Wheeler and Rubio Seek to Designate Downtown Portland an Enterprise Zone to Curb Exodus

They appear to be betting that tax abatement will stop a rush out of the central city.

Pearl District and downtown Portland at sunrise. (Blake Benard)

Mayor Ted Wheeler and Commissioner Carmen Rubio plan to ask the City Council to make much of downtown Portland a tax-free enterprise zone as companies flee the central city to avoid taxes, crime and open-air use of illegal drugs.

Wheeler and Rubio plan to bring a resolution before the council Aug. 31, asking commissioners to allow Prosper Portland, the city’s economic development agency, to expand the enterprise zone boundaries to include “new tax lots in the downtown SW Portland core and NW Industrial areas,” according to a copy of the resolution posted on the city’s website.

“The Business Advancement Team at Prosper Portland, who is leading employer retention for the city, is in conversations with companies making active decisions about their future in Portland and have identified the Portland E-Zone as a key tool in their decision-making process to remain in the Central City,” the resolution reads.

Companies doing business in enterprise zones are eligible for breaks that include paying no property tax for five years on new capital investments. Land and existing equipment is not tax exempt.

In general, the tax liability for a new capital investment is 1.5%, according to Prosper Portland. A $20 million investment incurs a tax liability of around $300,000 a year. Once the five-year period is over, the improvements are fully taxed for the life of the improvements.

“We want businesses doubling down on their commitment to Portland,” says Jillian Schoene, chief of staff to Commissioner Rubio. She emphasized that the tax breaks are only on new investments. Bobby Lee, chief of staff to Wheeler, calls it an “economic development strategy to focus on growth and economic opportunities.”

An enterprise zone is a “tool to revitalize the downtown core, as affected by the pandemic, by encouraging new investment and jobs in downtown Portland,” the resolution says.

A separate resolution scheduled for the City Council on Wednesday seeks to extend the same graces to Daimler Truck North America—if it builds its new expansion in Portland. The resolution states that Daimler is “considering a significant expansion at an amount greater than $25 million, either in Portland, or in other markets throughout the U.S....if the project is located in Portland, Daimler Truck and Prosper Portland will expand on its partnership in the city in advancing clean technology, supporting a diverse workforce, and intentional purchasing through a public benefit agreement in accordance with the guidelines in the Portland E-Zone Policy.”

Landlords in downtown Portland are struggling to retain tenants. Many buildings have gone into foreclosure as companies leave the city center. Earlier this month, The Oregonian reported that Hoffman Construction, the biggest construction company in the area, had decided to move out of Fox Tower, a marquee building in Portland’s business district.

In the past decade, Prosper Portland has managed 97 enterprise zone projects. Seven are active, the city says, and they have the potential to invest $100 million and create 350 new jobs.

Proposed Enterprise Zone. (City of Portland)

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