County to businesses: Expand now, taxes can wait
DK Fab, an agriculture equipment supplier based in Woodburn, will receive a break on new property taxes incurred by its recent expansion, after the Marion County Board of Commissioners approved a first of its kind exemption on Nov. 10 aimed at helping businesses grow and create jobs.
The Rural Industrial Investment Exemption was created by state lawmakers and is designed to provide incentives to rural businesses invest in capital improvements and create jobs. Marion County is the first to implement it, according to county officials.
The program allows for a three-year exemption for property taxes on any new, qualifying improvements for the business.
"This is an opportunity that Marion County implemented in order to support our businesses who are making a large capital investment for our community," Marion County Economic Development Director Kelli Weese said. "The intention of this program is really to allow our businesses, who are making that big capital investment, time to get their businesses up and operational, get their capital improvements in, before they are required to pay property taxes on those additional improvements; it allows those businesses the chance to have some return on investment before they have the additional cost of their property taxes."
The approval requires DK Fab to follow up by notifying all taxing entities within its district. The company, located just east of Woodburn on Serres Lane, plans to invest $5.5 million, which would get an estimated property-tax exemption of $47,872 for each of the three consecutive years.
It's not the first time DK Fab sought, and received, a capital improvement exemption; the county approved it for one in the spring of 2019. But it is the first time the company will be able to take advantage of it. DK Fab also has a facility in Zillah, Washington. The company, which began in 1999 as a mobile welding and steel fabrication shop in Woodburn, provides processing equipment for a variety of regional agricultural crops, especially hops and hazelnuts.
"We had started this project and had anticipated it to progress quickly, but unfortunately we had a complete loss of our Washington shop in 2018; overnight a 12,000 square-foot shop burned to the ground," Kirsch said. "Everything in it — a 100% loss. So, basically all the resources we had intended to put toward the Oregon shop were forced to be put in to rebuild the Washington shop."
Kirsch said as of June 1, DK Fab finished the rebuilding of its Washington facility and has it up and running effectively.
"Now we've returned our attention back to the Oregon shop, which we have already invested over $1.3 million in ground work and development to prepare for the building," DK Fab Parts Manager Patrick Kirsch said. "We are working with a local architect (and) submitted plans to the county for review, and the building is already in progress with the final drawings at PBS here in Woodburn."
Wider ag benefit
Commissioner Colm Willis pointed out that while DK Fab thoroughly fulfills equipment needs for hops and hazelnut producers, its versatility has been beneficial for a wider variety of ag businesses.
"One of the things I like about this company is a lot of our farmers, if they have special problems, they can go to DK and say, 'Hey, I need this kind of machine; I can't buy it off the shelf. Can you help me?'" Willis told Kirsh during the county commissioners meeting Nov. 10. "And I know you guys do a really good job helping farmers solve some of those (unique) problems, because we grow a lot of different types of things here,".
Marion County Business Retention & Expansion Manager Nick Harville pointed out that the Woodburn company has also been helpful to area schools.
"These guys are from Marion County — they live here," Harville said. "When Mount Angel started their vocational training, they had nothing to teach the kids how to weld. DK Fab donated all of the equipment, so they're already investing back into the county."
Commissioner Kevin Cameron said the upshot of the tax exemptions is that it encourages growth.
"The good thing about this is it is encouraging a local business to invest $5 million or more, and that property tax isn't there yet, it defers it for three years, but it will come," Cameron said. "It gives you the chance to invest this money."
He used Willamette Valley Vineyards as an example, noting that business had a $5 million investment encountered an immediate increased tax bill, even before the investment began paying off. Since then the implementation of the RIIE stands to offset that type of scenario.
Kirsch said DK Fab currently operates out of 10,000 square feet. The new building will be 42,000 square feet, more versatile, utile and efficient, which in turn is expected to increase productivity. They anticipate hiring from four to six more employees over the next three to four years.
"We're forecasting a hop boom in 2023," Kirsch said. "With that, when there are those hop booms, there is going to be equipment that follows it."
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