Long-term Rural Enterprise Zone Facilities

Available in most rural enterprise zones, the long-term zone program offers a property tax abatement of 7–15 years, compared to the standard 3 to 5 years. Any type of business activity is eligible, but these incentives depend on local approval and minimum levels for investment size, job creation and employee compensation. Contact the local zone manager about using this program.

Incentives

  • Until a certified facility commences operations, it is not subject to local property taxes, under special provisions for this program.
  • 7 to 15 consecutive years of full relief from property taxes on new facility property, starting in the year after it is permitted for use and occupancy.
  • With the Governor's approval, credits equal to 62.5% of gross payroll against state corporate excise (income) taxes. (Credits received over a 5- to 15-year period, and each credit may be carried forward for five succeeding years. Local certification must occur by June 30, 2018.)

Where the Incentives Apply

The long-term enterprise zone incentives are available in rural enterprise zones, of which there are 36 throughout the state located inside a county that meets a defined level for longstanding annual unemployment rate or per capita income based on the latest statistics, or that is a qualified rural county in terms of its being outside a federal metropolitan statistical area and having a relatively higher general property tax rate countywide.

Note: The facility site must be in both an eligible county and the designated rural enterprise zone when the agreement is signed between the business and local zone sponsor.

Qualifying Projects

The facility must meet the following three criteria:

  1. Total investment costs need to be greater than 1% (or .5% if more than 10 miles from Interstate 5) of a county's total real market value by the end of the year when operations begin. This base amount varies from $1 to $25 million, depending on the location (≤ $12.5 million outside 10-mile I-5 corridor).
  2. Within 3 or 5 years of commencing operations, the business must hire a number of new, full-time employees to work at the facility, at least 10, 35, or 50, depending on the county, or 75 if within 10 miles of I-5, to be maintained during the tax abatement period.
  3. By the fifth year after the year when new facitlity operations commenced, average annual compensation (including benefits) for all workers at the facility must be at least 130% (if in a qualfied rural county) or 150% of the county average annual wage, based on the latest, final figure, at which point for every subsequent calendar year over the rest of the exemption period:
    • Average compensation needs to be at least that high relative to the county wage when first met.
    • The average wages (taxable income) received by those workers also must equal or exceed the latest year's figure for the county average wage.

Certification Process

Prior to beginning construction, improvements, or hiring at the facility, a business must submit a certification application PDF to the local enterprise zone manager and county assessor, who will approve the business for certification pursuant to the following two steps:

Step 1: The business and all local government sponsors of the enterprise zone enter into a written agreement, for which Business Oregon will provide documentation of concurrent county eligibility. This local agreement determines the exemption period (7 to 15 years) and may specify additional requirements to be met by the business/facility.

Step 2: The county board of commissioners (and the city council, if within city limits) specifically adopts a resolution approving the property tax exemption.

Special Notes for Corporate Tax Credit

Following local certification as described above, occurring no later than June 30, 2018, the Governor of Oregon may allow for this very unique tax credit and set the length of time it can be claimed. The credit may be used only against the tax liability relating to the facility, over and above an annual minimum payment of as much as $1 million in state taxes. The corporation needs to own the facility, and to begin claiming the credits at the latest by the tax year that starts in the third calendar year after the year when the facility is placed in service, using a special Department of Revenue form.

Property tax incentives are unaffected if the Governor does not grant the tax credit. If it is granted, corporate taxes collected by the state with respect to the facility are rebated to local taxing districts or zone sponsor, at up to 30% of the maximum for the minimum payment and of any excess tax liability relevant to and remaining after the tax credit.