Wednesday, September 30, 2020
Sept. 30, 2020

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Tax breaks sweeten deal between Vancouver, HP in plans for new site

By , Columbian staff writer

Vancouver’s willingness to work with the company on the site factored into HP Inc.’s choice to keep and expand its operations in Vancouver, said Bob Brackin, a representative from HP who addressed the city council during its meeting Monday evening.

The proposed development agreement between the city of Vancouver and the computer and printer maker — one that would see the company build a 68-acre campus on an undeveloped mining site — hinges, in part, on city incentives.

In exchange for kickstarting development in Section 30, the industrial area in east Vancouver once home to the English Pit mine, HP may receive a $1.25 million waiver on its business license fees over the next 20 years. The company may also see a $200,000 reduction in the new development’s traffic impact fees, as well as a deferment of its water and sewer development charges.

Additionally, Vancouver is planning to devote $3.5 million toward public infrastructure projects during Phase I of the project, with another $6.5 million promised in Phase II. Targeted investments in the area include grading the land, building out Southeast First Street, extending Northeast 184th Avenue and adding new sewer and water lines.

HP Inc. has had a presence in Vancouver for years and currently leases facilities at the Columbia Tech Center.

“We initially started our search looking at Pacific Northwest states,” Brackin said, adding that the search soon narrowed to look at the greater Portland metro area. “We felt that the business climate in Southwest Washington was the best place to bet.”

“A big part of that was the city’s vision for what Section 30 could be,” Brackin added.

City leaders have hoped to draw private companies into Section 30 for more than a decade, when a 2009 subarea plan of the old 553-acre mining site highlighted major potential for office, residential and light industrial uses.

At Monday’s meeting, city councilors expressed excitement that the future of the area was about to begin in earnest after a decade of stagnation.

“I worked on the Section 30 plan when I was at the county, so it’s great to see something come to fruition,” said Councilor Laurie Lebowsky, who started working as a planner for Clark County in 2005. “This area will have its own identity.”

Inducements cause concern

Some expressed concern about the incentives side of the agreement, especially the stipulation that would waive business license fees.

“I am very excited, but it would also be a dereliction of my duties if I did not question some of the assumptions that go into the proposal,” Stober said, adding he was reluctant to support “extending tax and fee breaks to a larger corporation when we’re struggling to support small businesses.”

Stober said he was especially concerned about offering freebies to the corporation at a time when the city is contemplating asking residents and businesses to pay higher taxes as part of the Stronger Vancouver initiative.

Stronger Vancouver, a package of about 60 new projects and services, was initially pitched as costing $30.1 million per year, a burden that was supposed to be evenly split between business taxes, property taxes and miscellaneous other fees. But the city council ultimately decided to remove a proposed business and occupation tax, pulling a $5.5 million piece out of the puzzle and torpedoing the aim of splitting the revenue collection evenly across three different sources.

The other piece of Stronger Vancouver that would be shouldered by the business community is a hike in the employee surcharge, from $90 to $160. Under the proposed development agreement, HP would be exempt.

Granting a tax break to HP while asking more from small, local entrepreneurs may highlight a stark contrast in how a “whale” like the computer company is treated, he continued.

“Residents expect equity as part of that package,” Stober said. “I do think we need to ask more of HP in this.”

Community and Economic Development Director Chad Eiken pointed to the public benefits of the new HP campus — up to $80 million in capital construction investment upfront, with the potential for hundreds of millions of dollars in further investment over the next two decades; retention of at least 700 full-time jobs paying more than 125 percent of the area median income, with space to add more; a major bump to the city’s tax base, expected to add $1.6 million per year by 2039.

“There is mutuality in the proposed agreement,” Eiken said. He added that the city could expect to see its investment returned around the 20-year mark. Likely sooner, if HP’s new campus acts as a catalyst to kickstart other companies into developing a plot of Section 30.

Mayor Pro Tem Bart Hansen praised Eiken and his staff for coming up with a “toolkit of incentives” to strike a deal.

“It’s just as important to bring in a business such as yourself as it is to keep a business such as yourself,” Hansen said, addressing Brackin directly. “This is keeping jobs in Vancouver. This is keeping people from needing to cross the river every day.”