Should Taxpayers Fund Development of Industrial Sites For Private Enterprise?

LD_PkwyJody Wiser of Tax Fairness Oregon has an informative piece in Blue Oregon regarding SB 246A, which  according the legislative staff summary will:

Require Oregon Business Development Department to establish and administer Oregon Industrial Site Readiness Program to enter into tax reimbursement arrangements with, or to make loans to, qualified project sponsors for development of certified regionally significant industrial sites

Ms. Wiser thinks funding site acquisition and preparation for private enterprise is a private, not public, expense. And in general I agree.

But, how much of the perceived need for SB 246A is due to our urban growth boundary (UGB)?

Oregon’s tight UGB makes large industrial sites fewer and more expensive to develop. A shortage of large tracts within the UGB cause higher demand and higher prices, and government imposed development conditions mitigating impacts on those sites is more expensive in dense, heavily trafficked areas.

Many Oregonians are fond of the benefits that UGB brings. Farm land and streams are protected and provide us with clean air and water. We can ride our bikes from our homes through farmland on a Sunday morning tour. Density can be directed towards mass transit nodes, conserving resources and minimizing CO2 emissions. These are benefits we all share and enjoy.

The question is, should we recognize these benefits by re-allocating the costs a tight UGB provides.

I’m generally against any public subsidy of private for profit enterprise. It’s unfair and bad policy if not done in a logical, equitable manner. But if vital public policy – an intact UGB – makes it impossible to attract new capital investment, I guess the public has some choices to make.

  • We can forego some economic growth, which leads to less employment and economic opportunities;
  • We could loosen the urban growth boundaries and let the market reduce site costs so Oregon is competitive for new capital investment with other States, or
  • We can enact cost shifting and have those that benefit (all taxpayers) help subsidize the artificial costs imposed on industrial investors by our tight UGB.

As with many policies that seem unfair on first impression. There may be more to this bill than meets the eye. I’m still not convinced that as written the bill is the best we can do. But it addresses legitimate issues related to other important Oregon policies.