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Reports shed light on property tax tradeoff

Intel, Genentech part of Strategic Investment Program reports released at OSPIRGs request


Governments in Washington County are foregoing the collection of tens of millions of dollars in additional property taxes every year to help create and retain thousands of well-paying jobs.

The extent of the local governments’ commitment to the jobs became a little clearer last week when the state of Oregon released previously confidential reports related to its Strategic Investment Program. The nonprofit Oregon State Public Interest Research Group filed a public records request for the SIP Annual Employment Reports. They were released on March 15 at the direction of the Oregon Attorney General.

Business Oregon had assured the companies the information in the reports would be confidential when they were submitted. Spokesman Nathan Buehler says his department hopes its release will not discourage companies from participating in the program in the future.

“I can’t speak for any businesses, but the Strategic Investment Program still offers valuable incentives that have made an impact in the past,” said Buehler.

The reports were submitted by two companies in Washington County. They are Intel, the large semiconductor manufacturer, and Genentech, a pharmaceutical research firm. Both were circumspect in their reactions to the release of the reports.

“Intel is proud of the jobs that have been created and retained by the $25-plus billion that has been invested in Oregon since 1974,” Jill Eiland, Intel’s Northwest regional corporate affairs manager, told the Hillsboro Tribune.

In a prepared statement, a Genentech spokesperson explained: “Hillsboro is home to Genentech’s state-of-the-art biologic fill/finish facility and warehousing and distribution center. We look forward to a long and productive relationship with both the state of Oregon and the local Hillsboro community.”

The SIP program was approved by the 1993 Oregon Legislature. It allows local governments to waive property taxes on new equipment if the new equipment helps create jobs. Property taxes are still collected on land and buildings, and the governments can negotiate a number of fees and other payments with the employees to help offset the uncollected property taxes.

The reports obtained by OSPIRG cover the 2012 and 2011 tax years. They include property tax, employment and salary figures for each year. The figures in the reports are not cumulative, but give a snapshot of the program results for each of those two years.

According to the reports, Intel participated in three SIP agreements in 2012. In that year, the company paid a little more than $6.2 million in additional property taxes on the added value of its land and buildings. It paid a little more than $12 million in fees and other payments. And it saved a little more than $62.6 million in property tax payments on new equipment.

In exchange, Intel reported creating or saving 7,701 jobs in Washington County in 2012. The company said the average annual taxable income for the new and retained employees was $124,196.93.

That same year, Genentech participated in one SIP agreement. It reported paying $412,175 in additional property taxes while saving another $3.8 million. In exchange, the company reported creating 324 new jobs that paid an average annual taxable income of $78,803 in 2012.

In 2011, Intel also reported participating in three SIP agreements. That year, the company reported paying a little more than $4.4 million in additional property taxes and over $10.6 million in fees and other payments. In exchange, it reported creating or saving 7,840 jobs that paid an average annual taxable income of $131,500 in 2011.

Genentech was not required to file a report in 2011.

Washington County Chairman Andy Duyck said the job figures in the reports justify the SIP agreements.

“The amount of SIP-related jobs and income tax revenue — on the scale documented in these reports — should not be surprising to the local governments involved in the program here in Washington County. We have worked for decades in partnership with the State of Oregon to use local property tax abatement to encourage business investment through the SIP. Property tax abatement is Oregon’s primary incentive program to attract and retain companies,” Duyck said.

The new and retained jobs generate income taxes collected by the state and federal governments. A state program called Gain Share rebates 50 percent of the additional income taxes back to local governments to help offset their uncollected property taxes. It was created by the 2007 Oregon Legislature. The reports obtained by OSPIRG were required by Business Oregon to determine the amount of the Gain Share rebates.

Oregon Gov. John Kitzhaber has asked the 2013 Oregon Legislature to reduce the share. Washington County and Hillsboro officials are fighting to keep it at 50 percent.

“The Gain Share program, which prompted the reporting of jobs and income tax data found in these records, is another aspect of our success. Gain Share helps recover a portion of the forgone property tax revenue and provide local governments and tax payers with an incentive to support additional SIP agreements. SIP and Gain Share are great examples of how the State of Oregon and local governments can jointly use their tax revenue to create jobs,” Duyck says.

Celeste Meiffren, the OSPIRG consumer and taxpayer advocate who sought the reports, said the organization does not have a position on the program. After reviewing them, she believes the documents are too incomplete for the public to understand whether the companies are living up to their obligations.

She is considering asking for more documents on the SIP agreements from Business Oregon.



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