Wilsonville's tax increment financing program has never been used since it was created in 2013 to encourage business investment

Over the past decade, the City of Wilsonville has used urban renewal funds — the taxes associated with increases in property values within delineated zones for public improvement projects — more than many other cities.

Although the public funding tool has taken tax revenue from public agencies like the fire department and school district, property values in such areas generally have soared.

But the City's most unique urban renewal tool, providing tax incentives to businesses that locate to six properties in town, has never been used since it was created in 2013.

"We now realize the program criteria was aspirationally high," said Jordan Vance, City of Wilsonville economic development manager at the Nov. 4 Wilsonville City Council work session. "No one has used the program or been close to meeting the program's requirements."

With the tax increment financial zones set to expire this year, the City is considering tweaking the program to make it apply to all properties throughout the City, among other changes. And the council gave direction to City staff to create a proposal for the new program during the work session.

"I think it's valuable to have a tool, and the work I've been doing with Greater Portland Inc. makes it clearer than ever to me that site selectors are looking for what advantages are there to locate in one place versus somewhere else. Incentives have been part of the landscape," said Mayor Tim Knapp during the work session. "Trying to recognize that and make Wilsonville have attractive resources in appropriate circumstances is potentially valuable to our community over time."

The program was implemented as residue from the Great Recession and as a way to persuade businesses to locate on specific properties in the City. Wilsonville later narrowed the program to three properties, two of which are in use but don't meet program requirements.

Current properties are Pacific Foods on Southwest 95th Avenue, Energy Storage Systems on Southwest Parkway Avenue and the former Microsoft building on 95th Avenue, which is now vacant.

"In my mind, the prior program's intent was not to see how much money we could give away. It was to get those buildings functioning in our city," Knapp said.

The mayor expressed interest in expanding the program so the City has a tool to bring more business to town. However, he doesn't want the standards to be too lax.

"Somewhere there's a sweet spot between being too lenient with your standards that would allow companies to reap more benefits than necessary," he said. "The amount that's necessary in my mind is the amount that's needed to get a viable project to locate here that otherwise is not going to locate here, not one that ended up coming anyway."

Along with allowing the program to be used across the city, the Wilsonville government might make the requirements less stringent. Currently, the requirements are that the business must make an investment of at least $25 million and create at least 75 full-time jobs and that the jobs must pay at least 125% of the average wage in Clackamas County, for a benefit of a three-year rebate and 125% for a five-year rebate.

Vance said one idea is to provide more of a weighted framework that would provide varying levels of rebate based on varying benchmarks. However, specifics will be identified by staff and consultant Tiberius Solutions.

"Added flexibility around program qualifications and site locations will ultimately allow us to be more competitive and in line with the marketplace and put us in a position to attract a wider range of businesses," Vance said.

Passage of a new program would not require support from urban renewal taxing districts, such as West Linn-Wilsonville School District or Tualatin Valley Fire & Rescue, but Vance said the City would seek feedback from relevant jurisdictions. The idea of going to voters with the decision was brought up during the meeting, but City Manager Bryan Cosgrove noted that voters already approved the program in 2013.

"It would be a reformatting of something the voters have already weighed in on," he said.

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