Long-term Rural Enterprise Zone Facilities Program
Available in most rural enterprise zones, the long-term zone program extends property tax abatement for 7–15 years, compared to standard three to five 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 for further information on these incentives, the current eligibility of certain zones and investment/employment minimums by county.
The following are the incentives available to businesses using this program.
- Until the facility is officially operational, it is not subject to local property taxes, under special provisions for this program.
- Seven to 15 consecutive years of full relief from property taxes on a new facility property, once permitted as operational.
- With the Governor's approval, credit equal to 62.5% of gross payroll against state corporate excise (income) taxes. (Credits received over a five- to 15-year period, and each credit may be carried forward for five succeeding years.)
Where These Tax Incentives Apply
The long-term enterprise zone incentives are available in rural enterprise zones, of which there are 34 throughout the state located inside a county meeting defined levels for longstanding annual unemployment rate or per capita income based on the latest statistics.
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.
Criteria for Qualifying Projects
Qualifying projects must meet the following three criteria:
- 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 about $1 million up to $25 million, depending on the location.
- Within three or five years of commencing operations, the business must hire a minimum number of new, full-time employees (10, 35, 50 or 75 jobs, again, depending on location) to be maintained during the tax abatement period. (A minimum of 10 new employees suffices in most relevant zones, if the investment exceeds $200 million.)
- Within five years of commencing operations, average annual compensation (including benefits) for all workers at the facility must be at least 150% of the county average annual wage at which point the minimum for the rest of the exemption period is established.
Prior to beginning construction, improvements or hiring at the facility, a business must submit a certification application 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 eligiblity. This local agreement determines the exeption period (seven 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) must adopt a resolution sanctioning the property tax exemption.
Special Notes for Corporate Tax Credit
Following the local certification as described above, which must occur no later than June 30, 2018, the Governor of Oregon may issue an approval for the tax credit and set the length of time it can be claimed.
Property tax incentives are unaffected if the Governor does not grant the tax credit. If it is granted, 30% of corporate taxes collected by the state with respect to the facility are rebated to local taxing districts.
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 the Department of Revenue form .
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