Oregon Direct Financial Incentives 2010
Oregon's economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include the Oregon Production Investment Fund, Oregon Investment Advantage, Electronic Commerce Enterprise Zone, and Oregon Production Investment Fund.
This program helps companies start or locate new operations or business units in Oregon, by exempting for 10 years on State personal or corporate tax returns the taxable income from a certified facility. In addition to being located in an eligible county, the facility needs to be on an industrially zoned site or inside the urban growth boundary of a city with less than 15,000 in population. The business firm must create five or more new "full-time, year-round" jobs at the facility. At the time of application for preliminary certification with the Economic & Community Development Department, the expectation should be that the facility's operations will not compete for sales or resources with existing employers in the local area/economy, and they need to be unlike any other that the company has in Oregon.
Standard Enterprise Zone property tax abatement:
This program offers immediate, upfront cash savings on new investments in one of 50-some rural and urban designations. Manufacturing, processing, storage, distribution, call centers, and corporate headquarters are all examples of eligible activities. Qualified new buildings, additions, modifications, machinery and equipment at the authorized site in the zone are 100 percent exempt from property tax abatement, if employment increases by the greater of 10 percent or at least one new, full-time job. The period of exemption is for a minimum of the first three years after the construction/installation of qualified property. A local agreement may extend the abatement up to a total of five consecutive years, with the requirement in most cases that average annual "compensation" (with benefits) for all new employees equals or exceeds 150 percent of the most recent county average annual wage figure at authorization.
Construction-in-Process property tax abatement:
An annual filing with the county assessor can exempt non-utility business facilities from property taxes for up to two years, while any such facility is under construction and not in use on January 1 of the assessment year. This exemption is generally available for manufacturing projects anywhere in the state, including heavy machinery and equipment located at the unoccupied facility on January 1, and it can cover all qualified property in the process of construction or installation as part of any authorized enterprise zone project.
Food Processor Exemption property tax abatement:
New machinery and equipment may be exempt from property taxes for five years anywhere in the state, if used in primary food processing of raw or fresh fruits, vegetables, legumes, nuts or seafood.
Strategic Investment Program (SIP) property tax abatement:
SIP is available anywhere in Oregon. For 15 years, SIP exempts from property taxes all of the investment in excess of $25 million in rural areas, or $100 million in urban areas. The benefiting business firm must pay an annual community service fee equal to 25 percent of the abated taxes, up to a maximum of $500,000 (rural) or $2,000,000 (urban) per year. State Economic & Community Development Commission makes final determination of SIP tax treatment, either pursuant to project-specific agreement with county (and city) government(s), or directly for property located in a designated Strategic Investment Zone, for which local additional requirements, if any, would be pre-established.
Long-term Rural Enterprise Zone incentives:
This alternative enterprise zone program for very special projects is allowed in almost all rural zones, subject to local resolutions, zone sponsor agreement and certification. Property tax abatement covers all new facility property from the start of construction until 7 to 15 years after facility is first placed in service. In addition, pursuant to local certification, the governor may approve tax credits equal to 62.5 percent of gross payroll for use against state corporate income tax liabilities relating to the facility, over and above a minimum annual tax payment equal to an amount ranging from $100,000 up to $1 million. The corporate taxpayer must own the facility and may claim credits over a 5- to 15-year period, as set by the governor, starting by the fourth year after operations have commenced. Unused credit amounts have a carry-forward period of five additional years. The certified facility needs to satisfy certain criteria, which vary based on location, for minimum investment costs and the hiring and maintenance of new, full-time employees at the facility. Annual employee "compensation" (with benefits) must also stay at or above 150 percent of county average wage, as achieved by the fifth year of operations.
State income/corporate excise tax credits:
Oregon has a number of credits that directly offset business income and corporate excise tax liabilities, based on certain capital or operating expenses or special actions. Explained below are the credits that can be most critical for new developments.
Electronic Commerce Enterprise Zone tax credit: Qualifying businesses in several of the zones can generate a credit up to $2 million per year, in addition to property tax savings (for which personal property equipment and machinery used in e-commerce more readily qualifies for standard enterprise zone exemption). This income tax credit equals 25 percent of each year's capitalized investment in assets that serve e-commerce operations inside the enterprise zone. Unused credit amounts have a carry-forward period of five additional years.
Business Energy Facility tax credit (BETC): This transferable credit is equal to 35 percent of eligible project costs (≤$10 million per project) for energy-saving equipment, sustainable buildings, transit/telecommuting support, recycling, research and development, and many other types of investments-or to 50 percent for renewable energy (≤$20 million of eligible project costs). When sold to another state taxpayer, the applicable "pass-through" rate is 25.5 percent of project costs, or 33.5 percent for renewable energy projects. Taxpayer claims credits incrementally over five years, with each increment having a carry-forward period of eight extra years for any unused amount.
Dependent Care tax credit:
This credit is the lesser of 50 percent of each year's direct assistance costs or $2,500 per employee, plus 50 percent of expenses for information and referral services. Expenses for any certified company program can generate these credits in lieu of a business deduction, if an employee contribution to the program were otherwise eligible under federal personal income tax deduction/credit. Unused credit amounts have a carry-forward period of five additional years.
Research tax credit:
Credits equal 5 percent of the excess of in-state qualified research expenses over a base amount for the taxable year, consistent with the federal R&D corporate income tax credit. The annual maximum credit is $2 million per corporate taxpayer. Unused credit amounts have a carry-forward period of five additional years.
With respect to the above tax incentives, always consult with a tax advisor. In addition, grant awards and other forms of financial, workforce and infrastructure assistance may be available at the state, regional or local level.
Other Oregon programs
Governor's Strategic Training Fund:
Fund supports the retention and growth of living-wage jobs, a skilled workforce and competitive businesses in Oregon. It is a flexible, responsive and time-sensitive resource for training Oregon's private-sector workforce. The emphasis is to upgrade skills of the workforce in order to increase productivity, keep Oregon businesses viable and competitive and offer new skills and opportunities to Oregon's workers.
Industrial development revenue bonds/express bonds:
These are tax-exempt bonds, issued by the state of Oregon. They provide long-term financing for land, buildings and equipment.
Brownfields Redevelopment Fund:
Direct loan and grant program to conduct environmental actions on brownfields.
The Oregon Production Investment Fund rebates 20 percent of Oregon-based production expenses and 10 percent of wages paid. The Greenlight Labor Rebate offers qualifying productions an additional cash payment of up to 6.2 percent of Oregon payroll for productions that spend more than $1 million.
Oregon State Contact:
Oregon Economic and Community Development Department
775 Summer Street N.E.
Salem, OR 97301-1280
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.