City of Portland Adopts and Expands Tax Incentives

Portland City Council recently passed incentives to stimulate economic activity in Portland’s Central City and encourage investment and jobs in downtown Portland.

Portland Enterprise Zone Expansion

In Resolution 37629, the Portland City Council adopted a boundary change for the Portland Enterprise Zone (E-Zone) to add Central City core and additional Northwest Industrial areas to the current E-Zones in the Southwest Waterfront, Old Town/Chinatown, and other Northwest Industrial areas. This resolution became effective on August 31, 2023.

Under the E-Zone program, eligible businesses that make a substantial new capital investment may qualify for a waiver of 100% of property taxes attributable to the new investment for a five-year period after completion. Existing land or machinery does not qualify for the exemption.

According to Prosper Portland, the city’s economic development agency, the tax liability for a new capital investment is around 1.5% of the value of that investment. A $20 million investment would typically produce a tax liability of around $300,000 a year. Once the five-year period is over, the improvements, along with the rest of the property, are fully taxed for the life of the improvements.

Applicants must commit to satisfy these job-creation requirements:

  • The number of jobs in the zone must rise and be maintained during the exemption period at a minimum of 110% of the average level at the time of the application.
  • Enter into a first-source hiring agreement before hiring new employees.

Application for the E-zone program must be made before beginning physical project work such as construction, installations, site preparation, etc., or hiring new employees.

Downtown Business Incentive Tax Credit

On September 14, 2023, Portland City Council passed Emergency Ordinance 191451. This ordinance provides a targeted credit to the City of Portland Business License Tax (BLT) to encourage bringing business employees back to the core business districts. These districts include Lower Albina, Lloyd, Downtown, and Old Town/Chinatown.

This program provides a maximum nonrefundable tax credit of $250,000, limited to the lesser of:

  1. 100% of the BLT
  2. 1% of “income subject to tax” as shown on the BLT in the year of origination, or
  3. $30 per square footage of building space occupied.

Eligible businesses include those with at least 15 employees, each working at least half of their time in the eligible sub-districts of downtown Portland. They must also enter into a new lease or extend a current lease of four years or more. Businesses that occupy their own building space instead of leasing space may also qualify. A BLT taxpayer who qualifies for a Downtown Business Incentive credit must apply to the City of Portland Revenue Division for preapproval of the credit amount they may claim. Applications for the Downtown Business Incentive credit will be available in October. The overall program is limited to $25 million over the two years of the program. As such, it is critical that businesses evaluate eligibility and apply promptly.

For more information or assistance with these programs, please get in touch with our state and local tax (SALT) Director, Sonjia Barker, or your Perkins advisor.