The City Council approved on a 6-1 vote Monday night the establishment of an enterprise zone to incentivize new business. (Photo by Brad Fuqua/Philomath News)

In a move intended to incentivize new business and create jobs, the Philomath City Council during its meeting Monday night established an enterprise zone — a designated area within the city limits that will abate local property taxes for three to five years.

The enterprise zone encompasses approximately 1.1 square miles and includes industrial and commercial properties along with a few residential neighborhoods. To be included, the area needed to meet state-mandated hardship criteria — household median income is 80% or less of the state’s median income or the unemployment rate is two percentage points or higher than the state’s unemployment rate.

Jerry Sorte, Corvallis Benton County Economic Development Office supervisor, said eligible businesses include manufacturers, processors, shippers, call centers, headquarter-type facilities and hotels or resorts and qualified projects include new buildings, structural modifications or additions or new installs of equipment.

“It’s a tax abatement program where if you make certain developments, you don’t have to pay taxes on those particular developments for a particular period of time,” Sorte told the council during a presentation.

Ineligible businesses would be retail, construction, financial and certain other defined activities.

“Broadly speaking, this is an incentive program that is designed to attract development within the zone and required to create jobs in the process,” Sorte said. “It’s one of the few monetary incentives that are available through state programs for this type of development.”

On the residential areas that fall within the enterprise zone boundaries, Sorte said “that’s OK, it doesn’t change the uses that are permitted in those areas and typically, there’s not going to be a manufacturing or other type of qualifying business that would be established in those areas.”

The break includes all taxes for at least three years and up to possibly four or five years.

“Looking at the taxing rates in Philomath, in some those total — kind of based on where you’re at — between $19 and $22 per $1,000 of assessed value,” Sorte said.

The council approved the enterprise zone resolution on a 6-1 vote with Jessica Andrade in opposition.

An image of the proposed Philomath enterprise zone. (Image captured from City Council meeting packet)

Councilor Catherine Biscoe said the overarching view of the program sounds great and serves as an encouragement for business development and job creation, but she did have questions on the risks and costs.

“Say we have a multimillion dollar firm that wants to come here and develop a building in some space and we’re going to just wipe away all of that tax revenue for the city — that is in fact the tax revenue that helps us build our infrastructure, it is the tax revenue that helps us provide administrative services,” Biscoe said. “Where do we recapture those taxes and that revenue?”

She also sees a messaging issue when it comes to the downtown corridor.

“How do we tell our downtown businesses that we’re not in a position or we don’t have a program to offer you that same kind of incentive knowing what the budget constraints are when it comes to infrastructure in particular?” she said. “This feels very open-ended.”

Councilor Ruth Causey said she sees the enterprise zone as an opportunity for those types of businesses through the time-limited tax break to establish themselves in Philomath.

“That’s tax revenue we wouldn’t have had if they didn’t come here,” Causey said. “It’s not that we’ll never have it — we’ll have it within three years or five years or whatever’s appropriate for that situation. So I think it gives us an advantage and at least puts us on equal footing with other communities. I don’t see that as really impacting our current tax revenue.”

Causey added that in addition, the city could “certainly create incentives for other businesses that we want to come to our downtown area.”

Councilor David Low said that although he sees the enterprise zone as complementary to downtown — a point Causey had made — he would like to see an emphasis on retail.

Councilor Teresa Nielson sees the enterprise zone as a positive.

“Yes, there’s a temporary minimization as they come into town but as they establish their business we have years ahead,” Nielson said. “Hopefully, these are businesses that will stay indefinitely and provide a substantial benefit to our city and our population. I absolutely think that this could be a really good thing for us.”

Andrade had questions on map and zoning issues, as well as working in conjunction with the Planning Commission’s efforts related to comprehensive plan updates.

“It feels odd to be discussing this in depth to potentially make this decision now when we haven’t received those recommendations from the Planning Commission yet,” she said.

Workman said the Planning Commission has already given its approval of incentives for new development that focus on job creation, such as enterprise zones and other tax incentives — although that’s still a draft document without final approval. Workman added that the city’s strategic plan also includes such pursuits.

Biscoe made points that question the timing of the enterprise zone based on downtown development efforts and various other city-related issues. Andrade agreed and said, “Yes, this sounds like a great opportunity and yet perhaps do we want to do this now?”

Andrade later said, “We have so many new things going on in the city right now — so many new policies and projects that we want to do. I agree that it feels like we’re getting ahead of ourselves and we should wait a little bit until we see more growth with our smaller businesses and have started to do the streetscapes project.”

The Corvallis Benton County Economic Development Office is assisting Philomath — the sole sponsor — with the administrative responsibilities associated with the enterprise zone designation, a process that got started on Feb. 25. The proposal went before the city’s Finance and Administration Committee on June 1 and a meeting with the taxing districts followed on June 3.

Workman reported that he received no negative comments from the taxing districts with only one that showed up at the meeting — the Philomath School District.

“To me, these are all good things and this is something we should’ve done 10 years ago,” Workman said, later adding, “I strongly support establishing an enterprise zone and helping our businesses out.”

The city manager mentioned that one perceived negative involves businesses that had already made solid commitments to coming in.

“You could see that as wasteful or leaving money on the table,” Workman said. “However, I would argue that if that new business is coming to Philomath and they get three years without having to pay property taxes on that investment they’ve made, all the better because my experience is that money doesn’t go into the pockets, it goes into investment into that business.”

Based on information published by Business Oregon, there are 76 enterprise zones in the state — 58 rural and 18 urban. Philomath falls under the designation of rural zone.

Dennis Lewis accepts a 20-year service plaque on Monday night from City Councilor Ruth Causey. (Photo by Brad Fuqua/Philomath News)

In other news out of the June 13 meeting:

• The council began its evening with a 90-minute work session on Philomath’s downtown revitalization plan.

• Councilors participated in an Urban Renewal Agency meeting prior to the regular council meeting and adopted a $3.1 million budget for the 2022-23 fiscal year. There were no comments during a public hearing.

• The city presented Dennis Lewis, senior wastewater operator for Philomath Public Works, with a plaque for 20 years of service.

• The council approved a resolution to receive various types of state-shared revenues, including $434,218 from the highway gas tax with 99% of that amount going to streets and roads and the remaining 1% to bicycle paths and trails. There were no comments during a public hearing.

• The council adopted a $39.4 million budget for fiscal year 2022-23 and a related resolution to impose and categorize taxes at a rate of $5.305 per $1,000 of assessed valuation. There were no comments during a public hearing.

• The council approved updates to a social service funding policy “to add clarity and inclusiveness to the process of selecting agencies that receive funding” and added a new section reflecting the current utility assistance program.

• The council approved a transient lodging tax policy and grant program. The program awards portions of TLT funds to organizations that support tourist-related activities. Councilors will be scheduled to vote on an ordinance amendment at their next meeting.

• The council approved the design of bronze sidewalk inlays to be installed as part of the streetscape project. Artists Andrea Marks and Deann Garcia provided details on the preferred design with themes on mixed conifer forests, meadows and grasslands, oak woodlands, riparian and wetlands (separate story to be published at a later date).

• The council approved of a general design concept for the memorial to be placed at Paul J. Cochran Veterans Memorial Park. The city received a state grant for $50,500 to build and install the memorial and flagpole area with requirements for a 40% match, which amounts to $20,000. The grant funds must be spent by May 2023.

• The council approved the second reading of an ordinance that outlines an agreement with Benton County to administer the city’s tobacco retail licensing program and enforcement.

Brad Fuqua, Philomath News

Brad Fuqua has covered the Philomath area since 2014 as the editor of the now-closed Philomath Express and currently as publisher/editor of the Philomath News. He has worked as a professional journalist since 1988 at daily and weekly newspapers in Nebraska, Kansas, North Dakota, Arizona, Montana and Oregon.