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Incentives
Enterprise Zones
Forest Grove offers a property tax abatement program that provides a property tax exemption for industrial businesses and certain hotel/motel facilities that make a minimum of $50,000 of new investments in real property and/or equipment and create new jobs.
Nearly all industrially zoned properties inside the City of Forest Grove are eligible, as well as Commercial Auto Overlay zoned properties inside the City of Forest Grove for Hotels and Motels only.
How it Works
In exchange for locating or expanding into an enterprise zone, eligible (generally non-retail) business firms receive a total exemption from the property taxes normally assessed on new plant and equipment for at least three years, but possibly up to five.
Eligible Businesses
Eligible businesses must produce, sell, or provide goods, commodities, products, merchandise, work, or services to other businesses or business operations. This includes conventional manufacturing, as well as assembly, fabrication, processing, shipping or storage, warehouse, distribution, bulk clerical processing, printing or mass document production, after-sale technical support, and maintenance facilities. Industrial processes such as cleaning, coating, curing, kiting, labeling, laminating, packaging, refining, smelting, sorting, or treating are eligible, as is the development of standardized computer software products. Call centers in which no more than 10% of the customers or business transactions come from inside the local calling area, in which the telephone calls are made without long-distance charges can be eligible if they meet certain additional requirements.
Hotels and motels including the associated property of ancillary operations are eligible under the motel/hotel option if used 50% or more by overnight guests.
Qualified Property
- Minimum $50,000 investment
- Real property such as newly constructed buildings or structures
- New additions or modifications to existing building/structure
- Heavy/affixed machinery and equipment
- Machinery and equipment classified as personal property (readily movable) $50,000 or more
Not eligible:
- Land
- Non-Inventory Supplies
- Rolling Stock
- Vehicles
- Motor-Propelled Devices
- Certain Minor Personal Property Items
Program Options
3-Year Enterprise Zone Tax Exemption
- Invest at least $50,000 in new plant or equipment
- Increase full-time permanent employment by the greater between 1 person or 10% of the existing employment base
- Pay the new employees an average of 150% of the minimum wage (2017: $16.87 per hour); most benefits can be used to meet this total compensation level
- Maintain increased employment level over 3 years
- Enter into a First Source Hiring Agreement with local job training providers - commits company to consider local applicants for new hires
- Complete the intake application and pay a fee of one-tenth of one percent of the investment, with a cap of $50,000 before proceeding with the program
5-Year Enterprise Zone Tax Exemption
- Invest at least $50,000 in new plant or equipment
- Increase full-time permanent employment by 10% of the existing employment base
- Pay the new employees an average of 100% of the average Washington County yearly wage. Most benefits can be used to meet this total compensation level
- Maintain increased employment level and wage over 5 years.
- Enter into a First Source Hiring Agreement with local job training providers; commits the company to consider local applicants for new hires
- Complete the intake application and pay the application fee of one-tenth of one percent of the value total investment capped at $25,000 before proceeding with the program.
- Pay a community service fee equal to 25% of the value of the abated tax in each of years four and five
Opportunity Zone
Forest Grove has one federal Opportunity Zone. It is located in the northeast section of the City covering the part of the US Census Tract 332 that is within the City boundary.
In 2018, the U.S. Treasury made opportunity zone designations across the country to encourage long-term investments through a federal tax incentive.
Program Description
Opportunity Zones can deliver significant tax savings on medium-to long-term investments in economically disadvantaged communities. This new tax incentive pertains to both the capital gains invested initially through a qualified opportunity fund (QOF), as well as future capital gains earned on the original investment in zone-based businesses or projects. Each zone consists of an entire census tract, as established for the decennial U.S. Census.
The designations are in effect until December 31, 2028, and offer a predictable basis for private investment decisions over several years
Program Tax Advantages
The private capital for projects or businesses in a qualified opportunity zone will arise primarily from the unrealized capital gains of U.S. taxpayers—that is, the increased value of assets (stocks, land, etc.) since they were originally purchased by the individual or corporation currently holding the asset. When an asset is sold and the gains realized, an income tax liability is normally generated.
With the opportunity zone incentive, the capital gains arising from sale to an unrelated person that are then transferred into a qualified opportunity fund within 180 days will have their tax liability delayed or deferred until December 31, 2026, at the latest. The taxpayer decides how much of his/her newly realized gains to invest, when to sell or exit that investment, or even whether to invest other moneys alongside (which would not receive these tax benefits).
In addition to deferring income taxes, by the time the investment of tax-deferred capital gains in the opportunity zone is sold or the end of 2026, whichever is earlier:
- The amount subject to taxes shrinks by 10% if the investment has been held for at least five years by 2026 (invested by 2021).
- The amount subject to taxes also shrinks to the fair market value of the investment if less than its original value.
If the value of the investment of capital gains appreciates after having been held for at least 10 years in the QOF, then those new capital gains earned in the zone are themselves completely tax-free. Otherwise, the net income or proceeds generated by a zone investment are taxable. This 10-year hold on the investment in the QOF must begin on or before December 31, 2026, and the investment or interest in the QOF must be disposed of or liquidated or the gains realized on or before December 31, 2047.
Opportunity Funds
Any number of organizations, persons, financial institutions, etc., can set up qualified opportunity funds, with various objectives or specialties. Some may be formed for a single purpose such as a particular real estate development, while others might adopt more of a venture capital model with a portfolio of shares in entrepreneurial companies. The larger qualified opportunity funds could cater to many investors as a vehicle for diversified financial strategies. There are likely to be funds that are sponsored by nonprofits or foundations, or that focus on certain commercial or industrial sectors or types of communities, including rural ones.
State Incentives
Business Oregon has a team of professionals to assist businesses with their financing needs by packaging loan programs or by matching a partner service provider with a business. They administer more than 80 grant, loan, tax incentive, and other programs to further the development of businesses, communities, and economies in Oregon.