Strategic Investment Program Agreements
The Strategic Investment Program (SIP) was adopted by the Oregon Legislature in 1993. It allows businesses and local governments to negotiate alternative property taxing agreements if these businesses are willing to invest at least $100 million at an urban site or at least $25 million at a rural location in Oregon. The purpose of this program is to attract and keep companies that provide good jobs in Oregon, particularly capital-intensive, high-technology employers.
Intel SIP Agreements
Washington County, the City of Hillsboro and Intel Corporation reached an agreement in 2005 to provide an alternative property taxing structure for qualified Intel investment under Oregon's SIP laws.
The 2005 Intel-Washington County SIP agreement is the fourth since the program's inception. Two SIP agreements were approved in 1994 and a third in 1999. The two 1994 agreements granted an alternative property tax structure for qualified Intel investment of up to $3 billion. The 1999 agreement took a similar approach for qualified Intel investment up to $12.5 billion between the tax years 2000-01 and 2014-15.
The 2005 agreement provides a framework for potential additional Intel investment in Oregon of up to $25 billion over a 15-year period beginning as soon as 2008 or as late as 2013. The 2005 SIP also establishes a method for dealing with investment that might occur during an overlapping period covered by both the 1999 agreement and the 2005 agreement.
For both agreements, the County also required Intel to pay the equivalent of full taxes on all land and buildings associated with each SIP project. The 1999 and 2005 agreements allowed for property tax savings to Intel for investment in machinery and equipment used for semiconductor manufacturing. This machinery and equipment costs billions of dollars to create and can become obsolete within two-to-three years.
Genentech SIP Agreement
The 2006 SIP agreement among Washington County, the City of Hillsboro and Genentech, Inc., is for a maximum investment of $250 million. The exemption period began in 2010 and will extend for 15 years. Each year that Genentech receives a SIP property tax exemption, it shall pay a Community Service Fee not to exceed $500,000 in any tax year, and additional negotiated payments totaling approximately $7.6 million over the 15-year period.