The Bend City Council is making a smart move to do a bit to help businesses succeed. The council voted 6-1 to request that the state approve an expansion of Bend’s enterprise zone.
An enterprise zone is an area where businesses that qualify can get tax breaks. Bend has a zone. The proposed expansion would add almost all of the rest of the land zoned commercial in the city limits and add the areas inside Bend’s new urban growth area expansion.
In the zone, businesses that qualify can receive three-year or five-year abatements on property taxes on new investments that were not on the tax roll. The business must be a traded-sector business to qualify. A traded-sector business means it has to sell its goods into a market with national or international competition. A qualifying business typically has to invest more than $50,000 or expand its work force by 10 percent. Employees hired must be paid above-average wages. In Bend’s zone, that would mean $62,000 a year.
One big question about enterprise zones is their effectiveness. Councilor Bill Moseley was the lone vote against the expansion. His argument is basically that the benefits are marginal and they aren’t necessarily enough to change the mind of a business to expand. So, the argument goes, what can happen is businesses end up with a tax break when they would have expanded without it.
It’s hard to know for sure what happens. But expanding a business is not an easy decision to make. There’s risk, uncertainty and almost always a strained bank account. The tax breaks do add an incentive. Some businesses that have participated in Bend’s zone say the zone helped make the decision to expand or stay in Bend.
For instance, Bend-based biotechnology company Grace Bio-Labs said the tax benefit was a major factor in its decision to move its headquarters to Emkay Drive, inside the enterprise zone, as Bulletin reporter Julia Shumway wrote.
Grace Bio-Labs qualified for a five-year abatement in May. It invested $3.25 million, creating five new jobs. Average compensation was $100,000. Its total tax abatement this year was $49,500.
An enterprise zone is one of the only tools Bend has available to make good things like that happen. The council was right to support the expansion.