Proposed 2014 Intel SIP Agreement

Sponsored by: County Administrative Office

"By continuing the success of our past agreements, we will gain important resources supporting our public services and we will retain thousands of jobs here in Oregon at a critical point in our economic recovery," said Washington County Commissioner Roy Rogers, who represented the county board during the negotiations.

"Intel's decision to increase its investment in Hillsboro strengthens our position as a global center for high-tech manufacturing jobs," said Hillsboro Mayor Jerry Willey. "This partnership is outstanding for our community, and for all Oregonians, as we attract and retain jobs in key industries, and pursue additional global investments in Hillsboro."

Commissioner Rogers and Mayor Willey praised Governor Kitzhaber and Business Oregon for their expertise and support for this historic proposal. Commissioner Rogers commented that "the negotiation process for any SIP is very complex and we've appreciated the state's assistance throughout."

The proposed agreement is focused on investments in the company's unique cycle of equipment replacement and on retaining the 17,500 employees currently working in Washington County. The multi-million-dollar machinery and equipment used in Intel's manufacturing process can become obsolete within a few years as the technology rapidly evolves. As with earlier SIP agreements, property taxes would be partially abated for investments in these leading-edge tools consistent with Oregon's SIP law.

"In an increasingly competitive global business environment, we are pleased that Washington County, the City of Hillsboro, and the State of Oregon continue to provide the right place for Intel to invest," said Neil Tunmore, Intel vice president and director of corporate services. "We are proud to call Washington County home to Intel's largest site in the world, where our most advanced technologies are developed."

The proposed 2014 SIP agreement requires Intel to make payments under two categories, those required by state law and those negotiated locally. The statutorily required payments would total to an estimated $122 million in property taxes and fees over the life of the agreement. Additional fees would total to an estimated $228 million over the same period. Actual amounts would vary depending on how much and over what timeline Intel invests.

The proposal would follow a precedent established with other Washington County SIP agreements of requiring fees equal to full property taxes on all land and buildings. These fees have consistently resulted in payments that were greater than the minimum required under Oregon's SIP law.

The announcement and its significance come as the Oregon economy continues to experience unemployment rates greater than its pre-recession levels. A recent analysis by ECONorthwest, a private consulting firm, revealed that each of Intel's jobs in Hillsboro and Washington County created an additional three non-Intel jobs throughout the state. In 2012, this added up to nearly 68,000 jobs –about 4 percent of the State's workforce. Additionally in 2012, Intel's payroll amounted to $2.8 billion causing a ripple effect that led to a gross total of $327.7 million in state income taxes and local property taxes in support of public services statewide. According to the Brookings Institute, exports from computer and electronic products accounted for 57 percent of total exports and 63 percent of export growth in Greater Portland, underscoring the importance of Intel's role in the regional economy.

If approved, the 2014 proposal with a term of 30 years would be the fifth Intel SIP agreement in Washington County. In 2005, Washington County and the City of Hillsboro negotiated an agreement with Intel that set the stage for up to $25 billion of investment beginning in 2010. In 1999, the county and city negotiated a SIP agreement allowing investment of up to $12.5 billion beginning in 2000. Finally, two additional Intel SIP agreements were put into effect in 1994 with a combined total of $3.4 billion of investment.

The Washington County Board of Commissioners will be briefed on the proposed agreement at their 8:30 a.m. work session on August 12 in Room 140 of the Cameron Public Services Building, 155 North First Avenue, Hillsboro. The Hillsboro City Council will be briefed at 6 p.m. on August 19 in Conference Room C113B&C of the Hillsboro Civic Center, 150 East Main Street, Hillsboro.

The Washington County Board and the Hillsboro City Council plan to gather public comments on the 2014 proposal leading to a scheduled joint meeting and public hearing at approximately 7 p.m. on Tuesday, August 26, in the auditorium of the Cameron Public Services Building, 155 North First Avenue, Hillsboro. After hearing public testimony, the board of commissioners and city council are scheduled to consider approving the proposal. State law would then require the Oregon Business Development Commission to approve the agreement before it could take effect.

The Strategic Investment Program was authorized by the 1993 Legislature to increase Oregon's ability to attract and retain capital-intensive industry and high-wage jobs. Projects approved for the SIP must pay full property taxes on the first $100 million invested in an urban area, or $25 million in a rural area. Under law, this investment amount is allowed to increase by 3 percent each year. An annual Community Service Fee equal to 25 percent of abated taxes, up to $2 million in an urban area or $500,000 in a rural area, must also be paid. The 2014 proposal includes additional negotiated fees.

Links to additional information:

• Proposed 2014 Intel SIP agreement
• Frequently Asked Questions (FAQs)
• Other Washington County SIP agreements

Contacts:

• Philip Bransford, Communications Officer, Washington County Administrative Office, 503-846-8685, [email protected]
• Patrick Preston, Public Affairs Manager, City of Hillsboro, 503-681-6218, [email protected]
• Chelsea Hossaini, Northwest Region Communications Manager, Intel Corporation, 503-264-1330, [email protected]