WEDNESDAY, JANUARY 24, 2018
HERMISTONHERALD.COM • A9
Herald Business
Federal commission confirms
UEC’s authority to build
Wheatridge transmission line
Business tax breaks come with catch
By JADE MCDOWELL AND
ANTONIO SIERRA
STAFF WRITERS
S
ome of Eastern Oregon’s
biggest businesses get
a tax break only they can
access, but it comes with a
catch.
The enterprise zone, an
Oregon program that pro-
vides multi-year property
tax exemptions on new
investments, has been uti-
lized often by Hermiston
over the past decade. Com-
panies in certain indus-
tries located inside one of
the zones can receive a
three- to five-year exemp-
tion on property taxes for
new construction or equip-
ment, as long as the invest-
ment causes the company
to add jobs or increase
productivity.
From the beginning of
Hermiston’s enterprise zone
in 2005 until the end of
2017, the city gave enter-
prise zone tax exemptions
to $85 million in capital
investment. Those breaks
exempted the companies —
Shearer’s Foods, DuPont
Pioneer, Pioneer Hi-Bred
and Eastern Oregon Tele-
com — from paying any
property taxes on the new
construction or equipment
for three to five years.
In early January, the city
gave its first tax break longer
than five years — known as
a longterm rural enterprise
agreement — to potato pro-
cessor Lamb Weston. The
company will not have to
pay property taxes for 15
years on a $225 million
project expanding its Herm-
iston plant. But in exchange
for the longer tax break,
the company has agreed to
a $1 million per year pay-
ment to be split between the
city of Hermiston and Uma-
tilla County. Assistant city
manager Mark Morgan said
that $15 million spread over
15 years will equal about
42 percent of what Lamb
Weston would have paid
in property taxes over that
same time period.
Tax breaks have since
expired in Hermiston on
$63.1 million worth of
investments, bringing them
onto the tax rolls. Another
$3.5 million project by
Shearer’s foods will come
onto the tax rolls July 1.
Pendleton’s enterprise
zone goes back much fur-
ther, to at least 1997, but
since 2013 has given
breaks to $19.6 million in
investments.
Morgan said it would be
difficult for him to come up
with even a ballpark num-
ber of how many dollars in
property taxes had not been
paid due to enterprise zone
exemptions. The applica-
tion lists the total amount
of money the company
is investing in the expan-
sion, not what the building
or new equipment will be
appraised at. So, for exam-
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ject to federal jurisdiction,
not state, and requesting
that the commission order
UEC to provide transmis-
sion service to the project.
Columbia Basin filed a pro-
test against it, again stating
that the project would ille-
gally violate its exclusive
service territory.
Although the stated pur-
pose of the transmission line
would be for wholesale and
not retail sales, the FERC
ruling shows Columbia
Basin argued that its retail
service would be directly
affected because the coop-
erative would either have to
rely on Umatilla Electric’s
transmission line or con-
struct a duplicate line at a
cost to its members. It stated
that it was willing to pro-
vide transmission service
from the Wheatridge site
to the edge of its territory,
at which point UEC could
pick up transmission.
On Thursday, the Federal
Energy Regulatory Com-
mission issued a final order
in UEC’s favor, stating that
the transmission line was
solely to facilitate whole-
sale sales and would not
violate Columbia Basin’s
exclusive service territory.
It ordered UEC to provide
“the requested interconnec-
tion and transmission ser-
vices” for Wheatridge.
“We’re thrilled with the
ruling,” Robert Echenrode,
UEC general manager and
CEO said in a statement Fri-
day. “We have maintained
all along that this is a fed-
eral issue rather than a state
issue, so we are gratified
that FERC affirmed that in
its decision.”
By JADE MCDOWELL
HERMISTON HERALD
EO FILE PHOTO
Shane Clayson, research manager of the DuPont Pionner facility, holds a corn tassel outside
the facility near Hermiston in August.
Tax-free investment
Cities can give businesses tax breaks for three or more years
for new projects in "enterprise zones." Below are the exemptions
granted by Hermiston and Pendleton since 2009 and the total
value of each project.
Hermiston Enterprise Zone exemptions
Project cost Year
($ millions) begun
Company
Pioneer Hi-Bred
Pioneer Hi-Bred
Dupont Pioneer
Shearer’s Foods
Shearer’s Foods
Shearer’s Foods
Eastern Oregon Telecom
Lamb Weston*
$35
13.9
2.6
3.1
25
3.5
2
225
2009
2013
2013
2010
2011
2014
2017
2018
Year
expired
2015
2019
2019
2014
2015
2018
2021
2033
Pendleton Enterprise Zone exemptions, 2013-2021
Company
Keystone RV
Keystone RV
Keystone RV
Rocky Mountain Colby Pipe
Rocky Mountain Colby Pipe
Rocky Mountain Colby Pipe (pending)
Hill Meat
Hill Meat
Pendleton Woolen Mills
Oregon Grain Growers
Project cost Year
($ millions) begun
$0.75
0.25
0.2
1.5
4.2
4.5
1.2
6.5
0.35
0.15
*$1 million per year to be paid instead of property taxes.
2013
2014
2015
2016
2017
2019
2013
2016
2016
2017
Year
expired
2015
2016
2017
2018
2019
2021
2015
2018
2018
2019
Sources: Cities of Hermiston and Pendleton
EO Media Group graphic
ple, Eastern Oregon Tele-
com was recently given an
enterprise zone exemption
on a $2 million investment,
represented by the new
building it broke ground on
in September. But Morgan
said he would guess roughly
$400,000 of that investment
would represent things like
engineering and construc-
tion management, bring-
ing the actual building’s
appraised value to less than
$2 million. Then there are
formulas to calculate depre-
ciation over time.
“It’s actually very hard
to estimate how much the
companies have saved on
their tax bills based on the
enterprise zone applications
... these companies always
list what they intend to
invest, but the actual taxable
value may be totally differ-
ent,” he wrote in an email.
Morgan said it’s import-
ant to remember that once
Hermiston got permission
from the state to set up the
enterprise zone, the regular
exemption of three to five
years (depending on jobs
created) is automatic if a
company turns in an appli-
cation and has fulfilled all
the requirements.
“If a company meets
all of the requirements for
a basic exemption, then
it’s simply an administra-
tive approval to check that
they meet all of the require-
ments,” he said.
Proponents of the enter-
prise zone argue that a com-
pany simply won’t locate
or expand anywhere that
they can’t get a tax break,
so a city that refuses to
offer one will miss out on
the jobs and other growth
brought by the investment.
A report compiled by Mor-
gan at the end of the 2016-
2017 fiscal year before the
EOT and Lamb Weston tax
breaks estimated the enter-
prise zone had resulted in
“362 new full-time jobs
resulting in more than $9.65
million of new annual pay-
roll circulating through the
economy of Hermiston and
western Umatilla County as
of 2016.”
Blue Mountain Commu-
nity College’s taxing area
spans throughout Eastern
Oregon.
BMCC President Cam
Preus said staff “haven’t
put pen to paper” as to how
much money enterprise
zones exemptions cost the
college, but the state helps
supplement their general
fund to stave off a loss in
tax dollars.
Overall, Preus said the
benefits of an enterprise
zone outweighed the set-
backs. She added that
BMCC was invited to an
upcoming meeting with
the Umatilla County Board
of Commissioners on how
Lamb Weston’s $1 mil-
lion annual payment will be
spent, which could include
funding for job training.
The Federal Energy
Regulatory
Commission
ordered Umatilla Elec-
tric Cooperative to provide
wholesale transmission ser-
vice to a Wheatridge Wind
Energy project, rejecting a
protest by Heppner-based
Columbia Basin Electric
Cooperative that the action
would encroach on its
exclusive service territory.
The proposed wind farm,
broken up into two areas a
few miles north of Heppner,
would include up to 292 tur-
bines and generate up to 500
megawatts of energy. The
project’s developers have
been working with UEC
on a plan for UEC to con-
struct a 230-kilovolt trans-
mission line connecting the
project to Bonneville Power
Administration’s Morrow
Flat substation in UEC’s
service territory.
The wind farm is in
Columbia Basin’s service
territory, and the cooper-
ative argued that the pro-
posed transmission line
would violate Oregon law
barring electric utilities
from making retail sales of
electricity within other util-
ities’ exclusive service ter-
ritory. It filed a complaint
with the Oregon Public
Utility Commission on Jan.
13, 2017.
According to a news
release by UEC, in response
to the complaint Wheat-
ridge and UEC filed an
application with the Fed-
eral Energy Regulatory
Commission to confirm the
transmission line was sub-
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