Jul 5, 2007

Enterprise Zone Study: Slower Growth Than Non-EZ Zones

Comparison of growth rates between cities with and without enterprise zones shows that cities with enterprise zones grew at a slower rate than cities without enterprise zones, according to a recent study by the Center for Urban Studies at Portland State University. Data in the study shows that cities without enterprise zones grew by 41 percent, compared to 22.5 percent for cities with enterprise zones.

The study, Oregon Enterprise Zone Tax Abatement Economic Development Study and Urban Renewal Study (Hall, Rufolo, Dong), also asserts the following:

  • Within Enterprise Zones, the impact of the tax abatement on employment seems to be very limited. "The cost per job created appears to be relatively high, and this cost comparison is based on the questionable assumption that none of the employment growth would have taken place without the abatements."
  • Surveys show that tax abatement has limited influence on employer location decisions. ,". . .In fact, Dowall(1996) found that only 23 percent of firms participating in the California Enterprise Zone Program reported that program incentives influenced their location decisions. "
  • "With the passage and implementation of Ballot Measures 5 and 50, tax abatements result in a direct revenue loss for local taxing entities."
  • "There are existing local economic conditions relating to land costs, transportation infrastructure, labor, financing, and regulatory practices that tax incentives cannot overcome"
  • "For local taxing districts, after providing services without corresponding increases in revenues during the (tax) exemption period, the ability to generate revenues is substantially lower than what is suggested by initial investment values."
The information in this study seems to conflict with information provided to us by city staff, State of Oregon, and Port of Portland officials at previous work sessions. We're having a public hearing on July 10 to decide whether to officially go forward with the creation of an enterprise zone in Troutdale.

FedEx is looking to construct a $100 million distribution center in Troutdale, a development that could hinge on whether the city gives the company a multimillion-dollar tax abatement via what's known as an enterprise zone. I've discussed this proposed enterprise zone previously.

To read about the estimated amount of tax abated, click here.

To read about happened at the joint City of Troutdale/City of Fairview city council work session, click here.

Be sure to read Fairview city councilor Quinby's comment about that joint work session here.

Click here for a Google search with keywords TROUTDALE and FEDEX.

Click here for a Google NEWS search with keywords TROUTDALE and FEDEX.

FEDEX or no FEDEX, the most important factor to consider remains: What's best for Troutdale?

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