Jul 11, 2007

Troutdale City Council: Yes to Enterprise Zone

After a long and sometimes contentious city council public hearing last night, we voted to go ahead with the steps needed to create an enterprise zone at the old Reynolds metals site. The final vote was 5-2, with councilors Ripma and Kight voting no.

What we actually voted on was to authorize the mayor to request a new State Enterprise Zone(EZ) authorization round, and direct city staff to begin work on the final language for a Troutdale/Fairview Resolution Authorizing Application to Establish and Enterprise Zone.

Why did I vote yes? Even within an EZ, new construction or development is never a sure thing. I was not convinced that EZ's are a valuable economic tool except for the fact that we can require a minimum criteria in order for a company to be eligible for tax abatement within the EZ.

As an example of what other cities have required in their EZ criteria, Gresham requires a minimum investment of $1 million. For projects involving construction, a minimum of $75/sf is required. Gresham requires a procurement plan to increase purchasing from Gresham companies. Gresham's EZ criteria also require that at least 75% of all full-time employees must be paid at least 200% of minimum wage after one year of employment, and must provide benefits to full time employees that meet or exceed the national average. Troutdale's criteria may be different. We're working on them now.

The Reynolds site is a unique area as far as taxation is concerned. Troutdale has never received property tax income from this site because it wasn't within the city limits until a few months ago. Troutdale only recently annexed this property in February of this year. And when the Port of Portland takes title to this property in September or October of this year, the property taxes generated will again be ZERO. Why? Because the Port of Portland, as a governmental agency, pays no property tax. So if no development occurs, and if the Port doesn't sell the land to a private entity such as FEDEX, there will be no property taxes for this site.

Some people think we're giving away property taxes by creating this EZ. . We're not writing a check to FEDEX or any other company that might locate within the EZ. We are delaying when the property taxes begin for these companies by three years. Troutdale's share of the abated property taxes over three years will be approximately $1 million total. In return for that $1 million, if FEDEX comes to this site, FEDEX will be constructing an $80-100 million facility with estimated employment of 1000 jobs at the end of three to five years. That's a good trade-off.

In the past as well as right now, there will be NO tax dollars coming from the Reynolds site. But but with an EZ, after the tax abatement period ends, an estimated $1.3 million in tax revenue will be generated for all taxing districts. Troutdale's share of this: $383,000 per year. ZERO tax revenue in the past, now and for three to five more years. With an EZ: at the end of the tax abatement period, $383k per year for Troutdale as long as FEDEX remains.

Without an EZ, the Reynolds site could be filled with warehouses, with only 3-4 jobs per acre at low wages.(look at Airport Way, Marine Drive). With an EZ and minimum criteria: 1000 jobs (about 14 per acre), jobs which will be 150-200% of minimum wage and with good benefits.

Are there any guarantees? No. But lets face it, whether or not we like property tax abatement, it's a fact that Troutdale is dealing with an extremely competitive economic development environment. Other cities in the Metro area have EZ's. East Multnomah County has not been competitive in job creation. This EZ gets us on a level playing field.

Some people have said companies might come to the Reynolds site without an EZ. Maybe that's true, maybe it's not true. But FEDEX has expressed interest. They've already had a pre-application conference with the city. This deal is on the table now. I'll take real interest and good chances of success versus pie in the sky any day.

I've gone from being for and against the creation of this EZ on a daily basis for the last two weeks. But when I narrow it down to what's best for Troutdale, and after looking at all the issues from both the positive and negative side, I made the judgement that the EZ is what's best for Troutdale. So did a wide majority of the rest of the city council by a 5-2 vote. A majority of the citizens that came to the pubic hearing last night agreed with us. 1000 new jobs is worth the effort.

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