HOUSE COMMITTEE ON TRADE AND ECONOMIC DEVELOPMENT

 

 

February 12, 2003   Hearing Room D

1:00 PM Tapes  11 - 12

 

 

MEMBERS PRESENT:            Rep. Patti Smith, Chair

Rep. Vicki Berger, Vice-Chair

Rep. Mary Gallegos

Rep. Mark Hass

Rep. Dave Hunt

Rep. Steve March

Rep. Dennis Richardson

 

STAFF PRESENT:                  Kimberly A.  Medford, Committee Administrator

Linda K. Gatto, Committee Assistant

 

MEASURE HEARD:                     Informational Meeting 

                                                   Enterprise Zones

                                                   Oregon Council of Knowledge and Economic Development 

 

 

These minutes are in compliance with Senate and House Rules.  Only text enclosed in quotation marks reports a speaker’s exact words.  For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE 11, A

004

Chair Smith

Calls the meeting to order at 1:32 p.m. and opens the informational meeting for the purpose of obtaining an overview on Enterprise Zones.

INFORMATIONAL MEETING

Enterprise Zone Overview

018

Mike Burton

Oregon Economic and Community Development Department, (OECDD) Assistant Director. Submits (EXHIBIT A) and describes what is meant by an Enterprise Zone.

090

Chair Smith

Asks if a local jurisdiction can expand an Enterprise Zone.

092

Burton

Responds that an Enterprise Zone has geographic constraints, chiefly it cannot be larger than 10 square miles. Comments on other constraints.

098

Burton

Explains the department’s role in the application process and new zone designations.

128

Burton

Explains rural zone tax exemption negotiations. Notes urban zones can have additional terms and conditions.

159

Burton

Refers to page 7 (EXHIBIT A) and discusses long-term rural exemptions.

197

Rep. Gallegos

Asks if there is a mechanism to support and sustain the increase in salaries.

206

Burton

Responds that the mechanism is higher pay in exchange for an extra two years of property tax exemptions. Provides details on extensions.

228

Art Fish

Clarifies that after five years the payroll levels should be maintained based on the productivity and skills of the company’s workforce.

241

Rep. Gallegos

Asks what evaluation process verifies that the salaries will be sustained.

246

Burton

Responds that the companies are required to report that information to the zone manager.

255

Rep. March

Asks is the school portion included in the property tax exceptions for all ad valorem taxes.

260

Burton

Responds that all property taxes are exempted for qualified firms.

290

Rep. Richardson

Asks how successful the Enterprise Zone program been in creating jobs.

292

Burton

Submits (EXHIBIT B) and discusses the return on investment over time.

330

Rep. Richardson

Asks what funds are allotted for this program.

334

Burton

Responds approximately 1 or 2 FTE’s and no cash outlay. Continues to discuss that not all businesses are exempt.

366

Rep. March

Asks what is the cumulative value of the taxes that have been foregone.

382

Fish

Explains the $15.7 million in taxes, page 1 of  (EXHBIT B).

440

Burton

Expresses that the three year exemption is a good deal and explains why.

TAPE 12, A

052

Rep. Hass

Asks if E-commerce Zones have proved successful historically.

053

Burton

Answers that there is a glitch which is being addressed in HB 2299. Notes that history is limited since the law is only 18 months old.

059

Fish

Responds there are firms that would be new operations for Enterprise Zones.

066

Rep. Richardson

Asks if there is a relationship between Enterprise Zones and Free Trade Zones.

072

Fish

Responds only by coincidence.

073

Larry Glassock

Salem Economic Development Corporation, (SEDCOR), President. Explains that the Enterprise Zone legislation was key to the Siltec/Mitisbushi acquisition and expansion.

152

Glassock

Continues to testify stating that Enterprise Zones are critical to discussions with companies looking for incentives.

176

Chair Smith

Asks how Oregon compares to other states in terms of incentives and recruitment.

188

Fish

Responds it is a statutory benefit and with an immediate cash value but other states having bigger bells and whistles.

198

Rep. Hunt

Asks what prevents a company from relocating and taking advantage of the incentive.

204

Burton

Explains that there is a prohibition if the relocation causes the decrease in jobs in another part of the state.

215

Rep. Hunt

Asks if there has been critical feedback for suggested changes in the future.

216

Burton

Responds affirmatively. Explains that the intent is to re-order the statute, clarify who does the work, and extend the sunset.

233

Rep. Berger

Compliments Mr. Glassock’s work.

247

Hasina Squires

Special Districts Association of Oregon. Testifies without objection to the Enterprise Zone program. Explains that the there are 800 special service districts represented by the Special Districts Association some of which are property tax reliant. Notes that the program is voluntary to the extent of the harm it can do on special districts in rural areas. States that the association will advocate for opting-out for special districts legislation.

352

Chair Smith

Closes the informational overview on Enterprise Zones and states that HB 2252 is moved to Monday.

354

Chair Smith

Opens the informational overview on Oregon Council for Knowledge and Economic Development, (OCKED).

Oregon Council of Knowledge and Economic Development Overview

378

Allen Alley

Oregon Council for Knowledge and Economic Development, Chair and CEO of Pixel Works, Tualatin Oregon.

379

Dr. Frost Lee

Member of the OCKED, Tech Transfer and the Capital Access committee.

384

Scott Gibson

Gibson Enterprises.

380

Alley

Submits OCKED’s report (EXHIBIT C) and begins Power Point presentation (EXHIBIT D). States that high technology is the leading employer in Oregon.

TAPE 11, B

026

Alley

Comments on economic danger signals;

  • Oregon ranks 50th in high school completion (1999)
  • Oregon posted the largest decline in support for higher education.
  • Oregonians spend a disproportionate amount of their wealth on technology in the home.

118

Alley

Discusses miniature-scale materials and devices for energy, environmental and biological systems. Discusses the capital investment; $10 million in start up and $20 million in capital.

160

Alley

Begins an overview on attracting venture capitalists.

215

Alley

Comments on the international science fair in scheduled for 2004.

224

Alley

Summarizes by quoting Darwin on response to change.

217

Adrian Roberts

OCKED. Discusses the Signature Research Center concept and  knowledge based solutions, (EXHIBIT E).

270

Scott Gibson

Submits and reads (EXHIBIT F).

330

Gibson

Continues to testify on OCKED’s legislative recommendations.

390

Gibson

Discusses attracting 7-10 venture capital firms to move their primary residence to Oregon.

416

Rep. Gallegos

Asks for a recommendation on how to balance the funding for K-12 and higher education.

428

Alley

Responds by explaining that Oregon’s higher education is on the front page of USA today and how this is interpreted by the world community from a relocation point of view.

TAPE 12, B

058

Rep. Hass

Asks Mr. Gibson if the recommendations he discussed will be presented as legislation.

064

Gibson

Responds that SB 358 – SB 363 are the six bills that package OCKED’s recommendations.

069

Rep. Hunt

Asks are there state funded services and programs that are considered to have a high economic development value that should be reconsidered with OCKED’s recommendations.

076

Gibson

Responds that the economic engine needs to be revitalized.

099

Alley

Adds that Oregon spends more money on stuff other than teacher salaries than any other state in the country.

(EXHIBITS G, H, and I) Submitted for the record.

132

Chair Smith

Closes the informational meeting and adjourns the meeting at 2:55 p.m.

 

EXHIBIT SUMMARY

 

A – Enterprise Zones informational document, Mike Burton, 7 pp

B – Current Enterprise Zone Activity summary, Mike Burton, 6 pp

C – OCKED Report, December 2002, Allan Alley, 73 pp

D – OCKED, Power Point presentation,

E – OCKED, Signature Research Center, Adrian Roberts, 

F – OCKED, prepared testimony, Scott Gibson, 3 pp

G – OCKDED, written testimony submitted for the record, Rich Linton, 2 pp

H – OCKED, written testimony submitted for the record, Mike Salsgiver, 1 p

I – OCKED, written testimony submitted for the record, Timothy P. White, 2 pp