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A quarter century of enterprise zones

Enterprise zones have been around in Oregon for 25 years. Currently there are 59 enterprise zones in Oregon, including 12 in urban areas.

To create an enterprise zone, a city, county or regional economic development group must fill out an application that outlines the amount of industrial space in the proposed zone, as well as the demographics and available workforce in the area. Once the application is approved by the Oregon Business Development Commission, the zone takes effect with a 10-year lifespan.

Property taxes are frozen for all industrial businesses within the zone, or new ones that move in. Then, whenever companies construct a building, expand an existing building or upgrade equipment, they are exempt from paying additional property taxes on the additions. The exemption lasts five years.

鈥淚t’s one of Oregon’s most effective tax-incentive programs,鈥� said Arthur Fish, incentives coordinator for Business Oregon, the state-run business development department. 鈥淚t’s a big help to capital-heavy industrial businesses (such as those in manufacturing, distribution and research, or development), with much less of a hindrance on taxing districts than other programs.鈥�

In 1988, the city of Redmond tapped into a relatively new program to create an enterprise zone to attract industrial businesses. City officials say the zone has since created 1,722 jobs and brought $124.6 million in capital improvements to the Central Oregon community of 25,000 people.

Twenty-six miles away, however, a similar enterprise zone created 10 years ago in Madras has failed to lure a single company or project.

The cities’ experiences reveal what economic development experts say is the biggest factor that can make or break the success of an enterprise zone.

An enterprise zone is a tool that Oregon cities and counties use to attract industrial businesses. Tax incentives are offered to companies that build new facilities or install new equipment in the specific area.

The most basic formula for an enterprise zone contains three elements: location, land and labor force. A large tract of buildable land located next to a transportation corridor in an area with a sizable labor pool can attract companies, said Arthur Fish, incentives coordinator for Business Oregon.

However, Fish added, those three factors – even when combined with the promise of abated property taxes – may not be enough to guarantee the success of an enterprise zone.

In the cases of Madras and Redmond, for example, both met the main criteria for their enterprise zones. Redmond, however, met a fourth: a proactive marketing strategy that Redmond economic development manager Jon Stark said employed multiple platforms to spread the word.

“We’ve been successful because we’ve gotten multiple people to promote our program in a uniform fashion,” Stark said. “We promote the program, the city promotes it, the businesses that have used it promote it, and even the real estate agents around town promote it.”

Representatives of the city, the economic development department and some companies that have used the zone, promote it at trade shows around the region and the country each year, he said. And they meet with real estate agents around town every few months to make sure they’re up to date on the available land within the enterprise zone, he said.

Madras officials, meanwhile, have observed this. They have taken large strides to improve how they promote the city’s enterprise zone. No projects have been approved in the enterprise zone yet, but Madras is in discussions with two interested companies: Mid-Columbia Lumber is weighing whether to update a facility in Culver and Butler Aircrafts is considering a renovation of a hangar at the Madras Airport.

“The problem has been that we never had a person here in Jefferson County with their boots in the ground promoting the program,” said Wayne Pearson, who recently was assigned to represent the enterprise zone by Economic Development for Central Oregon.

The county and the cities within the zone are proactively seeking businesses more so than in years past, Pearson said. Also, they are targeting specific types of businesses that would be a good fit for the area, he said.

“Earlier this year we sent out a promotion package about our available land and the program to the (National Association of Container Distributors) because we feel a bottling company would be a great fit to the area,” he said. “We have great water here, in addition to affordable land and the program, and we are making sure that bottlers know that in case they decide to move or expand.”

Enterprise zones are working in other parts of the state, too. Just this year four companies have announced that they are performing expansions or building new facilities within Gresham’s enterprise zone. Most recently, Solexant, a thin film solar manufacturer, announced that the company will be building a $37 million factory within Gresham’s enterprise zone that will create more than 100 jobs. Boeing Corp., Portland Specialty Bakers and ON Semiconductors also applied, and got approval, to enter Gresham’s zone this year; the three companies combined will spend $108 million.

Prineville also has benefited from its enterprise zone, where Facebook late last year chose to construct its first data processing center. The enterprise zone was one of two reasons that the company selected Prineville to be the home of its 300,700-square-foot facility, said Ken Patchett, manager of the new data center.

But not all of Oregon’s 59 enterprise zones are success stories, Fish said.

“Sometimes it’s just that the area isn’t attractive to businesses,” he said. “But a lot of the time it’s because these areas don’t do a good enough job of promoting the program and being proactive about getting the word out.

“There is no point of putting all the time into setting one of these up if you aren’t going to let people know about it.”