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Aid sought to redevelop Hynix [The Register-Guard, Eugene, Ore. :: ]
[February 17, 2014]

Aid sought to redevelop Hynix [The Register-Guard, Eugene, Ore. :: ]

(Register-Guard (Eugene, OR) Via Acquire Media NewsEdge) Feb. 15--SALEM -- Two local lawmakers are pushing to expand a state tax incentive program in hopes of landing a developer for the long-vacant Hynix site in Eugene.

The incentive is said to be key for a possible buyer who is nearing a decision on a $150 million project at the site that could create 300 to 400 permanent jobs, according to the city.

Rep. John Lively and Sen. Lee Beyer, both Springfield Democrats, are trying to increase, from 10 to 13, the number of "electronic commerce zones" the state can approve. E-commerce zones are an add-on to traditional enterprise zones and are aimed at technology companies.

While a business locating in an enterprise zone can get a three- to five-year local property tax waiver, the e-commerce designation allows business owners to claim an additional credit on their state income taxes worth 25 percent of their capital investment, for up to five years. The credit is capped at $2 million per year per business.

The former Hynix semiconductor plant in west Eugene -- which closed in 2008, laying off more than 1,100 employees -- is in an enterprise zone. But it can't receive an e-commerce tag without a change in the law because state officials already have approved the 10 legally permitted zones.

Lively, who also serves as interim director of the Lane Metro Partnership, a regional economic development agency, said that two potential developers who've shown interest in the site recently both have said they would like an e-commerce designation to move forward.

One possibility, known as a "Project Sky," is "near" a decision "on whether to go forward or not," according to an email Lively sent to the Lane Metro board on Thursday, obtained by The Register-Guard.

Lively would not confirm the identity of the developer Friday. But he told the committee the "client has been around for quite a while." Beyer said that, while he doesn't know the details, he understands the developer hopes to build a data center and rent out commercial and server space to technology companies.

Elizabeth Howe, a lobbyist for the city of Eugene, told the revenue committee that the project potentially represents 300 to 400 jobs and a $150 million investment.

That meshes with a plan for the site described to The Register-Guard in mid-2012 by a development group led by Simon Tusha and Mike McKernan. At the time, Tusha said the developers wanted to get an e-commerce designation.

Tusha and McKernan could not be reached for comment late Friday.

Lively told the revenue committee Friday that "frankly, if we don't find a use (for the Hynix site) pretty quickly, they're going to tear it down." Lively added that, while he couldn't guarantee that getting an e-commerce designation would help finalize the sale, "It is very important." Added Beyer: "People have tried very hard to get clients in there, but it's been a hard fit. ... We talk about job creation around here. This is one of the little things we may be able to do that would incent it." Based on the past cost of the 10 other e-commerce zones, legislative staff has estimated that adding three more zones would cost the state only an extra $50,000 a year in lost taxes.

Chris Allanach, an economist working for the Legislature, said while "there's always the possibility of an outlier" that could add to the state's one-year costs significantly, past trends are the best indicator for the average cost of the new zones.

No one spoke Friday against creating the new zones. But the issue is complicated by the fact that the change is being packaged in House Bill 4005 with at least one and possibly two other tax incentive changes.

One change would reactivate a controversial incentive program for green energy projects, known as the manufacturing Business Energy Tax Credit, which expired at the end of last year. The other would double, from $1 million to $2 million, the tax credit that individual business can claim for research and development.

Combined, those two changes would cost the state about $5 million a year in tax revenues when fully in place, in the 2015-17 biennium.

Tim McCabe, director of Business Oregon, the state's economic development agency, on Friday defended the tax credit program. It had been criticized before it was scaled back for ballooning costs and for backing companies that later struggled.

Beyer and Lively said HB 4005 was the only potential place to add new e-commerce zones, because the issue surfaced too late for a stand-alone bill. Lively said they were hopeful the bill can pass in the remaining three weeks of the short session.

"I haven't heard much opposition to it," Lively said. Its chance of success "is as much about some of the other pieces (in the bill) as anything else." If lawmakers approve the new e-commerce zones, Eugene and Lane County would need to apply jointly to Business Oregon to sponsor one in west Eugene. Other local governments could apply as well.

___ (c)2014 The Register-Guard (Eugene, Ore.) Visit The Register-Guard (Eugene, Ore.) at Distributed by MCT Information Services

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