Special Delivery

[September 5th, 2007]

Oregon will give one of America’s richest corporations a $4 million tax break if it relocates its regional hub on Swan Island to an east Multnomah County suburb.

Under the plan, FedEx, which last year netted $1.8 billion on revenues of $32.3 billion, would not have to pay property taxes for three years on new buildings and equipment it installs in Troutdale, northeast of Gresham. The deal comes courtesy of the Oregon Economic&Community Development Department, which gives tax breaks to corporations that build or expand in officially chartered “enterprise zones.”

Last Tuesday, Troutdale City Council voted to ask the department to create Oregon’s 56th enterprise zone on several hundred recently annexed acres between Interstate 84 and the Columbia River, at the site of the former Reynolds Metals aluminum plant. The zone would extend to part of neighboring Fairview, which is expected to approve its part of the request this week.

In theory, local governments use the tax breaks that come with enterprise zones to lure companies to their shores. In this case, documents and interviews with public officials show it was FedEx, represented by Ryan&Company, a Dallas tax consultancy that specializes in winning incentives from local jurisdictions, that came to Troutdale with its hand out. In a May 11 email to the Port of Portland, a senior manager for the company representing FedEx wrote, “Any assistance that can be provided could greatly impact the company’s…decision on where to locate the new facility.” (The Port is acting as the developer for the zone.)

As of this month, FedEx has not announced its plans, even as local officials have catered to the company’s needs. According to FedEx spokeswoman Allison Sobczak, FedEx hasn’t made up its mind where to locate its new hub. One thing is for certain: FedEx’s current ground transportation hub on Swan Island is too small for its growing operation. All Sobczak says is that FedEx wants to move to “communities that are business-friendly.”

“It’s kind of like poker,” says Troutdale City Councilor Robert Canfield. “You don’t have all the information. You have to take a guess at what the other person might do.”

All fingers point to Troutdale as the eventual location for the hub, even as FedEx stays mum in public about its future.

Troutdale City Administrator John Anderson contacted jurisdictions in Washington at which FedEx had looked, and he found “significantly less activity on FedEx’s part.”

And only in Troutdale did FedEx pay a design and engineering firm to draw up and submit detailed plans, including a 424,736-square-foot main building and a 500-space parking lot. All told, FedEx expects to spend $102.6 million on the new hub, according to documents with the Port of Portland.

The Reynolds site is the largest remaining industrial-zoned property inside the region’s urban growth boundary.

Patent attorney David Ripma was the only Troutdale City Councilor to vote against the zone.

“I’m fundamentally opposed to having the new ‘big guy’ in town pay no taxes, while the rest of us, including small businesses, do pay,” Ripma says.

FedEx’s tax break would equal three years of property taxes paid by 444 average Oregon homeowners.

State Senator Vicki Walker (D-Eugene) is also a longtime critic of the enterprise zone program. She is now a candidate for Oregon secretary of state. “I’m tired of voters saying no to local tax programs for schools and other things; they think we have enough because we keep giving money away.”