HomeMy WebLinkAboutItem 09 Resolution for Electronic Commerce Zone Preparedness AGENDA ITEM SUMMARY Meeting Date: 5/21/2012
Meeting Type:Regular Meeting
Staff Contact/Dept.: John Tamulonis/CMO
Staff Phone No: 541-726-3656
Estimated Time: 10 Minutes
S P R I N G F I E L D
C I T Y C O U N C I L
Council Goals: Community and
Economic Development
and Revitalization
ITEM TITLE:
RESOLUTION FOR ELECTRONIC-COMMERCE ZONE PREPAREDNESS
ACTION
REQUESTED:
Approve/Not approve:
A RESOLUTION OF SPRINGFIELD REQUESTING THAT THE SPRINGFIELD
COMMUNITY ENTERPRISE ZONE BE DESIGNATED FOR ELECTRONIC
COMMERCE AND AUTHORIZING THE SPRINGFIELD CITY MANAGER TO
SUBMIT THIS RESOLUTION TO THE STATE OF OREGON FOR APPROVAL
UPON A FIRM’S INTEREST IN LOCATING SUITABLE FACILITIES IN
SPRINGFIELD
ISSUE
STATEMENT:
When Springfield extended the Enterprise Zone in 2011 Springfield was
considering other permutations to sponsorship and development areas to include in
the application sent to the State of Oregon for consideration. Not requested, at that
low point of the recession, was adding an electronic zone for those firms primarily
using the internet for commercial activities that might consider locating in
Springfield. With the economy improving Springfield should consider passing a
resolution indicating Springfield’s interest in having an E-Zone added to the local
incentive package available to firms and allowing the City Manager to present the
Council’s request for designation to the State of Oregon upon a suitable firm’s
expressing interest in locating here. Oregon has, perhaps, one remaining e-
commerce zone to designate out of 60 and Springfield could be a prime location for
a variety of call centers given the range of such facilities now in our community.
ATTACHMENTS: 1: Resolution & Exhibit A
2: Business Oregon: Electronic Commerce Zones Brochure
3: ORS Division 662 Electronic Commerce Enterprise Zone
4: Map of Springfield Enterprise Zone / E-Commerce Zone
DISCUSSION/
FINANCIAL
IMPACT:
The ‘e-commerce’ zone has only a small, if any, local effect (related to the
minimum value of exempt property for Enterprise-Zone eligible firms) and
provides for eligible firms making capital investments and doing transactions on the
internet or internet-based computer a credit equal to 25% of the capital investment
made in a year against the business’s annual state income or corporate excise tax
liability (maximum $2 million credit in a year and unused credits may be carried
forward over the next five years).
Attachment 1, Page 1 of 2
CITY OF SPRINGFIELD
RESOLUTION NO. _______
A RESOLUTION OF SPRINGFIELD REQUESTING THAT THE SPRINGFIELD
COMMUNITY ENTERPRISE ZONE BE DESIGNATED FOR ELECTRONIC
COMMERCE AND AUTHORIZING THE SPRINGFIELD CITY MANAGER TO
SUBMIT THIS RESOLUTION TO THE STATE OF OREGON FOR APPROVAL
UPON A FIRM’S INTEREST IN LOCATING SUITABLE FACILITIES IN
SPRINGFIELD
WHEREAS, the City of Springfield sponsors the Springfield Community Enterprise
Zone more particularly described and set forth in Exhibit A; and
WHEREAS, the Enterprise Zone is one of the most successful economic development
tools for the City of Springfield, contributing to the establishment and expansion of
diverse businesses and the creation of family wage jobs; and
WHEREAS, the City of Springfield with its supply of available land for development
and complementary infrastructure has established itself as a community that can support
electronic commerce business; and
WHEREAS, the City of Springfield would like to encourage electronic commerce as
part of its economic development efforts; and
WHEREAS, pursuant to ORS 285C.095, the City of Springfield may file an application
with the State of Oregon Business Development Department requesting that the
Springfield Community Enterprise Zone be designated for electronic commerce.
WHEREAS, the Council finds that such designation will provide additional financial/tax
incentive for qualified business firms engaging in electronic commerce;
NOW THEREFORE, BE IT RESOLVED THAT:
1. The City of Springfield requests the State of Oregon Business Development
Department that the Springfield Community Enterprise Zone be designated for Electronic
Commerce; and
2. That the Springfield City Manager is authorized to submit this resolution
requesting designation to the State of Oregon Business Development Department upon
the prospect of a firm’s that primarily use internet commerce indicating its interest in
making eligible capital investments in the Springfield Community and specifically the
Community Enterprise Zone; and
Attachment 1, Page 2 of 2
3. This Resolution shall take effect upon its adoption by the Council and approval by
the Mayor.
ADOPTED by the Common Council of the City of Springfield this 2nd day of May 2012
with a vote of _____ for and _____ against.
______________________________
Christine L. Lundberg
Mayor
ATTEST:
_______________________
Amy Sowa
City Recorder
Attachment 2
Attachment 3, Page 1 of 5
DIVISION 662
ELECTRONIC COMMERCE ENTERPRISE ZONES
123-662-0001
Purpose and Scope
This division of administrative rules specifies matters related to areas designated for electronic commerce and the tax incentives
especially available in them, including but not limited to the electronic commerce overlay of an enterprise zone:
(1) In such areas businesses engaged in Electronic Commerce are not only eligible for the standard enterprise zone exemption,
but they may also qualify for a state income tax credit based on their Electronic Commerce investment.
(2) These administrative rules:
(a) Have no bearing on any enterprise zone aside from its having electronic commerce status;
(b) Do not control the fiscal parameters for tax abatements by the Department of Revenue; and
(c) Are not intended to supersede applicable administrative rules in OAR chapter 150.
Stat. Auth.: ORS 285A.075, 285C.050(5), 285C.060(1) & 285C.095(2)
Stats. Implemented: ORS 285C.050, 285C.095, 285C.100, 285C.135, 285C.180, 285C.185, 315.507 & 315.508
Hist.: OBDD 25-2010, f. & cert. ef. 6-14-10
123-662-0100
Definition of Electronic Commerce
OAR 123-001 (Procedural Rules) defines terms used in this division of administrative rules, unless the context clearly indicates
otherwise; in addition, for purposes of “Electronic Commerce” under ORS 285C.050(5):
(1) “E-commerce zone” means any of the enterprise zones designated for electronic commerce under ORS 285C.095 or the
area so designated under ORS 285C.100, as described in OAR 123-662-1200.
(2) “Predominantly” means that more than 50 percent of applicable transactional activity is Internet-based in terms of receipts,
number of orders, clients served or like measures, as opposed to activity handled directly or primarily through other means such
as by telephone or e-mail.
(3) Applicable business activity and related investments must:
(a) Locate and occur inside the E-commerce zone;
(b) Involve dealings with customers, suppliers, clients or other transactional entities that are external to the eligible business firm,
predominantly over the Internet itself or on a computer network that utilizes the Internet as a platform; and
(c) Entail, support or relate to the sale or purchase of goods, property or services, whether conducted on a wholesale,
commercial, business-to-business, retail or other basis.
(4) It also includes facilities, equipment, services, networks, software, broadband infrastructure, or the like that are produced or
operated inside the E-commerce zone by a third party, who facilitates, fosters or makes possible business transactions by
means consistent with sections (2) and (3) of this rule. Such a third party is eligible for purposes of tax abatement if other
businesses or organizations represent 75 percent or more of its customers or gross receipts.
(5) Beyond the initiation or consummation of the sale, purchase or arms-length exchange, it also encompasses elements of the
transaction’s overall completion or delivery, if that element:
Attachment 3, Page 2 of 5
(a) Is conducted in the E-commerce zone by means consistent with sections (2) and (3) of this rule, including but not limited to
customer service, technical support, claims processing, client evaluation, performance measurement and so forth, even if the
actual sale, purchase or contract originated outside the zone or through other means; or
(b) Naturally serves, underpins or arises from the sale or purchase of goods, property or services inside the E-commerce zone
by means consistent with sections (2) and (3) of this rule, including but not limited to distribution, made-to-order assemblage,
direct after-sale support, shipping, warehousing, warranty service or any similar operation or order fulfillment-type activity.
(6) One way to understand subsection (5)(b) of this rule is by means of a flowchart representing the totality of Electronic
Commerce operations in the zone, such that if a critical node in that flowchart is handled by means consistent with sections (2)
and (3) of this rule, then:
(a) Substantially related activities both upstream and downstream of the node are also included for purposes of this rule; and
(b) Associated qualified property or investments in capital assets shall generate their respective tax benefits subject to applicable
requirements.
Stat. Auth.: ORS 285A.075, 285C.050(5) & 285C.060(1)
Stats. Implemented: ORS 285C.050, 285C.135, 285C.180, 285C.185 & 315.507
Hist.: OBDD 25-2010, f. & cert. ef. 6-14-10
123-662-1000
Electronic Commerce Status and Application
For purposes of an enterprise zone authorized/designated for electronic commerce under ORS 285C.095:
(1) It may be any enterprise zone in existence, regardless of whether it is urban or rural, but the effective date by which the
enterprise zone came into existence as described in OAR 123-650 or 123-656 must precede or coincide with its designation as
an E-commerce zone.
(2) Electronic commerce status fully overlays the entire area of an E-commerce zone inclusive of areas added by a subsequent
change to the zone’s boundary.
(3) The sponsor of an enterprise zone may revoke its status as an E-commerce zone by resolution(s), pursuant to which the
Director shall order and set the effective date of revocation, and that enterprise zone may never again be an E-commerce zone.
(4) The Department shall seek applications from zone sponsors respective to such revocation or to termination of an existing E-
commerce zone’s underlying enterprise zone. Such a preexisting enterprise zone needs to reapply for electronic commerce in
order to be re-designated, as described in sections (5) to (11) of this rule.
(5) An application by an enterprise zone in accordance with ORS 285C.095 must consist of at least two items:
(a) Copy of a resolution newly adopted by each governing body of the zone sponsor that requests designation for electronic
commerce, consistent with its charter, by-laws or ordinances; and
(b) A completed form as prescribed by and available from the Department and supporting materials.
(6) An applicant zone sponsor shall use the form to respond to the following factors:
(a) Significance associated with the location and attributes of the cities, business sites and so forth that are in the current zone
boundary, as well as future boundary change requests (to be considered, any such boundary change must be acknowledged in
sponsor resolutions);
(b) Strategic or marketing plans, resources and readiness of the enterprise zone for local development relating to Electronic
Commerce, including but not limited to being a result of public investments;
(c) Past success in using the statutory and local incentives of the enterprise zone for inducing business development or
comparable programs or tools;
Attachment 3, Page 3 of 5
(d) Interest and support among local businesses, community organizations and the general public for having the enterprise zone
obtain electronic commerce status; and
(e) Other local assets that support and complement Electronic Commerce activity or investments (for example, training
institutions, telecommunication infrastructure, environmental initiatives).
(7) For designation of an applicant enterprise zone for electronic commerce, the Department shall evaluate the factors in section
(6) of this rule, especially as necessary to compare multiple applicants.
(8) According to a policy prescribed by and available from the Department, as hereby incorporated and made part of these
administrative rules by reference, the Director may accept applications for and make designation for electronic commerce
contingent on the readiness of a business firm for authorization under ORS 285C.140 respective to substantial Electronic
Commerce investments.
(9) The Director may set aside section (8) of this rule in the case of a zone sponsor reapplying for an enterprise zone to
terminate by operation of law and seeking continuation of an electronic commerce designation that will be less than three years
old.
(10) The Director shall make a final determination, which is not subject to appeal, about whether to order electronic commerce
designation for an applicant zone and shall prescribe an effective date for the designation, which may not be earlier than receipt
of a complete application.
(11) The Department shall promptly give written notification to any applicant zone sponsor rejected for electronic commerce
designation.
[Publications: Publications referenced are available from the agency.]
Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.095(2)
Stats. Implemented: ORS 285C.095
Hist.: OBDD 25-2010, f. & cert. ef. 6-14-10
123-662-1200
Designated Areas
(1) If the Legislature allows additional electronic commerce designations under ORS 285C.095, which are currently limited to 10
enterprise zones, the Department shall seek applications in accordance with OAR 123-662-1000 through the local zone
managers of all existing enterprise zones.
(2) Subject to change, the enterprise zones that are currently E-commerce zones are: Bend, Harney County/Burns/Hines,
Medford Urban, Greater Redmond Area, Roberts Creek, Rogue, Portland and Salem.
(3) The City of North Plains in Washington County is a city designated for electronic commerce under ORS 285C.100 effective
on March 4, 2002, such that
(a) All areas then or later inside the city limits or urban growth boundary of the City of North Plains are equivalent to an “E-
commerce zone,” as used in this division of administrative rules, but only for purposes of Electronic Commerce and business
firms that are eligible on that basis under ORS 285C.050 to 285C.250 and 315.507.
(b) The city shall act as the effective zone sponsor and take responsibility for all duties of a zone sponsor as they apply to an
Electronic Commerce business firm seeking to utilize areas of the city for special benefits.
Stat. Auth.: ORS 285A.075, 285C.050(5), 285C.060(1) & 285C.095(2)
Stats. Implemented: ORS 285C.095, 285C.100 & 285C.135
Hist.: OBDD 25-2010, f. & cert. ef. 6-14-10
123-662-2000
Enterprise Zone Business Eligibility
Attachment 3, Page 4 of 5
Respective to the standard exemption from property taxes under ORS 285C.175:
(1) A business firm engaged in Electronic Commerce will likely be eligible in other ways under ORS 285C.135, but it shall not be
subject to the requirements or restrictions of those other ways once the enterprise zone is effectively an E-commerce zone.
(2) If an eligible business firm that originally sought eligibility based on Electronic Commerce does not satisfy that definition, it
may still receive authorization and exemption subject to another way’s requirements or restrictions, except in an area described
in OAR 123-662-1200(3).
(3) The following may occur only once the enterprise zone is effectively an E-commerce zone:
(a) Authorization and qualification of a firm that is eligible based only on Electronic Commerce; or
(b) Exemption of personal property permissible only under ORS 285C.185(1)(b)(B).
(4) Property that due to section (3) of this rule does not qualify for exemption by January 1 of the first year, for which a business
firm may claim the exemption, may not qualify later.
(5) After an area’s status as an E-commerce zone effectively ceases, a business firm shall enjoy the following protection for
exemption on qualified property respective to Electronic Commerce eligibility, notwithstanding that the firm might be eligible in
another way:
(a) Under ORS 285C.245(1)(a), (b) and (c), consistent with applicable elements of OAR 123-674-8100 and 123-674-8200, if for
whatever reason the underlying enterprise zone terminates and the location of the qualified property is outside of a subsequent
enterprise zone.
(b) Only under ORS 285C.245(1)(a), consistent with OAR 123-674-8100(1)(b) regardless that the firm was already authorized or
qualified, upon:
(A) Revocation of the zone’s electronic commerce designation; or
(B) Termination of the underlying enterprise zone and designation of the location of qualified property in another enterprise zone
without electronic commerce status.
Stat. Auth.: ORS 285A.075, 285C.050(5) & 285C.060(1)
Stats. Implemented: ORS 285C.095, 285C.100, 285C.135, 285C.140, 285C.180, 285C.185 & 285C.245
Hist.: OBDD 25-2010, f. & cert. ef. 6-14-10
123-662-2500
State Income Tax Credit for E-commerce
For purposes of a business firm receiving and using the credit under ORS 315.507 to offset state personal or corporate
income/excise tax liabilities:
(1) Respective to an enterprise zone’s designation as an E-commerce zone, the applicable investments in Electronic Commerce
capital assets under ORS 315.507(2) must:
(a) Be made in an income or corporate excise tax year, during or before which the designation took effect.
(b) Not be in use, placed in service or completed in terms of construction or installation before that effective date.
(2) The business firm must make:
(a) Application for authorization before the effective date of either revocation of the zone’s electronic commerce designation or
termination of the underlying enterprise zone.
(b) The applicable investment on or before the enterprise zone effectively terminates, irrespective of:
Attachment 3, Page 5 of 5
(A) Prior revocation of the zone’s electronic commerce status; or
(B) Any continuing receipt or access to the standard property tax exemption after termination.
(3) The business firm engaged or preparing to engage in Electronic Commerce may make applicable investments only:
(a) During the remainder of the income/excise tax year, after the firm has received authorization by approval of its application
from the zone sponsor and county assessor;
(b) In an income/excise tax year that begins while the firm is actively authorized and ends before July 1 of the first property tax
year of exemption; or
(c) In an income/excise tax year that begins on or less than a year’s time prior to July 1 of a property tax year, in which the
business firm remains qualified and qualified property is exempt under ORS 285C.175.
(4) The third year after a credit is claimed as described in subsection (3)(a) or (b) of this rule must be a year described in
subsection (3)(c) of this rule, in order for the firm to receive and keep the tax credit.
(5) The capital assets that generate the credit do not necessarily correspond to qualified property exempt under ORS 285C.175,
although there will likely be some overlap, and such assets consistent with sections (3) and (4) of this rule must concurrently
relate to such qualified property.
(6) The business firm will claim the credit as an amount entered with “other credits” on the taxpayer’s state tax return for an
income/excise tax year (beginning before the date prescribed under section 3, chapter 913, Oregon Laws 2009), in which it
makes the Electronic Commerce investment; there is no prescribed form or worksheet.
(7) The firm shall be responsible for maintaining tax records under ORS 315.508, including but not limited to:
(a) Annual qualification for exemption under ORS 285C.175, such as copies of forms filed with the county assessor and
evidence of avoided property taxes, sufficient zone employment, and so forth;
(b) Methods used to determine the basis and extent, by which the firm/taxpayer attributes capital assets to Electronic Commerce
for purposes of calculating the credit; and
(c) The actual cost of investments in terms of such calculations, as well as the annual limit under ORS 315.507(4) of effectively
up to $8 million in relevant costs in any one income/excise tax year.
(8) The tax credit is inapplicable in conjunction with the exemption under ORS 285C.409 (Long-Term Rural Tax Incentives).
(9) In terms of capital assets for Electronic Commerce (in contrast to property tax terms, which typically relate to new physical
vesting), to “make an investment” means:
(a) As a matter of timing, to incur costs or binding liability in payment for the asset, for example, by entering into a construction
contract or by having booked an order to acquire machinery & equipment.
(b) Not only capital that is new to the E-commerce zone, but also the firm’s acquisition of assets already existing in the zone.
Stat. Auth.: ORS 285A.075, 285C.050(5) & 285C.060(1)
Stats. Implemented: ORS 285C.095, 285C.100 315.507 & 315.508
Hist.: OBDD 25-2010, f. & cert. ef. 6-14-10
The official copy of an Oregon Administrative Rule is contained in the Administrative Order filed at the Archives Division, 800 Summer
St. NE, Salem, Oregon 97310. Any discrepancies with the published version are satisfied in favor of the Administrative Order. The
Oregon Administrative Rules and the Oregon Bulletin are copyrighted by the Oregon Secretary of State. Terms and Conditions of Use
Springfield Public Works, March 2010
There are no warranties that accompany this product. Users
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00.511.50.25Miles
Low Density Residential
Medium Density Residential
High Density Residential
Mixed Use Residential
Mixed Use Commercial
Neighborhood Commercial
Major Retail Commercial
Community Commercial
Mixed Use LMI & CC
Light-Medium Industrial
Campus Industrial
Heavy Industrial
Special Heavy IndustrialBooth-Kelly Mixed Use
General Office
Medical Services
Quarry & Mine OperationsPublic Land & Open Space
Total Enterprise Zone area within city limits: 11.44 sq. mi.
CURRENT ZONING
Enterprise ZoneCity LimitsTaxlotsSpringfield Community Enterprise Zone