City competes for tool to offer tax abatement for expanding businesses

By approving an application to establish a tax abatement-based Enterprise Zone in Beaverton, the City Council on Tuesday night took a significant step in removing the city from an unappetizing economic 'sandwich.'

As Economic and Community Development Director Don Mazziotti explained, the cities just to the east and west of Beaverton are free to offer three- to five-year tax abatement deals to companies that promise to invest $1 million or more into expansion, remodeling and job creation strategies.

'Beaverton is sandwiched by Enterprise Zones,' Mazziotti told the council. 'In Portland to the east and Hillsboro to the west, virtually every company engaged in manufacturing and fabrication wants to know if we have an Enterprise Zone. If we tell them we don't, they say, 'We'll see you later' and relocate to where they will get an enormous startup advantage.'

Appearing to catch Mazziotti's drift, the council unanimously approved the Enterprise Zone application. The move frees Economic Development Manager Alma Flores to clear the application with the Port of Portland, the last of the tax districts - from which the state requires zone approval - the city must go through.

The final application is due to the Business Oregon office, which administers the Enterprise Zone program, by June 8. Approval would be confirmed by July 1, the same day the Beaverton zone would go into effect.

The process, Flores explained, has Beaverton vying for one of nine Enterprise Zone openings. Four existing zones are set to expire, and a recent Oregon House Bill that city leaders lobbied for added five more zones.

'It is competitive,' Flores said. 'We don't know what other municipalities are applying, but the other four are requesting that theirs be extended.'

If the zone is approved, new and existing manufacturing businesses within the designated areas - about 5 square miles in three or four industrial areas southeast and west of Central Beaverton - could apply for property tax-abatement incentives. They must commit to at least $1 million investments in infrastructure and equipment to receive a three- to five-year abatement of property taxes. Retail, financial and construction-oriented businesses are excluded.

'With an existing building, the value wouldn't change,' Flores explained to the council. 'But if the (business) wanted to expand, it could receive tax abatement up to three years' based on the investment value.'

After the third year, the business would be eligible again based on any new investment projects, she added.

The program fits goals set out in Beaverton's Civic Plan, particularly analyses indicating the city needs 'additional tools' to spark industrial-related development in the city. The plan identified eight census tracts surrounding key industrial areas that qualify for the Enterprise Zone designation.

Observing the program results in no lost or diverted funding, Councilor Ian King called the program an obvious fit for Beaverton.

'It's really a win-win for everyone concerned in Beaverton,' he said. 'It's very important to be in a competitive situation with neighboring communities. It's something I can really get behind and support.'

Mayor Dennis Doyle, who has already fielded phone calls from businesses interested in using the incentive to expand, said in April he expects the Enterprise Zone will generate immediate interest among the city's industrial sector.

'I'm excited about it,' he said. 'Once it's approved this summer, we implement it and off we go.'

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