The Vancouver City Council on Monday unanimously approved discounts for large employers that offer high wages. In doing so, the council was careful to make a distinction between its program and, as Mayor Tim Leavitt put it, a “blanket waiver of fees” offered by Clark County that has been criticized as costly and ineffective.
The city will waive business license surcharge fees and reduce traffic impact fees, but only for companies with 200 or more employees that pay higher-than-median salaries. The incentives are modeled on ones that helped convince Banfield Pet Hospital to move its corporate headquarters from Portland to Vancouver.
The business will need a written development agreement with the city outlining a long-term commitment. Under the legally enforceable agreement, the business would be on the hook for repaying the city if it falls short on its promises, said Chad Eiken, the city’s director of community and economic development.
The ordinances cap the amount of money that can be waived per project and a tiered schedule gives greater benefits to bigger businesses.
The incentives will sunset after six years unless renewed, Eiken said.
City Manager Eric Holmes wrote in a report to the council that while reducing traffic impact fees means the public will bear a greater cost of growth, impacts on the city’s general fund are anticipated to be temporary “due to projected increases in sales, property and utility tax revenue,” Holmes wrote.
In contrast to the city’s program, the county’s fee waiver program eliminates permit application and traffic impact fees on all commercial building projects in unincorporated areas, regardless of the size of the employer or wages. Clark County Auditor Greg Kimsey said last month that the costly, ineffective program should be eliminated or significantly changed.
Kimsey’s audit found that $7.8 million has been waived in fees since the program started in 2013. Between $4.6 million and $6.9 million in waived fees benefited projects that would have been built anyway. Of the 115 jobs created as a result of new development, most came in low-wage food, consumer service or retail sectors.
Despite Kimsey’s findings, county commissioners have not indicated they plan to discontinue the program.
The current median individual income for the Portland-Vancouver Metropolitan Statistical Area is $48,580,
Under the city’s program, for example, a business that has 200 or more employees and median salary of at least 200 percent of the regional median income could qualify for a 25 percent reduction in traffic impact fees, up to $100,000. A business with 600 or more employees and a median salary at least 125 percent of the regional median income could have its traffic impact fees reduced by 50 percent, up to $200,000.
A waiver of business license fee surcharges would be capped at $20,000 annually.
Vancouver City Councilor Jack Burkman said the city’s incentives had been thoroughly vetted by Lloyd Tyler, the city’s chief financial officer, as well as the city’s planning commission.
Banfield, the largest private veterinary practice in the United States with 800 clinics in PetSmart stores, has approximately 560 headquarters employees and projects to grow to 670 employees in five years and to 950 employees in 15 years.
Data on Banfield salaries were not available, but the company’s wage/benefits package averages $126,000 per employee, Eiken told the council earlier this year.
The new headquarters will open in 2015 on Mill Plain Boulevard and Southeast 184th Avenue.
Eiken told the council in May that Banfield will generate $14.2 million in new tax revenues in the next 15 years for the state, city, Evergreen Public Schools and smaller taxing districts.
Councilor Anne McEnerny-Ogle said having development agreements is a critical component, as the county reported difficulty getting information from businesses that benefitted from the waivers.
Councilor Bill Turlay said the city needs incentives to help attract large employers because of the competitive market.
Eiken said he’ll provide the council with annual updates on the incentives, which will also be available to existing companies in the city that want to expand.
Eiken added he doesn’t think the incentives alone are enough to land a new company, but they will garner attention.
“Vancouver sells itself,” he said, once executives agree to visit.
