HomeMy WebLinkAboutItem C - Enterprise ZoneEUGENE CITY COUNCIL
AGENDA ITEM SUMMARY
Work Session: Economic Development Committee Recommendations on an
Enterprise Zone
Meeting Date: October 11, 2004 Agenda Item Number: C
Department: Planning and Development Staff Contact: Tom Coyle
www. cl. eugene, or. us Contact Telephone Number: 682-6077
ISSUE STATEMENT
This work session is a continuation of the September 29, 2004, City Council agenda item regarding the
Mayor's Committee on Economic Development recommendation specific to Enterprise Zone tax
exemptions. It is requested that the council direct staff to proceed with application to the State of
Oregon to establish an Enterprise Zone.
BACKGROUND
At the September 29, 2004, City Council meeting, the following motion was presented:
Move to direct the City Manager to proceed with application to establish an enterprise zone in
Eugene, jointly sponsored with and supported by Lane County, based on the recommendation of
the Mayor's Committee on Economic Development, and consistent with State of Oregon
guidelines. The application package will return to the council for approval in advance of the
Spring 2005 State of Oregon application deadline.
A friendly amendment to that motion was accepted as follows:
Move to amend the motion by striking the single boundary expansion in the area bounded south
of lst Avenue, west of defferson Street, north oft he raikoad tracks, and east of l/an Buren Street.
A second motion to amend was presented as follows:
Move to amend the staff motion so it applies to redevelopment, infill, and brownfieM sites only.
A motion to table passed as follows:
Move to table the October 11, 2004, work session because of time constraints and needfor a
response from Mr. Klein.
The need for a response from the City Attorney revolved around the City's ability to limit the tax
exemption to redevelopment, infill, and brownfield development given the state statutes and rules. The
clearest approach to limiting the tax exemption to redevelopment/infill/brownfield development would
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be to eliminate peripheral greenfield sites from the boundary. A preliminary map representing this
approach is included in Attachment A. Additionally, a response from the City Attorney regarding the
second motion is included in Attachment B. Other enterprise zone background information was
provided in the September 29 Agenda Item Summary.
RELATED CITY POLICIES
Information was provided in the September 29 Agenda Item Summary.
COUNCIL OPTIONS
1. Direct staff to proceed with an application to establish an enterprise zone in Eugene based on the
recommendation of the Economic Development Committee, with the application package returning
to the council for approval prior to the Spring 2005 state application deadline.
2. Direct staff to proceed with an application to establish an enterprise zone in Eugene based on the
amended motion which limits the tax exemption to redevelopment, infill, and brownfield sites only.
3. Provide direction to not prepare an enterprise zone application at this time.
CITY MANAGER'S RECOMMENDATION
The City Manager approves the staff-developed recommendation that an application to establish an
enterprise zone, consistent with the committee's recommendation, and consistent with state guidelines
and timeframes, be prepared for City Council approval and submittal to the State of Oregon in the
Spring of 2005.
SUGGESTED MOTION
Move to direct the City Manager to proceed with application to establish an enterprise zone in Eugene,
jointly sponsored with and supported by Lane County, based on the recommendation of the Mayor's
Committee on Economic Development, and consistent with State of Oregon guidelines, and striking the
single boundary expansion in the area bounded south of First Avenue, west of Jefferson Street, north of
the railroad tracks, and east of Van Buren Street. The application package will return to the council for
approval in advance of the Spring 2005 State of Oregon application deadline.
ATTACHMENTS
A. Map representing the second motion option
B. City Attorney opinion
C. Response to questions and issues from September 29, 2004
FOR MORE INFORMATION
Staff Contact: Tom Coyle
Telephone: 682-6077
Staff E-Mail: tom.g.coyle~ci.eugene.or.us
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/grownfie~d Attachmeat A
CITY OF EUGENE
INTER-DEPARTMENTAL MEMORANDUM
CITY ATTORNEY - CIVIl, DEPARTMENT
To: Denny Braud, PDD/CDD Date: October 6, 2004
Subject: Enterprise Zone - Additional Condition Re: Brownfields
You have asked whether it would be lawfi~l for the City of Eugene and Lane County to
include as an additional condition for enterprise zone tax exemption eligibility that thc development
occur only on brownfields, m~d not greenfields~ For the lbllowing reasons, it would not be lawfill
for thc City and County to impose such a condition.
ORS 285C.135 provides the state-prescribed eligibility criteria lbr enterprise zone tax
exemptions. In general, and subject to certain restrictions, a business is eligible for thc exemption
if it is engaged in, or proposes to engage in, within thc enteq~rise zone, "providing goods, products
or services to businesses or other organizations tlu-ough activities including but not limited to,
manufacturing, assembly, fabrication, processing, shipping or storage." ORS 285C. 135(1). For the
most part, if the business meets the state criteria, it is eligible for the exemption, hz addition to thc
state criteria, ORS 285C. 150 al lows a "sponsor" o t'an enterprise zone, i .c. a city or county, to impose
additional conditions that the business must satisfy in order to receive the tax exemption. Hoxvever,
the additional conditions "must be reasonably related to the public purpose ot' providing
opportnnities for groups of persons, as defined by thc sponsor, to obtain employment, including but
not limited to providing training to these groups of persons."
The condition yon have proposed, i.e. requiring thc business development to occur only on
brownfields, does not affect whether a business meets the state eligibility criteria, and is unlikely to
be ~'ound to be reasonably related to the public purpose of providing people with employment
opportunitics. Thercfi)re, we do not believe it would be lawfill for the City and County to impose
such a condition.
IIARRANG LONG GARY RIJDNICK P.C. -
CITY ATTORNEYS
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ATTACHMENT C
ENTERPRISE ZONE
Questions and Issues from September 29, 2004 Meeting
1. Is there an alternative form of property tax exemption, other than the State's Enterprise Zone
program, that could be used to redefine the types of companies that qualify, and broaden our
ability to condition the tax exemption?
No. Property tax exemptions are authorized by the State of Oregon-Department of Revenue. The City
of Eugene does not have the authority to initiate tax exemptions locally. Existing tax exemption
programs, including the Multiple Unit Property Tax Exemption (MUPTE), Vertical Housing
Development Zone, Historic Property Tax Exemption, and Low-income Housing Tax Exemption are all
authorized under state statutes. These programs are not applicable to traditional job-creation/economic
development activities.
2. What is the definition of "family wage job" and "living wage"?
These two terms are typically used synonymously, but there is no single, universally accepted definition.
The State of Oregon typically considers "average annual wage" to be the benchmark for family/living
wages. The average annual wage in Lane County is currently $30,311 ($14.57/hr.). The Economic
Policy Institute considers the annual family/living wage to be $31,383 ($15.09/hr.) for a family of three
(average household size in Eugene) in the Eugene-Springfield area.
3. What are the "community standards" that were referenced at the previous meeting; and, given
the state Enterprise Zone statutes and rules, is it possible for these standards to be incorporated
into locally adopted conditions?
The Eugene-Springfield Solidarity Network has developed a community standards policy for economic
development subsidies provided to business. The following is a description of the standards and an
analysis of the City's ability to condition the enterprise zone tax exemption on each standard:
Transparancey and Disclosure - Open and pubfic accounting of how money will be spent and what it
will provide to the local community.
Tax exemptions granted in the enterprise zone program are matters of public record. Because the
program only offers tax exemptions, there is no money "spenf' in the program, and therefore no
ability for companies to utilize funds inappropriately. The County Tax Assessor requires
companies to demonstrate annually that they are in compliance with the program requirements.
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Accountability- Employers who do not observe these community standards will be required to pay back
any pubric money or tax breaks?incentives that they have received and will not be erigible for further
subsidies until they guarantee compliance. Estabrishment of independent commission to oversee and
monitor compliance with community standards.
State statues require the Tax Assessor to disqualify tax exemptions in cases where companies are
not meeting the program criteria. There are layers of accountability provided in the program,
including statutes and rules that clearly define events of disqualification, requirements that
companies submit statements of compliance to the Tax Assessor annually, and the authority
provided to the Tax Assessor to disqualify ("clawback") exemptions. Given the accountability
required in the program, there is no clear role for an independent commission to oversee and
monitor compliance.
Family Wage Jobs- Require racially and ethnically diverse workforce, provide riving wage jobs, fair
labor practices, on-site childcare or chiM care allowances, neutrality in union organizing campaigns.
The State statues allow the adoption of local conditions that are "reasonably related to the public
purpose of providing opportunities for groups of persons to obtain employment...". It may be
possible to include local conditions related to wages, keeping in mind that there may be
limitations on the jobs that can be conditioned (new jobs only) and the reasonableness of the
wage requirement.
Conditions related to workforce diversity and childcare appear to be consistent with the
provision of employment opportunities; although childcare requirements for small/medium-sized
businesses may not be reasonable. Regarding equal opportunity employment and fair labor
practices, there are existing laws that govern these areas. State enterprise zone statutes require
companies to comply with all local, state, and federal laws applicable to the companies'
operations within the enterprise zone throughout the exemption period.
Local Hiring - Any jobs created at any level are hired retained and promoted locally first, hiring a
majority (at least 60%) locally. Utilize local vendors, suppliers and services.
Based on a 1995 opinion issued by the Oregon Attorney General which declared that residency-
based hiring requirements violated the Oregon Constitution, the Oregon Administrative Rules for
enterprise zones specifically states that additional local conditions "shall not require that the
eligible business firm' s hiring, recruitment, promotion, training, compensation or treatment of its
actual or potential employees, suppliers, contractors or customers be based on those persons' or
businesses' residency or geographic location..."
Sustainability - Encourage small business and existing sectors, "smart growth "principles, encourage
use of nearby existing mass transit routes.
Historically, the primary focus of the enterprise zone program in Eugene was directed towards
the encouragement of small business growth in existing traded sector businesses. In the expired
West Eugene Enterprise Zone, 81% of the companies that participated had less than 50
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employees when their new investment was qualified. Because the continuation of this small
business focus in a newly created zone is a desired outcome, it is important that additional local
conditions provide equal or greater access to the tax exemption for these local small businesses.
Central to the idea of "smart growth", policies should encourage density in areas already served
by infrastructure, which has the effect of conserving open space and irreplaceable natural
resources on the urban fringe. Benefits of smart growth development policies include a stronger
tax base for the community, closer proximity of a range of jobs and services, increased efficiency
of already developed land and infrastructure, reduced development pressure in edge areas, and
preservation of more open space.
Although it may be difficult for specific additional conditions related to smart growth and mass
transit to meet the state's "employment opportunities" limitation, the tax exemption can be used
as a tool to "encourage" smart growth principles. The recommendation forwarded by the
Mayor' s Committee on Economic Development does incorporate principles of smart growth.
The recommendation provides greater benefits for redevelopment, infill, and brownfield
investments; and the boundary recommendation is focused on the encouragement of a dense
pattern of development within an industrial area with infrastructure already provided.
4. What definitions are being used to classify redevelopment, infill, brownfield, and greenfield
development?
Redevelopment- reusing, renewing and restoring existing structures, including structural improvements
and production improvements; removal of non-economic or outdated improvements; consolidation and
clearing of property.
Infill Development - creation of new and higher density uses for land within existing developments,
including expansion of existing facilities on adjacent property, and development of underutilized lots
within an existing development area.
Brownfield Development - abandoned, idle, or under-utilized industrial and commercial properties
where expansion or redevelopment is complicated by real or perceived environmental contamination.
Greenfield Development - new development occurring on the periphery of an existing built-up area, on
a parcel of land not previously developed
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