Businesses moving into Bend and several areas just outside city limits are a step closer to qualifying for tax breaks under a proposal approved by the Bend City Council Wednesday.

Councilors voted 6-1 to request that Business Oregon, a state development department, approve expansion of the city’s enterprise zone. The land includes most of the rest of the commercial land in city limits and the urban growth boundary, 2,380 acres around town that will eventually be annexed.

Companies that build in the area or hire more employees won’t have to pay property taxes on new investments — buildings or other property that wasn’t already on the tax rolls — for three or five years.

They only get those tax breaks after they finish building and hiring employees, and they have to repay the taxes if they don’t maintain minimum employment.

For a three-year abatement, companies have to add at least two jobs or increase full-time employment by 10 percent, prioritize hiring local employees and maintain a minimum number of jobs in the area without offsetting those jobs by laying off employees elsewhere in Oregon.

For a five-year abatement, employers also have to pay new employees an average of 150 percent of the area median income. In Deschutes County, that means the average pay should be nearly $62,000 a year.

In a letter shared with the City Council, an executive at Bend-based biotechnology company Grace Bio-Labs said the prospect of a tax abatement was a major factor in its decision to move its headquarters to 1015 SW Emkay Drive, inside the current enterprise zone. Vice President of Finance Kenneth Betschart said the economic incentive shows the city of Bend “is an active partner in our success.”

Grace Bio-Labs, which qualified for a five-year abatement in May, invested $3.25 million and created five new jobs with an average compensation of $100,000. Its total tax abatement this year was $49,500, and about $9,100 would have gone to the city, Bend Economic Development Director Carolyn Eagan said.

“Really when we’re talking about the impact to the city coffers, it’s very small,” Eagan said.

Councilor Bill Moseley voted against the proposal, despite taking advantage of similar programs with his own business. He said those economic incentives don’t ever actually cause businesses to create jobs, and he doesn’t feel comfortable giving money to rich business owners.

“I just don’t believe that an abatement for $49,500 will cause them to create a single job,” Moseley said.

But Councilor Barb Campbell, another business owner, said she was impressed by how many of the businesses that use the credit are Bend-based businesses. Multiple Bend breweries, including Worthy, GoodLife, Deschutes and 10 Barrel, receive tax abatements.

“I was really struck by how many of those businesses are local businesses,” Campbell said. “They’re businesses that have started here and have grown up here.”

Since Bend created its enterprise zone in 2010, 40 companies in the enterprise zone have invested $149.5 million in new facilities and hired 584 people, Bend Economic Development Advisory Board chair Erich Schultz said in a letter to the city council.

There is no current timetable for the city’s request to be sent to Business Oregon.

In other business, councilors agreed to research and discuss charging higher transportation fees on new developments to more quickly build and improve roads in the city’s urban growth boundary.

The council voted 5-2 to adopt new rules meant to streamline meetings and a social media policy for councilors. Campbell and Councilor Nathan Boddie, who opposed the rule change because they thought it would harm transparency, voted against the new rules. The rule change and social media policy require an additional vote.

Councilors gave final approval to a new law exempting developers of affordable housing from paying fees meant to help cover the costs new buildings have on the city’s streets, sewer system and water infrastructure.

— Reporter: 541-633-2160; jshumway@bendbulletin.com

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