Oregon Incentives and Workforce Development Guide
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- Industrial Development Projects of State Significance:
- This new program sets up a process for identifying up to 10 “regionally significant” industrial areas per biennium to further job creation. It also establishes an expedited review process and narrows the grounds for appeal. The intention is to protect those industrial lands with the potential for future economic development and job growth from conversion to residential or commercial zoning.
- Film & Video Incentives:
- Oregon offers a host of incentive programs for film and video productions taking place in the state. Unlike other states’ programs, these incentives are cash rebates as opposed to tax credits. This simplifies and speeds up the rebate process. Incentive programs rebate:
- 20% of the production’s Oregon-based goods and services
- An additional cash payment of up to 16.2% of wages paid to production personnel
- Oregon Business Expansion and Retention Program:
- A state incentive available to existing companies expanding operations in Oregon or new companies coming in to the state. The program helps innovative, knowledge-based industry companies create more high-paying jobs in Oregon by helping to offset a company’s expansion costs with forgivable loans based on the anticipated increase in income tax revenue due the state from the new jobs created. To be eligible, the company must plan to hire 50+ new employees in Oregon; have 150 or more employees at time of eligibility; have employee wages are 150% above state average or county average, whichever is less; and must be in a traded-sector industry (excludes retail businesses).
- Oregon Business Development Fund (OBDF):
- A revolving loan fund that provides term fixed-rate financing for land, buildings, equipment, machinery and permanent working capital. Participants must create or retain jobs and must typically be a traded-sector business in manufacturing, processing or distribution. The program gives preference to projects located in rural and distressed areas and to small businesses with fewer than 100 employees. Loans have a maximum amount of up to 40% of the project cost or $1 million; a maximum term and amortization of 20 years or the useful life of the project and/or collateral; a fixed interest rate (4% minimum APR) and a 1.5% loan origination fee.
- Oregon Capital Access Program (CAP):
- Helps lenders (banks and credit unions) make more commercial loans to small businesses providing capital for start-up or expansion. It is designed for non-profit and for-profit businesses seeking funds for most business purposes. All types of loans and lines of credit are eligible. Lenders build a loan-loss reserve each time they enroll a loan. Contributions to the loan-loss reserve account are matched by the Oregon Capital Access Program. CAP loans have enrollment fees determined by the financial institution but will receive a match on the enrollment fee of up to $35,000 per borrower; and have rates and terms for repayment determined by the lender.
- Oregon Credit Enhancement Fund (CEF):
- A loan insurance program available to lenders to assist businesses in obtaining access to capital. The fund guarantees loans made by lenders providing working capital or fixed-asset loans to businesses. Through June 30, 2015 the program is available statewide to most types of businesses industries. At this time, effective July 1, 2015, the program’s availability will be for traded-sector manufacturing, production, processing and distribution companies; can assist most businesses located in a designated distressed area; can assist businesses that are using proceeds to clean up a brownfield site; can include loans used for fixed assets, working capital or export financing; can insure term loans and lines of credit and; has an enrollment fee typically between 1.25% and 6% of the insured amount based on the term of the credit facility. Loan guarantees are typically up to 80% of the loan amount, up to $2,000,000 exposure for term loans and up to 75% of the enrolled credit facility, up to $1,500,000 exposure for lines of credit.
- Oregon Industrial Development Bonds:
- Tax-exempt bonds issued by the state of Oregon, designed to help Oregon manufacturers grow. They finance job creation and business growth for Oregon traded-sector, value-added manufacturers and processors by providing long-term debt financing for land, buildings and other fixed assets at a rate below prime. Affordable interest rates and tax-exempt status assist in lowering capital expenses. The bonds generally provide the greatest benefit to the borrower for bonds of $5 million or more.
- Oregon Express Bond Program:
- Uses much less paperwork and highly standardized documents to save borrowers time and money during the tax-exempt bond borrowing process. Business Oregon has selected a bond counsel firm with a pre-approved fee schedule. Express Bonds are placed with the borrower’s bank and may be feasible for financing smaller projects, particularly within the $500,000 to $5 million cost range.
- Entrepreneurial Development Loan Fund (EDLF):
- Provides direct loans to help start-ups, micro-enterprises and small businesses expand or become established in Oregon. This fund fills a niche not provided through traditional lending markets. Loans are a maximum initial amount of $75,000 (maximum of $100,000 total loans per borrower) typically with a term and amortization of five years and a fixed interest rate of Prime plus 2% APR. Participants must meet one, or both, of the following criteria:
- have revenues of less than $500,000 in the previous 12 months or
- be a business owned by a severely disabled person.
- Brownfields Redevelopment Fund:
- A Brownfield is property where expansion or redevelopment is complicated by actual or perceived environmental contamination. Oregon’s Brownfields Program is available to provide financing for the full range of environmental activities—assessment through cleanup—associated with Brownfields redevelopment. The department works with the OR Department of Environmental Quality to ensure that a project’s scope of work will achieve environmental compliance and meet the needs of the redevelopment project.
Oregon offers globally competitive tax incentives, including abatements and credits, to help encourage businesses to locate in Oregon, and existing Oregon businesses to grow and prosper.
- Manufacturing Business Energy Tax Credit (BETC):
- The manufacturing credit has been instrumental in growing Oregon’s expanding renewable energy industry. Oregon facilities that manufacture renewable energy resource equipment may be eligible for the credit, which has proven extremely valuable to offset the costs of large capital investments. Eligible costs may include the building, equipment and machinery and other costs used to manufacture equipment, machinery or products designed exclusively to use a renewable energy resource. The facilities are eligible for a tax credit of 50% of eligible costs, up to a maximum of $40 million in eligible costs for each phase of development.
- Enterprise Zones (EZs):
- In exchange for locating or expanding in an enterprise zone, businesses receive exemption from local property taxes on new plant and equipment for at least three years (but up to five years) in the standard program. In addition, some zones can offer special incentives for investments in long-term rural facilities or electronic commerce operations.
- Oregon Investment Advantage:
- This income tax exemption program helps businesses start or locate in a number of Oregon counties by providing a multi-year deduction for all income-based taxes related to the new business operations, potentially eliminating state business tax liability during that multi-year period.
- Strategic Investment Program:
- Exempts a portion of very large capital investments from property taxes. The program is available statewide.
- Research Tax Credits:
- Corporate tax credit for qualified research and basic research conducted in Oregon, as a state-level extension of federal R&D tax credits.
- With timely filing for each of up to two years, unfinished improvements to a business facility may be exempt from local property taxes statewide. (In an EZ, most authorized business firms can receive essentially the same but somewhat broader tax abatement using another form.)
- Employer-Provided Dependent Care Tax Credit:
- A 50% credit for the annual cost of assisting employees with childcare and similar needs.
- Oregon New Markets Tax Credit:
- The Oregon Low Income Community Jobs Initiative (Oregon New Markets Tax Credit, or NMTC) program:
- Helps finance investments and create jobs in low-income communities
- Delivers below-market-rate investment options to Oregon businesses
- Attracts additional Federal New Markets Tax Credit investments in Oregon
- Sparks revitalization in Oregon’s low-income communities
Investments can only be made in qualified, existing low-income community businesses located in Oregon as defined by section 45D of the Internal Revenue Code. These are census tracts that have a poverty rate of 20% or more, or the median family income is below 80%, the greater of: (a) statewide median family income or (b) metropolitan median family income. The tax credits are realized over the course of seven years. The total tax credit is calculated as 39% of the total qualified investment. The qualified investment amount is not to exceed $4 million per project or $1.56 million in tax credits per project.
- 0% for years 1 and 2
- 7% for year 3
- 8% for years 4, 5, 6 and 7
Renewable Energy Incentives
Please contact the Oregon Department of Energy regarding these incentives as they administer these programs.
- Rural Renewable Energy Development Zones:
- A three to five year exemption from property taxes on new investments in wind energy farms, biofuel production and other eligible projects in a designated county.
- State Energy Loan Program (SELP):
- A program for renewable energy, including manufacturing facilities. Loans have been as short as 10 years and as long as 30 years, depending on the borrower’s need and financial situation, and have been as large as $20 million. The Oregon Department of Energy finances these low-interest loans through the issuance of state general obligation bonds.
A complete list of incentives and business climate information can be found on the Business Oregon Web site.