Philomath forms plan to attract new businesses, jobs

“Broadly speaking, this is an incentive program that is designed to attract development within the zone and required to create jobs in the process,” said Jerry Sorte with the Corvallis-Benton County Economic Development office.

“It’s one of the few monetary incentives that are available through state programs for this type of development,” Sorte said.

Known as enterprise zones, the tax abatement areas are meant to encourage investment in economically struggling or blighted places.

The Philomath City Council voted 6-1 to approve the zone at its meeting Monday, June 13, with Councilor Jessica Andrade opposing and calling for more time to consider the decision.

“Yes, this sounds like a great opportunity,” Andrade said, but then asked if it was the right time to act considering other city endeavors to improve the local economy.

Other council members also raised concerns before voting in favor, including Councilor Catherine Biscoe, who questioned the cost to agencies relying on local tax revenue and whether more could be done to help downtown businesses. She also called for more time to discuss the proposal.

“Aren’t we going two different directions by saying we’re really encouraging big development to come in here and giving them tax incentives?” Biscoe asked. “At the same time we’re telling our downtown core businesses, ‘Well gosh, we want you to invest everything, but we’re not going to give you the same kind of incentive.’”

Responding to Biscoe’s remarks, Councilor Ruth Causey said in her view the enterprise zone is complimenting rather than detracting from plans around revitalizing downtown Philomath, which were discussed in an earlier work session.

She said bringing a manufacturer in, for example, would result in its workers shopping downtown.

“I think it gives us an advantage, and at least puts us on equal footing with other communities,” Causey said. “I don’t see that as really impacting our current tax revenue, and we can certainly create incentives for other businesses that we want to come to our downtown area.”

Sorte said the total tax rate when all districts are considered is between $19 and $22 per $1,000 of assessed property value.

A prior meeting with the affected taxing agencies regarding the proposed economic zone raised no concerns, according to a staff report. At the council meeting, City Manager Chris Workman said only one taxing district has offered any comment on the topic.

The one downside to the enterprise zone, Workman said, is money left on the table. If a business had already planned to set up shop in town, forgiving its first three or five years of taxes under the new zone would be a loss.

But Workman argued the tax savings is most likely to be invested in the business, further benefiting Philomath.

Manufacturers, processors, shippers, call centers, headquarters-type facilities as well as hotels, motels and resorts are eligible for enterprise zone benefits, Sorte said. Qualified projects include new buildings or structures, structural modifications or additions, and newly installed machinery and equipment.

On the other hand, Sorte said, retail, construction, financial, and certain other defined activities are ineligible.

Enterprise zones can only apply to areas experiencing economic hardship, Sorte said, noting that not all of Philomath meets the requirement of 80% or below of per capita income.

The resulting enterprise zone of around 1.1 square miles includes commercial and industrial areas as well as some residential neighborhoods. The city of Philomath is the sole sponsor, with the Economic Development Office overseeing management.

The zone would last for 10 years, although the council could choose to withdraw it before that time is up, but that would prevent the city from applying for another enterprise zone for a decade, according to Sorte.