Since late January, when voters passed measures to increase taxes on Oregon businesses, brokers in Southwest Washington say they have received dozens of calls from Oregon businesses looking into the possibility of relocating to Clark County.

Few businesses have made the move, but brokers in the Portland-metro area say more will probably follow suit as they seek lower taxes, more vacant space and cheaper rents.

“It’s still too early to tell if these inquiries will lead to multiple companies leaving Portland, or if they are just knee-jerk reactions to taxes that affect a business’ bottom line,” said Paul Carlson, director of the industrial group at the Portland office of Cushman & Wakefield. “But regardless if these businesses move or not, it’s a sign that these types of taxes are further hurting Oregon’s perception as a place to do business.”

Measure 66 raised the income tax for households earning at least $250,000 per year or for individuals making at least $125,000 annually, from 9 percent to 10.8 percent. Measure 67 raised the corporate minimum tax from $10 to $150, and also raised the tax rate for businesses earning more than $250,000 per year, from 6.6 percent to 7.9 percent. Those increases are expected to annually raise $727 million, which will be used to pay for education, low-income housing and other state-run programs.

Portland already has a reputation as being unfriendly to businesses, Carlson said. Tax increases only strengthened that notion, he said.

Other cities have acknowledged this trend, and are appealing to Oregon businesses.

In a Jan. 28 , Chicago Mayor Richard Daley commented on measures 66 and 67. He said, “It will help our economic development immediately. You’d better believe it. We’ll be out in Oregon enticing corporations to relocate to Chicago. I’ll be very frank. I make no bones about that. If those states want to do that, so be it.”

Officials in Washington state haven’t been as outspoken as Daley; however, Portland businesses are looking to the north nonetheless, according to brokers.

“Immediately after the passage of the measures last (January) we had three publicly traded companies from the Portland area call us looking at the possibility of moving to Southwest Washington,” Carlson said. None has committed to moving; however, all three told Carlson they are actively looking for space in Clark County because it’s close to Portland and has tax advantages.

Most companies considering whether to move are still weighing the cost of a move against tax savings. But a few businesses have already announced they’re heading for Washington. Northwest Pipe moved its headquarters from downtown Portland to Vancouver at the end of last year. Eugene-based Farwest Steel last week announced that it has bought a 20-acre site at the Port of Vancouver USA, where it will build a new steel manufacturing facility.

“We haven’t finalized any deals yet, but we have at least a dozen open investigations into spaces for Oregon businesses looking to move to the Vancouver area,” said Eric Fuller, principal of Eric Fuller & Associates, a Vancouver commercial real estate firm. “Most of the businesses that we’ve talked to are small to medium-sized private businesses looking for office space.”

Vancouver’s office vacancy rate is at about 18 percent, with an average asking rent for class A space between $21 and $24 per square foot, according to the Grubb & Ellis Second Quarter Market Report. Portland’s Central Business District, meanwhile, has a 10.7 percent vacancy rate and an average asking rent of $27 per square foot. There are similar discrepancies in the areas’ industrial markets.

The Port of Kalama has developed an advertising campaign around the tax advantages in Washington. The ad, which airs on Portland radio stations, says that Kalama offers a great quality of life and superior facilities combined with a lower cost of doing business.

But Terry Phillips, principal with the Phillips Group in Vancouver, said his firm hasn’t even had to make a push to attract Oregon businesses.

“It’s been more of us sitting back and taking inquiries,” Phillips said. “The entire market covers both Portland and Vancouver, so we aren’t making a concerted effort to make businesses in Portland or any of the suburbs move to Vancouver.”

Carlson added that a lot of these deals are still in the works.

“You have to move the hardware, the software and the manpower,” he said. “But if those costs fall below the increased taxes, a business is going to make the smart financial decision and move.”

The post Businesses antsy to flee Oregon appeared first on Daily Journal of Commerce.

Measures 66 and 67, two controversial Oregon ballot referendums to raise state taxes, were passed by public vote in January. Measure 66 raised taxes on household incomes more than $250,000 and individual incomes more than $125,000. Measure 67 raised the $10 corporate minimum tax to $150 for most businesses. Both measures took effect for the 2009 tax year.

Supporters of the measures claim fiscal responsibility and stress that the corporate minimum tax of $10 had not been raised since 1931. Critics say the measures will discourage businesses from moving to Oregon and prompt current businesses to leave.

So far, the state has not seen a decline in business triggered specifically by the tax increases. A website, , has been created to track the measures’ impact.

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“The tax increases are an absolute disincentive to grow my company. We will be up to 250 and 300 jobs in three or four years, but those jobs won’t be in Oregon.”

Bruce Hough, president and CEO of Medford-based ComNet Marketing Group, posted that comment at in response to the passage of Measures 66 and 67, which raised Oregon’s personal income and corporate excise taxes retroactively to 2009.

Now, six months after voters approved the measures, Hough has put his relocation plan into action.

“I had planned to open two new offices in Oregon and I will not do that now,” he said, adding that he will open a new office in Nevada next month. “I bring millions and millions of dollars a year into this economy, and now I’m going to take that to someone else’s economy.”

Hough expects other Oregon companies to follow suit. He said that according to a poll conducted before the January special election, if the measures passed, 85 percent of companies surveyed would be less likely to expand their business and hire new people, more likely to lay people off and more likely to raise their prices.

Of those surveyed, according to Hough, 65 percent said they were more likely to relocate their business if the measures passed.

“Even if only 10 percent of those do it, that’s still a lot of businesses, and there’s no way the state can make up for that loss,” he said.

So far, though, the mass exodus has not materialized, despite personal invitations extended by Chicago Mayor Richard Daley, Idaho Gov. C.L. “Butch” Otter and business recruiters from a slew of other states seeking to capitalize on private-sector discontent in Oregon.

Wally Van Valkenburg, managing partner of Stoel Rives’ Portland office and chairman of Oregon’s Business Development Commission, said neither the commission nor the state’s economic development department have seen any losses triggered specifically by the tax increases.

“These sorts of decisions aren’t made quickly, and I would be surprised if too many businesses decided to relocate,” he said.

Mike Salsgiver, executive director of Associated General Contractors of America’s Oregon-Columbia chapter, said AGC also has yet to hear from members or former members who are leaving or closing because of the measures.

“I’ve heard a lot of grumbling about it, but no one has said, ‘We’re wrapping it up because of what the state did,’ ” he said.

However, Salsgiver noted, a diverse group of business professionals from across the state has been meeting at 9 a.m. each Wednesday, usually in the boardroom at Associated Oregon Industries’ Salem office, to share concerns and strategize.

The informal coalition has been dubbed the Oregon Committee, or the Wednesday Group. Its gatherings typically draw 30 to 40 people representing a range of sectors, such as construction and banking.

“It’s actually an impressive collection of businesspeople,” Salsgiver said. “In the 30 years I’ve been doing this, I’ve never seen this many individual businesses and business associations meet this consistently. And it includes groups you wouldn’t normally see in the same room.

“I think it shows that we all understand that if we don’t do this, it’s only going to get worse from a policy perspective,” he added. “So from that standpoint, we’re doing what we should be doing and that is forming our agenda and speaking with one voice.”

The Alliance of Oregon Business Associations is furthering that effort through a website launched in April. was established to gather stories from Oregon companies and their employees and to quantify the impacts of Measures 66 and 67.

The alliance, according to spokesperson J.L. Wilson, hopes to let policymakers and legislators know how specific taxes impact the state’s economy. The group plans to vet the tax impacts for accuracy.

As the alliance sets about its task, Oregon’s Business Development Commission will continue to promote the state’s positive attributes as it recruits businesses, Van Valkenburg said.

However, the commission recognizes that Oregon is hampered because it has only two – personal income and corporate excise taxes – of the three revenue streams available to most states.

“I think the issue with the tax measures isn’t whether we have high taxes but whether we have tax balance. Oregon’s tax system is out of balance, which puts us at a competitive disadvantage,” Van Valkenburg said.

In addition, there is work to be done to bridge the divide caused by Measures 66 and 67, he said.

“We need a good relationship between the public and private sectors, and that has been jeopardized by the measures, so hopefully we can repair those public-private partnerships,” Van Valkenburg said.

Pat McCormick, a Portland public relations professional and spokesman for Oregonians Against Job-Killing Taxes leading up to the special election, said he and other business leaders are looking for other ways companies can reduce expenses to compensate for the increased tax burden.

McCormick said he was gratified to hear Gov. Ted Kulongoski acknowledge the structural problems that threaten Oregon’s economy when he spoke to the City Club of Portland recently.

“He raised questions the business community raised during Measures 66 and 67 about the sustainability of certain benefits, particularly health care and retirement benefits,” he said. “The business community is grateful to hear from a state leader, especially one as closely tied to organized labor as he has been, that we need to address those costly benefits.

“If there is a disappointment it’s that he’s raising these questions during the last six months of his administration rather than the first six months. But it’s good to have it on the table that these costs are not sustainable,” McCormick added.

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Could Oregon’s label of being unfriendly to big business be hurting the local commercial real estate market?

The Oregonian’s reported today that Oregon ranks 38 on the annual survey of . Oregon fell 14 spots from last year, most notably because of Measure 66 and 67, which imposes new taxes on businesses and the upper-income brackets.

Look at the recent decision by the Eugene-based to purchase 22 acres at the Port of Vancouver. Even though the Port cited consolidation and access to the rail line as Farwest’s main reasons for building a new 3,000-square-foot facility on the property, it’s hard not to think that increased corporate taxes in Oregon didn’t have something to do with it.

Why build a new facility if you are consolidating? And why choose the Port of Vancouver for rail car access when the Port of Portland just signed a lease with a new operator for Terminal 6 that stressed rail access as one of its main reasons for coming to Portland?

Farwest has to do what’s best for its company. But I’m sure there are plenty of landlords in the Rivergate Corporate Park that would have welcomed Farwest with open arms.

Fortunately, what Oregon lacks in business friendliness, it makes up for with livability. Oregon ranked No. 4 on the happiness index in the study, and No. 13 in overall health. But all the happiness in the world doesn’t fill vacant spaces or break ground on speculative commercial developments.

While it may even me a misconception that Oregon is bad to do business considering there are low property taxes and low energy prices, the perceived thought is what out of town businesses have to go off of.

The post Oregon’s reputation could be hurting commercial development appeared first on Daily Journal of Commerce.

Could Oregon’s label of being unfriendly to big business be hurting the local commercial real estate market?

The Oregonian’s reported today that Oregon ranks 38 on the annual survey of . Oregon fell 14 spots from last year, most notably because of Measure 66 and 67, which imposes new taxes on businesses and the upper-income brackets.

Look at the recent decision by the Eugene-based to purchase 22 acres at the Port of Vancouver. Even though the Port cited consolidation and access to the rail line as Farwest’s main reasons for building a new 3,000-square-foot facility on the property, it’s hard not to think that increased corporate taxes in Oregon didn’t have something to do with it.

Why build a new facility if you are consolidating? And why choose the Port of Vancouver for rail car access when the Port of Portland just signed a lease with a new operator for Terminal 6 that stressed rail access as one of its main reasons for coming to Portland?

Farwest has to do what’s best for its company. But I’m sure there are plenty of landlords in the Rivergate Corporate Park that would have welcomed Farwest with open arms.

Fortunately, what Oregon lacks in business friendliness, it makes up for with livability. Oregon ranked No. 4 on the happiness index in the study, and No. 13 in overall health. But all the happiness in the world doesn’t fill vacant spaces or break ground on speculative commercial developments.

While it may even me a misconception that Oregon is bad to do business considering there are low property taxes and low energy prices, the perceived thought is what out of town businesses have to go off of.

The post Oregon’s reputation could be hurting commercial development appeared first on Daily Journal of Commerce.

Ed Orcutt, a Washington state representative from Kalama, is warning his legislative colleagues that any tax increases could hinder the slight economic recovery his state is currently experiencing. And while he didn’t specifically point a finger to the south, his concerns should sound eerily reminiscent of those voiced by parties that opposed raising Oregon’s corporate minimum tax.

Washington residents are cautiously celebrating the recent news, released Friday morning by the Washington State , that their state’s economy is starting a slow climb away from recession status.

But even before the celebratory confetti started flying, Orcutt was there to cast some cautionary rain on their parade.

“…this sigh of relief can turn quickly into sighs of frustration unless leaders are very careful,” Orcutt said in his press release. “Our state economy is fragile right now … any tax on employers hurts their ability to retain current workers or rehire those who have been laid off.”

Sound familiar, Oregon residents?

I know Oregon has a reputation for being willing to tread where few — and sometimes even none — have dared go before. And from the comments around the country, it sounds as if the state’s done it again with Measure 67.

I just hope that this is one time when our desire to forge a new path doesn’t turn to be a dead-end road to nowhere. Or worse, a Thelma-and-Louise-style, point-of-no-return plunge off the edge of a steep cliff.

The post Who’s watching Measure 67 fallout? appeared first on Daily Journal of Commerce.

Ed Orcutt, a Washington state representative from Kalama, is warning his legislative colleagues that any tax increases could hinder the slight economic recovery his state is currently experiencing. And while he didn’t specifically point a finger to the south, his concerns should sound eerily reminiscent of those voiced by parties that opposed raising Oregon’s corporate minimum tax.

Washington residents are cautiously celebrating the recent news, released Friday morning by the Washington State , that their state’s economy is starting a slow climb away from recession status.

But even before the celebratory confetti started flying, Orcutt was there to cast some cautionary rain on their parade.

“…this sigh of relief can turn quickly into sighs of frustration unless leaders are very careful,” Orcutt said in his press release. “Our state economy is fragile right now … any tax on employers hurts their ability to retain current workers or rehire those who have been laid off.”

Sound familiar, Oregon residents?

I know Oregon has a reputation for being willing to tread where few — and sometimes even none — have dared go before. And from the comments around the country, it sounds as if the state’s done it again with Measure 67.

I just hope that this is one time when our desire to forge a new path doesn’t turn to be a dead-end road to nowhere. Or worse, a Thelma-and-Louise-style, point-of-no-return plunge off the edge of a steep cliff.

The post Who’s watching Measure 67 fallout? appeared first on Daily Journal of Commerce.

After the passage of Measures 66 and 67 on Tuesday, contractors are sorting out the effects the tax increases will have on business. Those could include laying off employees, leaving the state or closing up shop.

Larry Sitz, president of Emerick Construction Co., said that leaving Oregon for a state without income taxes is looking better and better. “We haven’t made a hard decision about moving to Washington, but that’s definitely in the back of our mind,” he said.

“From a businessman’s point of view, why not?”

Piling more taxes on contractors could slow the industry’s recovery, Sitz said. “It seems silly to be hurting the businesses that Oregon actually needs to pull out of this.

“Someone has to be making money for a tax base to exist.”

It’s hard to know how much the tax increases will affect contractors, said John Killin, president of the Associated Builders and Contractors Pacific Northwest chapter. But with the economy already hurting, even a small hit could put contractors out of business.

“This is, unfortunately, going to deal an additional blow to the economy and the construction industry,” Killin said.

“A lot of my guys are looking at closing their doors permanently.”

Hoffman Construction Vice President Bart Eberwein said he hadn’t studied the financial effect the measures would have on the company, and he declined comment on how much more the company might pay. There might be an upside of higher taxes for contractors who do a lot of government work, he said.

“At every level, going forward with a large capital project has a lot to do with mood,” Eberwein said. “If it puts the state in a better mood, we might see projects move into more intense planning.”

Brent Parry, president of Bremik Construction, said he hoped that an increase in jobs would balance out the higher income taxes. “There are certainly some negative effects, but also, being in the construction industry, there could be some positive effects.”

Bremik often does work for school districts, Parry said. While districts typically build new schools using bond money, which wouldn’t change under the new tax system, there is still plenty of other work that districts have postponed.

“This will help create a more balanced budget for those districts,” Parry said. “We could do some of the terribly deferred maintenance.

“There’s a lot of things to do, but there’s been not a dime to do it.”

Even with the tax increases, state officials will need to figure out to how to stabilize Oregon’s long-term budget, said Pat McCormick, spokesman for the campaign against the ballot measures. “The business community has always recognized the need for better long-term fiscal planning on the state’s end so we don’t let ourselves go through the roller-coaster cycles in good times and bad,” he said.

“We’re assessing what this will mean, and for a significant number of companies, it means they’re going to have to be addressing unanticipated costs for the 2009 tax year as well as future years.”

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Despite arguing opposite sides on the state’s upcoming tax-increase referenda, Democratic and Republican leaders agree on one message: Oregon is going to pay. The Jan. 26 vote on measures 66 and 67 will determine whether residents will pay through increased taxes or decreased services.

House Speaker Dave Hunt and Minority Leader Bruce Hanna used a Portland Business Alliance forum Wednesday to preview arguments that will form the backbone of the escalating “yes” and “no” vote campaigns.

Raising taxes in an already battered economy will cause unemployment to rise, Hanna said. He railed against “permanent, job-killing taxes,” echoing the name and message of the “no” campaign: Oregonians Against Job-Killing Taxes.

“If these measures are adopted, businesses may be forced to reduce hours, reduce employees or simply close their doors,” Hanna said.

Only 3 percent of individuals will see their income taxes increase under Measure 66, Hunt said. And 88 percent of businesses will see their taxes rise from $10 to $150 under Measure 67.

“It’s hard for me to imagine how 150 bucks kills any job,” Hunt said.

Democratic lawmakers pushed through the tax increases in the 2009 session. Gov. Ted Kulongoski signed them July 20.

Construction industry groups, including Associated General Contractors, Associated Builders and Contractors and the Oregon Home Builders Association, opposed the increases, particularly a provision that taxes businesses based on revenue instead of profit.

Opponents started a signature drive to refer the increases to voters. They qualified Oct. 8, when the Oregon Secretary of State’s office announced each measure got roughly 99,000 valid signatures, far more than the 55,179 needed.

The method of business taxation came up during Wednesday’s forum. Taxing corporations that show no profit hits them when they’re down, Hanna said.

“I find no way to justify taxing corporations on anything other than profit,” he said.

Many corporations are making money but show no profit on paper, thanks to tax breaks and other adjustments, Hunt replied. In fact, he said, two-thirds of Oregon corporations show zero profit, making a tax on profits unfeasible.

“Every business association in the state realized there had to be some other method of taxation than net taxation,” Hunt said.

Most prominent business associations, including the Portland Business Alliance, oppose the tax measures. After the debate, an informal poll asking who’d support the measures drew only a dozen or so cautious hands. Most of the remaining attendees in the crowded Governor Hotel conference room indicated they’d vote “no.”

One influential group has remained on the fence: the Oregon Business Association. After Wednesday’s debate, Hunt said he expected the association to remain neutral on the tax measures.

“I’d be completely shocked if they came out against this,” Hunt said.

During the 2009 session, the Oregon Business Association pushed House Democrats to keep the increases small and temporary, Hunt said. “And they got 80 to 85 percent of what they wanted.” Only increases on corporations with $10 million or more in revenue would be permanent, Hunt said.

If the measures fail, legislators will have to make deep cuts to the state budget during a February session, Hunt said. The situation wouldn’t be so dire, Hanna responded, had the Republicans’ smaller budget plan passed last session.

“We said, ‘Let’s not further lose touch with where Oregon is as a government versus private industry,’ ” Hanna said.

Oregon has already cut $2 billion in services including education, human services and public safety, Hunt said, and will cut another $1 billion if the tax increase measures fail. “How many of you really want to go back to those days of cutting more state troopers?”

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