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Council gives final nod to TIF zones

by: SPOKESMAN PHOTO: JOSH KULLA - The former Hollywood Video distribution center off Elligsen Road in north Wilsonville is one of six properties covered by the citys new TIF zones.The Wilsonville City Council has formally approved the designation of six separate properties within city limits as individual urban renewal districts.

Known as tax increment financing zones, the six single-site zones are the latest tools adopted by the city council Oct. 21 to promote economic development. The sites all feature vacant or semi-vacant warehouses, each abandoned by their original corporate owners as the ongoing economic recession took an increasing toll on local businesses over the last five years.

The TIF zone concept, which was approved by Wilsonville voters in March, allows the city to offer substantial property tax rebates to companies who choose to invest in one of those six sites.

“We used to draw businesses here because of our location and the quality of infrastructure,” Wilsonville Economic Development Manager Kristin Retherford said. “But as we headed into the recession we found that our vacancies were zooming up and up. During the same time period we were seeing more and more requests by site selectors for incentive packages.”

The council voted in favor of six separate resolutions enacting the zones, one for each property covered, at its Oct. 21 meeting. Councilors then approved the resolutions on second reading at their Nov. 4 meeting.

“In my view, it’s innovative work and it has the potential of pushing our economic vitality in a positive direction,” Mayor Tim Knapp said at the latter meeting. “And anytime you try something new you don’t necessarily have success guaranteed.

“I really am anxious to see if we can achieve something that was previously unexpected or uncertain,” he added, “so we’ll have to see if that is possible.”

TIF zones use a similar funding mechanism as a standard urban renewal district. But TIFs also provide property tax incentives for companies who invest in one of the properties and create above average wage jobs.

The concept is similar to the state of Oregon’s enterprise zones. Wilsonville, however, does not qualify for an enterprise zone because it is not considered economically disadvantaged under state criteria.

Properties included in the program include the former corporate headquarters of Joe’s on Southwest Boeckman Road, the former Nike distribution center off Southwest 95th Avenue, the former Ikon distribution center, also off Southwest 95th, the 250,000-square-foot Wilsonville Distribution Center on Boones Ferry Road and a now-empty building on the Xerox campus that recently was added to the list after Stream Global moved into the former Hollywood Video headquarters that was on the original list approved by voters.

The TIF zones differ from urban renewal in one important way: There is no true debt involved. Under a standard urban renewal funding scheme, bonds are sold to finance infrastructure projects. The increase in assessed property value following that development is then used to repay bond debt.

A TIF zone, by contrast, uses the promise of future property tax rebates as the “debt” needed to allow for an urban renewal-style tax increment arrangement under state law.

“With that contract there becomes a debt obligation that qualifies,” City Attorney Mike Kohlhoff said. “We don’t have the typical bond situation we have to pay off, but we have the obligation to repay that tax money, and that’s where that statute comes into play.”

The last step remaining before the zones will take effect is gaining “concurrence,” or permission for the plan to go ahead from at least 75 percent of the other taxing districts overlaying the six properties.

Parts of Wilsonville, including several of the proposed TIF zones, are in Washington County. There, 96 percent of districts have given their assent.

In Clackamas County, the board of commissioners last Thursday voted 3-2 to approve the city’s plan. It came following a heated public hearing in which former Wilsonville mayor and current commission chairman John Ludlow called the plan “robbery” of taxpayers. The vote, however, pushed the number of taxing districts in the county who have approved the TIF concept above 75 percent.

City Councilor Scott Starr, who has criticized city urban renewal spending in the past, emphasized the new TIF zones little resemble the type of program — such as the ill-fated 2011 SoloPower venture — that have raised public ire.

“There may be some times government hasn’t earned the trust of people on how urban renewal funds were spent,” Starr said. “This is not a tool to provide council with some walking around money to spend on pet projects at all. It has a defined end, and it has defined properties that can be used and a defined return on investment. So it puts the city in a very good place should they be used.”



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