to non-mandated training & benefits > 10% of entire company payroll is dedicated to 15 non-mandated training & benefits Whether the compauy is a small business. ~ 50 employees at time of precertification Points 10 Whether the company is utilizing a previously developed site, including expansion at an existing site (I.e., the investment will take place at tbe same physical location as the existing facility), or redevelopment of an industrial or brmvnfield site. Expansion at existing site Redevelop preexisting industrial site or brownlield site Points I 2 The extent to which the assessed value of new investment exceeds $500,000 per acre. ~ Investment ~ $500,000 per acre CRITERIA NOTES: * Example.~ of qUlllified local training or referral agencies: Lane Workforce Partncrship Oregon Employment Department Lane Community College Adult/Family Serviccs Vocational Rehabilitation Private Rehabilitation Agencies Goodwill Industries Catholic Community Services St. Vincent de Paul Salvation Army ** Examples of persons with employment barriers: Low/moderate income Disabled Injured Veteran Welfare recipient Displaced worker Teens/youth Ex-felon Older workers Shon-term jobs history Displaced homemaker Drug/alcohol abuse history Protected classes (Female head of household, Hispanic, Black, Asian or Pacific Islander, American Indian or Alaskan Native) *** Qualifying non-government mandated benefits include: health/lifc/disability insurance, retirement, profit-sharing, paid vacation/holiday, child care, transportation, sick leave, tuition assistance, career development/training. Based on the number of publIc benefit criteria points earned in each Enterprise Zone tax exempt year, each company shall make a public benefit contribution which shnll be a percentage of the total tax exemption In any given )'ear, based on the following: Points Earncd Public Benefit Contribution % 80+ 0% contribution 0-79 ~pply f~r!!,ula: Contri~~l!n duc_=. a pe':.':.e.!.lt~ge..!q~ to 25 minu!.,[(p.oint total ;:.80) x.J51___ _ _ Example: If point total is 40 ---- -- _ ..1~_!!!!nus [40~)>'i.25) = eontri!!!!!io.!!. ~t 12.5% Example: If point total is!!! ~..minus [10 + 80) ~ 25) = contribution of 21.875% DISTRIBUTION OF PUBLIC BENEFIT CONTRI.BUTlON Public benefit contribution will be paid annually, distributed as follows: - 40% to Lane County; - 40% to City of Eugene; - 20% to programs sponsored by educational institutions, including Section 501 (c)(3) lax exempt education foundations. The Enterprise Zone Committee will reconvene in any year in which there is at least $10,000 in this category to distribute. A competitive Request for Proposal process will be conducted by the Enterprise Zone Commillee to aJlocate the available funds. The Enterprise Zone Committee will consist of two City Councilors appointed by the Eugene City Council, two County Commissioners appointed by the County Board of ComJllissioners, and two at-large members appointed by the four Councilors/Commissioners. Administrative costs of the distribution process may be taken from the funds available. 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. ATTACHMENT C Enterprise Zone Committee Guidin!! Principles for Local Standards: . Different types of business, and different-sized investments will produce different benefits to the community. . . the standards should be flexible enough to capture the positive outcomes for all types of eligible investment . Small businesses should not be disadvantaged . Consider separate standards for small businesses and large businesses . Recognize that a majority of the investments will be made by existing, local businesses . Recognize that entry level jobs are important, despite the fact that these jobs may not pay a living wage initially . Employee benefits, training, and advancement opportunities are most important factors when defining quality entry level jobs . Utilization of local programs (apprenticeship, job placement) enhances the program's benefit to the community . Companies should be rewarded for efficient use of our scarce land supply . Job creation and future tax revenue are both important outcomes for the program . Consistent reporting of program outcomes is important for the community . Reporting compliance with standards should not be overly burdensome on businesses or staff Funds recaptured in the program should be targeted for specific community benefit Tax exemption should not only benefit the business, it should benefit the community