NEWPORT, Oregon (From news reports) -- With one member adamantly dissenting, the Lincoln County Board of Commissioners approved a tax exemption for Georgia-Pacific to develop a first-of-its-kind recycling operation in Toledo.
Georgia-Pacific has been piloting its Juno recycling technology in Georgia since 2013. According to the company's website, "the process takes municipal solid waste currently going to landfills from select commercial locations such as office buildings, airports, schools, fast food restaurants and malls. The material is processed and sanitized, and the fiber is fed into the paper-making process with old corrugated containers to be repurposed into products like corrugated boxes."
In June 2019, Georgia-Pacific broached to county commissioners a proposal to develop the first commercial application of the technology at its mill in Toledo through Business Oregon's Strategic Investment Program, which allows property tax exemptions for investments greater than $25 million. In Toledo, the exemption would apply to four taxing entities -- Lincoln County, the city of Toledo, the Greater Toledo Pool and Recreation District and the Port of Toledo.
The first $25 million is taxable, but development in excess of that threshold will be exempt for the next 15 years, with the company paying an annual community service fee on the money it saves. State law sets that fee at 25 percent of the tax savings, but the county negotiated a fee of 35 percent, or $2.5 million, whichever is less. The fee will be divided between the four entities based on their relative taxing authority. The agreement also stipulates a tax floor -- in the event that the replacement of existing property during the next 15 years reduces value below the taxable amount prior to the exemption, the community service fee will be increased accordingly. With just under $216 million is assessed property value, Georgia-Pacific is the county's largest taxpayer, paying $3.3 million last year.
As C.J. Drake, public affairs manager for Georgia-Pacific in Toledo, noted during the board's meeting on Monday to consider the agreement, it's also the county's largest employer, with an annual payroll of approximately $45 million. In light of the extreme downward pressure on the jobs market from the coronavirus pandemic, that employment base garnered reluctant support for the agreement from Board Chair Kaety Jacobson.
"Pre-COVID, I would have been a pretty strong no vote," Jacobson said, adding that she remained conflicted on the issue. "I don't like the idea of giving large corporations a tax cut, but there are 400 employees to consider. While the agreement doesn't guarantee job retainment, or that Toledo GP stays open -- I wish it did, but those are not things it guarantees -- I want to give these employees a fighting chance of staying employed and economically surviving the pandemic we're in."
In prepared remarks, Commissioner Claire Hall voiced her objections, first acknowledging that "Georgia-Pacific is playing entirely by the rules established by the state and federal governments," as well as those of the Strategic Investment program. "No one in authority, however, seems to be asking whether these rules are still appropriate," Hall said.
"I think we have to acknowledge the fact that this mill is the one of the largest legal polluters in the state of Oregon. The last ranked list that I could find, in 2014, had it number three in the state, with 1.2 million of air emissions and water pollutants." She pointed out that the plant had been identified in March 2019 by the Department of Environmental Quality for review under new Cleaner Air Oregon rules, one of 20 such operations in the state. According to a press release from the department, it selected those facilities based upon "preliminary reports on the amount of materials released by each facility, and the facility's proximity to people and vulnerable populations," as well as qualitative factors like data completeness and accuracy. Hall said, "Until we see the results of that review, I think the precautionary principle should prevail."
She also cited a 2019 article in the Oregonian, which found that while large cities had largely moved away from providing such tax exemptions to large corporations, "rural communities continue their race to the bottom," she said. "For me, it's time to step out of this race. As we discussed previously, this program has no requirement for the mill to remain open for a specified period of time and no requirement to guarantee job retention and job expansion. I feel like were being asked to commit millions of potential lost tax revenues for a wink, a smile and a handshake."
Commissioner Doug Hunt said, "I've said from the beginning that I think this is a question about jobs." He noted the city of Toledo, the largest beneficiary of Georgia-Pacific tax dollars in terms of percentage of income, already approved the agreement on May 27. "I would liken this to a car. If you have a car, and you're thinking of getting rid of the car, you're probably not going to put extra money into it to maintain it. But if you do, you're probably going to keep it around for a little longer than if you didn't. So I see this as an approach that will protect or enhance the jobs that are there," Hunt said. While there's no guarantee, he said, "I certainly think that if the company's going to make an investment of up to $100 million, they're probably not going to be making that kind of investment and then shutting the business down."
Hunt moved that the county proceed with the agreement -- some details of the text must still be finalized and approved by the state, and a fund-sharing agreement between the taxing entities will need to be approved. Jacobson said she "regretfully" seconded. Both voted yes, and the measure passed 2-1, with Hall voting against.
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