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Enterprise zones encourage new development, hiring, at cost of property tax revenue

Scappoose may be the fastest-growing city in Columbia County, but soon, the city may have to ponder whether to entice new development, at the expense of growing its tax base.

City councilors in Scappoose met for a work session Monday to discuss the merits of enterprise zone benefits.

SPOTLIGHT FILE PHOTO - A new Cascades Tissue plant in Scappoose is an example of a business that got major concessions from the state and local governments by way of tax breaks. Scappoose will likely be asked again to consider enterprise zone benefits for a new business in the coming months.Enterprise zones have long been used across Oregon to attract new businesses providing solid wage jobs through tax breaks that can last three to five years.

After celebrating the successful opening of a new $64 million Cascades Tissue plant last month, councilors are likely to consider extending similar benefits to Premier Jets, a jet ambulance company that primarily serves the medical field.

The jet company, which recently purchased property from the Port of St. Helens, hasn't formally requested the tax benefits, but currently has an application pending, Chuck Daughtry, executive director of the Columbia County Economic Team, confirmed. In this case, the company has already set up shop, but could still benefit from the tax break.

Daughtry visited the Scappoose City Council Monday as one of a handful of stops he's made recently to public agencies throughout the county, many of which have newly elected members.

Daughtry"What we're really trying to do is attract business and allow them to be successful," Daughtry said by phone Thursday. "When businesses start up, they have a tremendous cost. The enterprise zone benefits allow them to retain more of their cashflow, and instead of paying it out in taxes they can reinvest it into their busines"

Daughtry said typically, when businesses get tax breaks, they can reinvest the money they saved into hiring more employees, purchasing new equipment, or expanding their buildings.

To qualify, businesses must agree to pay employees a wage that is 150 percent of the average county wage. After three years, a business may apply for a two-year renewal, at which point the county imposes a local hiring contract, requiring the employer to look for qualified county residents as a first source when hiring.

While tax breaks may encourage new business and lead to increased local jobs, they also leave cities or counties without property tax revenue from those operations for multiple years.

Using Cascades Tissue as an example, which built its new 284,000 square-foot facility in Scappoose after receiving an Oregon Investment Advantage income tax break through the state, Scappoose Mayor Scott Burge said it can be hard for cities to consider enterprise zone tax breaks as incentives, when businesses have already located in the area, and in Cascades' case, already got significant assistance from the state.

"One of the arguments that I heard on the Cascades enterprise zone ... was that why should we vote for this, we've already got them here?" Burge remarked.

Daughtry reiterated the potential benefits to allowing large companies to save money.

"What you're doing is at the time when it's most needed, you're helping that business reinvest back into the investment," Daughtry said.

Officials said enterpirse zone benefits also help keep Oregon, and more importantly, Columbia County, competitive.

"At the end of the day, if you don't offer it, they'll go to Hillsboro or someone that will," Scappoose City Manager Michael Sykes said.

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