PUBLIC HEARING, WORK SESSION HB 2671A, PUBLIC HEARING HB 2298A

 

TAPE 93, 94, A-B

 

HOUSE REVENUE COMMITTEE

MARCH 24, 2003   8:30 AM   STATE CAPITOL BUILDING

 

Members Present:                        Representative Lane Shetterly, Chair

                                                Representative Wayne Scott, Vice Chair

                                                Representative Joanne Verger, Vice Chair

                                                Representative Vicki Berger

                                                Representative Pat Farr

                                                Representative Mark Hass

                                                Representative Elaine Hopson

                                                Representative Max Williams                                               

 

Members Excused:                      Representative Phil Barnhart

 

Witness Present:                        Tom Butler, District 60

                                                Art Fish, Oregon Economic and Community Development Dept. (OECDD)

                                                Rep. Bill Garrard, District 56

                                                Robert Trotta, People’s Energy Resources, Cobb Energy Facility

                                                Tray Sena, Klamath County Economic Development Association (KCEDA)

                                                Andrew Stadelli, KCEDA

 

Staff Present:                            Paul Warner, Legislative Revenue Officer

                                                Mazen Malik, Legislative Revenue Office

                                                Kathy Tooley, Committee Assistant

 

TAPE 93, SIDE A

 

004

Chair Shetterly

Calls meeting to order at 834 a.m.

 

OPENED PUBLIC HEARING ON 2298A

 

010

Mazen Malik

Provided description of HB 2298-A, no fiscal impact, revenue impact as yet not completed, (Exhibits 1, 2).

 

026

 

 

070

 

 

 

083

 

 

094

Rep. Tom Butler

 

 

Rep. Butler

 

 

 

Rep. Butler

 

 

Rep. Butler

Spoke in support of HB 2298A, described distressed communities designation.

 

Described challenges to encouraging people to come to rural Oregon and employ 5 or more employees, specifies population, wages, insurance requirements.

 

Described long-term commitment (10 years or more) requirement for property, plant, and equipment.

 

No fiscal, there is a fee for the OECDD certification.  Did not have revenue cost last session.

 

130

Chair Shetterly

Regarding revenue impact, there is no current revenue being foregone, because it only applies to new business ventures coming into the state?

 

133

Rep. Butler

Answered affirmatively.  Must apply with OECDD, discussed parameters, sign offs with city, county and a port district if applicable.

 

143

Chair Shetterly

What is the thinking with the addition of port?

 

145

Rep. Butler

Described situation in Lakeview and port districts. Did not want new company to come in that was not going to use infrastructure already in existence within the city and urban growth boundaries.

 

171

Rep. Verger

Does this bill take care of the problem as when American Bridge came in, reducing unemployment, then running into problem of not qualifying with unemployment percentage requirements?

 

182

Rep. Butler

This is done county by county some with long time unemployment rate.  This attempts to give longer period of time for company to come to town as long as per capita income was down for the full year.

 

218

Chair Shetterly

Reconstruction and modification has been added to activities to qualify, assumes movement into existing facility?

 

222

Rep. Butler

Reconstruction qualifies, if new to Oregon business.

 

242

Chair Shetterly

Is this written so tight that no one has qualified to use it?

 

225

Rep. Butler

Haven’t been able to attract people to businesses in distressed, rural Oregon.  This gives them more latitude.

 

Questions and discussion regarding small facilities that would come in; not employ many and receive credit.

 

300

 

 

 

500

Art Fish

 

 

 

Fish

Described background of HB 2298A.  Discussed current law, proposed changes.  Discussed eligibility criteria, cities, counties, high unemployment and per capita income.

 

Discussed city and county approval requirements.

 

 

TAPE 94, SIDE A

 

024

Chair Shetterly

Concern that this bill was so complicated, it would be difficult for people to determine if they were going to qualify.  Can you help them through if someone comes to you wanting to qualify?

 

028

Fish

It is complicated to keep up on the data and figure out.  Once a location is chosen, just a matter of process, giving cities/counties 60 days to approve or disapprove benefit.  Discussed criteria new to state, number of employees, median wage, long term outlook, non-competition with current business.  Whole process could take 6-9 months to start up.

 

071

Chair Shetterly

Where is the “New to Oregon language”?

 

074

Fish

That’s not new to the bill, A Engrossed, Page 3, lines 18 and 19.  Significant issue, do have inquiries by current companies.

 

Questions and discussion regarding example of new entities.

 

091

Rep. Verger

Do you think we are going to work hard on how to get to yes in these processes?

 

105

Fish

Can say yes, as quickly as some of these requirements are met.  The program is not too difficult. It just has some constraints that limit applicability.

 

115

Rep. Verger

Would you use the community solutions team process in a small area, with these criteria?

 

111

Fish

Yes, if there are other issues complicating, especially where there are benefits available.  Some areas are enterprise zones with additional incentives available.

 

121

Rep. Verger

Cited difficulties involved with enterprise zones and urban renewal requirements. Need to work with companies to make it easier.

 

150

Chair Shetterly

The intention is to try to focus development within particular distressed areas.

 

151

Fish

Requirement of 150% of per capita income is a complicating issue.  Potential for local objection is another complication.

 

183

Chair Shetterly

For the record, received exhibit from Oregon Revenue Coalition (Exhibit 4).

 

188

Chair Shetterly

Closed public hearing on HB 2298-A.

 

OPENED PUBLIC HEARING ON HB 2671-A

 

194

Mazen

Provided background and described HB 2671 (Exhibit 5), minimal fiscal (Exhibit 6), and revenue impact, (Exhibit 7).

 

289

Rep. Bill Garrard

This will create jobs in Bonanza and Klamath County during and after construction.

 

301

Robert Trotta

Spoke in support of the bill, discussed long term rural enterprise zone.  Taking project from a concept to actually benefit economic development by bringing investment into a community.  How do you make it easier?  This bill takes those steps.

 

304

 

 

 

365

Trotta

 

 

 

Trotta

Discussed development and permitting process taking 2 years. Project makes sense from environmental, permitting. Now working on economic phase.

 

Discussed incentive as not going as far as it needs to go.  Described other states enterprise zone incentives as better.  Trying to site facility now. Today the land provides $2000 property taxes, could be $700 million investment, describes breakout of union labor, length of time to build, permanent employees, $87 million annual salaries.

 

387

Trotta

This bill increases the possibility of this facility moving forward.

 

410

Rep. Garrard

Cited electrical market rates currently uncertain, but this company is willing to take the risk; Oregon needs to take risk as well in offering economic incentives.

 

422

Tray Sena

Spoke in support of bill.  Reiterated testimony of Trotta and Rep. Garrard.  Klamath County adopted in its goals and objectives power generation as a key ingredient for economic prosperity.  Company chosen based on track record and integrity of company and Trotta

 

 

TAPE 93, SIDE B

 

010

Andrew Stadelli

Spoke in support of bill and Cobb Energy Facility.  Cited company’s dedication to minimizing any negative impacts.

 

020

Rep. Hass

This feels like the strategic investment program, question regarding language regarding start up, Section 1?

 

070

Chair Shetterly

That’s a question for Fish.

 

031

Rep. Verger

In 2 years trying to get this business into Oregon, can you give the Committee an idea of what has been done right, possibly wrong; environmentally sensitive?

 

052

Trotta

Goal/vision of the state to protect environment and resources and process, protections are in place to do that thoroughly.  Needs additional tweaking, for companies that meet criteria and goes through review, should be economic criteria that make it feasible.

 

114

Sena

This is an incentive plan that is designed to help small economic development areas, with small employment opportunities. Intent is to bring in employment.  Some frustration is urban vs. rural.  What ifs have taken a long time.

 

140

Rep. Verger

In rural areas, for businesses that have a track record should not necessarily take 2 years to jump through hoops.  There should be a happy medium.

 

160

Rep. Garrard

Discussed cogeneration plant existing in Klamath, plus additional plant proposed.  This bill sets model, clears way for additional projects in Klamath Falls and in Oregon.

 

172

Rep. Farr

Support bill, this is exactly what is needed to improve the economy of the state. Discussed need to make it easier for companies to come in to this state.

 

190

Rep. Berger

On scale to 1 to 10, one being easiest, 10 being difficult how would you rate Oregon’s permitting process?

 

204

Trotta

The degree of difficulty is rated at 11.

 

206

Chair

The sense of the committee is to help you move this bill along for your benefit and for Klamath County.

 

240

Fish

Discussed Oregon Enterprise Zone (Exhibit 9), long-term rural tax incentives (Exhibit 10), discussed history, Section 1 of the HB 2671-A lists options that allow a company to meet requirements, including size of the county and distance from Interstate 5.

 

328

Hass

Don’t understand what section 1 does, what does the first part of Section 1 apply to and what does it strive to accomplish?

 

334

 

 

370

 

393

Fish

 

 

Fish

 

Fish

Section 1 of the bill, partially defines the program includes all minimum requirements for a facility to meet; discussed gradations. 

 

Discussed average compensation, as most significant hurdle. 

 

Discussed options available if siting more than 10 miles from Interstate-5.

 

420

Rep. Hass

Wouldn’t they be able to qualify under existing law?

 

422

Fish

They could if they met the 10 job requirement.

 

Questions and discussion regarding meeting requirements

 

473

Chair Shetterly

This bill creates a new entry “rural enterprise”.

 

475

Fish

Answered affirmatively.

 

476

Chair Shetterly

This may be the only facility that qualifies for it, but it is $200 million and jobs for Klamath County.

 

480

Fish

There could be other energy facilities, or use of Strategic Investment Program.

 

484

Chair Shetterly

This would not qualify for the income tax exclusion under HB 2298, Klamath County does not come under that?

 

487

Fish

That is correct, even with proposed changes.

 

496

Chair Shetterly

Acknowledged for the record, that Exhibit 4 from the ORC, was intended for HB 2671-A as well as HB 2298.

 

507

Chair Shetterly

Closed public hearing.

 

 

OPENED WORK SESSION

TAPE 94, SIDE B

 

040

 

 

042

 

 

 

048

Rep. Verger

MOTION:  MOVED HB 2671-A TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION

 

ROLL CALL:  MOTION PASSED 8-0-1

REPRESENTATIVES VOTING AYE:  Berger, Farr, Hass, Hopson, Scott, Verger, Williams, Chair Shetterly.  EXCUSED:  Barnhart

 

Rep. Garrard  will carry the bill.

 

 

 

051

Chair Shetterly

Meeting adjourned at 10:00 a.m.

 

 

Tape Log Submitted by,

 

 

 

Kathy Tooley, Committee Assistant Reviewed by Kim Taylor James

 

Exhibit Summary:

1.       Malik, “Fiscal Impact HB 2298A”, 1 page

2.       Malik, “Staff Measure Summary HB 2298A, 1 page

3.       Fish, “Testimony HB 2298”, 5 pages

4.       ORC, “Testimony HB 2671 and HB 2298”, 3 pages

5.       Malik, “Staff Measure Summary HB 2671-A”, 1 page

6.       Malik, “Fiscal Impact HB 2671-A”, 1 page

7.       Malik, “Revenue Impact HB 2671-A, 1 page

8.       House Committee on Trade and Economic Development, “Staff Measure Summary HB 2671-A”, 1 page

9.       Fish, “Oregon Enterprise Zones”, 1 page

10.   Fish, “Long-Term Rural Tax Incentives”, 2 pages