Vancouver flirted with Nike on expansion

Oregon tax law enacted to stave off possibility of development elsewhere

By Aaron Corvin, Columbian port & economy reporter

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photoStrong demand in North America helped Nike post second-quarter net income that beat expectations Thursday despite weaker sales in China and costs related to the sale of two brands.

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When Oregon Gov. John Kitzhaber called the Oregon Legislature into a rushed special session last week, he said the state needed to give tax assurances to Nike in order to keep the company from expanding out of state.

Neither Kitzhaber or Nike would disclose where the company might expand. But The Columbian has learned that the city of Vancouver, the state of Washington and economic development officials had been deeply involved in trying to secure an expansion of the giant athletic apparel corporation — perhaps as many as 5,000 new jobs — in Clark County.

Public officials won't confirm any discussions with Nike or its representatives. But documents identifying a company only as "Project Impact" point unmistakably to Nike, based near Beaverton, Ore., as the target of an aggressive recruitment campaign.

Vancouver Mayor Tim Leavitt confirmed Friday that there was interest by "a large Fortune 500 company" in moving to Vancouver, and the city met with company representatives.

However, he said non-disclosure agreements prevented him from sharing the company's name or any other specifics about the proposal. Leavitt also said he has not received any formal correspondence saying the company is no longer interested. Other city and economic development officials said they could not talk about any part of discussions with the unnamed company, citing a non-disclosure agreement.

The picture of the city's courting of Nike began to emerge in a brief notation in the Oct. 18 minutes of a meeting at Vancouver City Hall of the City Center Redevelopment Authority. Those minutes identify "Project Impact" and state that the "Economic Development Team is working fast and furious on this significant recruitment project."

The minutes go on: "Anticipating 5,000 new jobs and a $500 million capital investment with jobs triggering January 2014."

According to the minutes, "The company will not be located in the downtown area but will be a significant impact to our community."

A company of that size would be an overwhelming economic boost to Clark County where PeaceHealth, with about 4,200 jobs, is the largest employer.

A Dec. 10 e-mail, obtained by The Columbian and written days before the Oregon Legislature's special session, concedes that "the Vancouver site is effectively out of the running as we are behind the Oregon and Texas sites."

The Dec. 10 e-mail — written by Alisa Pyszka, economic development division manager for the city of Vancouver — went on: "We will still be considered if the Oregon legislation does not pass this Friday," adding that Texas also could still be in the running. "Chances are slim that legislation will fall through," she concluded.

The email contains a link to an online news story about Oregon lawmakers responding to Kitzhaber's request to give Nike special tax treatment.

Indeed, the Oregon Legislature approved a new law on Dec. 14 that gives Nike greater tax security as the company plans a multimillion dollar expansion in the state. The legislature allowed Kitzhaber to enter into a contract with Nike to protect it from changes in the way the state calculates the global sportswear maker's state income taxes.

"'Project Impact'" — the effort by local and state officials to recruit Nike to Clark County — "ceased to exist when the Oregon Legislature passed its recent tax package," according to a source familiar with the discussions.

This week, Kitzhaber and Nike president Mark Parker signed the agreement that commits Nike to completing a $150 million expansion in Oregon by the end of 2016 and hiring 500 new workers, who cannot be acquired by acquisition or merger with another company.

The legislation guarantees that Nike will continue to pay corporate taxes based on its sales within Oregon. The "single-sales" factor, enacted in 2005, excludes sales outside of Oregon as well as property and payroll. The contract extends for 30 years.


Columbian Business Editor Gordon Oliver and staff writer Stephanie Rice contributed to this story.

Aaron Corvin: 360-735-4518; http://twitter.com/col_econ; http://on.fb.me/AaronCorvin; aaron.corvin@columbian.com.