The Strategic Investment Program (SIP) offers a 15-year property tax exemption on a portion of large capital investments. The program was created in the 1990s to induce large, capital-intensive facilities to locate and grow anywhere in Oregon.
What Projects Qualify
SIP projects must serve a "traded sector" industry. Oregon law defines "traded sector" as one in which "member firms sell their goods or services into markets for which national or international competition exists."
The project's cost must be at least $25 million in a rural area or $100 million otherwise. But as a practical matter to benefit from the program, the overall investment will need to be considerably bigger. The actual exemption is on property value in excess of a taxable portion, which starts at $100 million for all urban projects, while in rural areas:
Total Investment Costs
Initial Taxable Portion Amount*
Not more than $500 million
$25,000,000
Between $0.5 and $1.0 billion
$50,000,000
Greater than $1.0 billion
$100,000,000
*"Rural area"—located entirely outside urban growth boundary of a city with a population of 40,000 or more at the time of state SIP application or in a Rural SIZ designated before October 5, 2015. Taxable portion is based on property's real market value and grows 3% p.a.
How Projects Get Approved
There are two options for an SIP project application:
Ad hoc approval. The county holds a public hearing and negotiates an agreement between the business and county and city (if applicable).
Strategic Investment Zone (SIZ). The zones are designed to provide a more streamlined local process. At any time, a county (and city) may submit a request through Business Oregon for the Business Oregon Commission to designate a Strategic Investment Zone.
Community Service Fee
Companies must also pay the respective county a community service fee as set by law. The fee is contained in the agreement with the business, which may include additional requirements on the business. The county must also sign a separate agreement with other local governments for distributing the fee.
Reporting Requirements
For any SIP project that is exempt in the prior tax year, the business must submit a report to Business Oregon detailing its employment and payroll. The report is used to evaluate the program's performance and provide estimates of state personal income tax revenue that may be shared with local governments.
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