Enterprise Zone growing slowly in tough economy

Business owners look for ways to cut costs, hire employees, increase production

By Vanessa Van Voorhis

The Estacada News, Mar 25, 2009, Updated Oct 30, 2009

Evan Jensen / Estacada News

Tai Shibahara looks at a toy while shopping with his mom Rochelle Shibahara at the retail discount store Eagle Bargain Outlet located in the Estacada Bargain Outlet located in the Estacada Industrial Park at 970 N.W. Park Ave. Eagle Bargain Outlet opened earlier this month.

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Metallion Industries and Northwest Technologies have spent a total of $1.6 million in capital improvements during 2008. In consideration of their investments, Clackamas County’s Housing and Urban Development office pre-approved the companies for tax abatements through the city’s enterprise zone (EZ) program that began in April 2008.

“Both companies have just gone through the preauthorization process,” Clackamas County program coordinator Renate Mengelberg said. “Now, they are in the process of investing and hiring. And because those companies have invested in equipment and committed to increasing employment, the program is a true success story.”

Under the EZ program, capital improvements are not enough to qualify for local tax breaks. The two industrial park companies must also increase their existing workforce 10 percent by April 1. However, the companies’ owners say hiring isn’t likely – at least not this year – because of the economic downturn.

An enterprise zone is a county-administered economic development program used by local governments to encourage new and existing manufacturing and industrial businesses to invest in rural or distressed communities and create new jobs.

In return for their capital investments, the businesses may receive tax abatements for a period of three to five years if they increase their total staff levels by at least 10 percent.

“We have a cadre of tools: the urban renewal district, which sparks redevelopment in downtown core, and for the industrial park, we’re using the enterprise zone,” Estacada City Manager Randy Ealy said. “From what I’ve seen in the last six or eight months, it is spurring development.”

After Estacada established its 130-acre enterprise zone along the east and west sides of Highway 224 last spring, Mengelberg and Ealy pitched the program to industrial park business owners. Metallion Industries and Northwest Technologies were the first companies to begin the complicated qualification process.

“At this point it’s debatable whether we’ll qualify for it or whether it’ll do any good,” said Nolan Becktel, owner of Metallion Industries. Between 2007 and 2008, he invested $500,000 toward the construction of an industrial park building and $450,000 in new equipment.

Becktel had already embarked on his development plans when city and county officials “came around with their offers,” he said. Although the EZ program wasn’t part of his original plan, “it became part of the picture,” and he agreed to create one new position within his company.

“I was told initially that if it doesn’t work to hire this year, that’s fine. We can postpone our tax abatement. She [Mengelberg] thought it worked that way until she went to those higher up on the totem pole,” Becktel said.

“We’re not finding any accommodations to give grace for addition time,” he said. “There ought to be some kind of accommodation. How are we to predict the economic downturn? How are we to muster growth in the face of it?”

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