Oregon City Council on Monday will consider approving a 30-year Tax Increment Financing (TIF) agreement with BP-Husky Refining.
A TIF agreement with the company would be a way for Oregon to help finance capital improvement projects in the area.
Taxes attributable to increased property values at BP would be set aside in a fund to finance public improvements within the boundaries of the TIF zone.
“Instead of BP paying taxes on increased property value, that money would go into a fund associated with a TIF that would help pay for the local share of public improvements,” said Administrator Mike Beazley.
The agreement would require BP to make the school district whole so it would not lose tax revenue, said Beazley.
“It simply says that if the property values go up in the area identified in the TIF, BP will make the school district whole, and the other money they would have paid in taxes could be used for the local share of public improvements,” he said. “If the values don’t go up, there are no obligations. It doesn’t obligate the city to move forward with public improvements, it doesn’t obligate BP. But it’s timely because of the nature of the tax calendar to do this at the end of this year. And downstream, we do expect to have development agreements between the city and BP that will shape our relative responsibilities as we move forward on joint projects, like ditch projects and potential road relocation that we would explore.”
Beazley called BP “an important partner with the city.”
“We’re excited about their investment in the community, and ways we can leverage our joint interests in making some changes to improve drainage to the community,” he said.
Bill Bussing, of BP-Husky, agreed.
“I think being able to put together agreements like this is actually important towards win-win solutions around public improvements that are connected with future investments,” said Bussing. “I think it provides the right incentives going forward on that. We have worked hard over the past couple of years with the city in terms of identifying what we thought were good public improvement projects, and we’ll continue to do that.”
Public Service Director Paul Roman said potential public improvement projects include the relocation of Cedar Point Road, and improvements to the Amolsch-Driftmeyer Ditch. Cedar Point Road would be moved further from the refinery to the south between Otter Creek and Wynn roads. The project, estimated to cost between $10 million to $20 million, may also involve some relocation of DuPont Road. Two phases of improvements to the ditch would cost close to $5 million.
“If it turns out that there is a growth in the property value for BP’s property in the area, over time, because of their investment, the TIF would be a mechanism to use some of the growth in taxes from the BP parcels to help pay for the costs associated with some of that infrastructure,” said Beazley.
“The community,” said Beazley after the meeting, “benefits in two ways: we want to continue to partner with one of our most important employers and industrial investors, and we want to help continue to make it easier for them to choose to invest in their property and expand in Oregon. At the same time, Oregon will benefit from improved drainage and roads.”
Mayor Mike Seferian said more steps must be taken “to pull this off.”
“I think you would be a little apprehensive getting started with this, but with BP, we’re at ease because the relationship has worked so good. Something this big for our city to pull off is exciting. A lot will have to be done, and a lot of things have to fall into place. We believe with the relationship we have, we can get all those things to fall into place.”
BP-Husky in the last few years planned major investments in the refinery, including $400 million in equipment upgrades to improve efficiency and competitiveness, and a $2.5 billion upgrade to increase capacity and process crude from Alberta’s oil sands.
Councilman James Seaman said the TIF funding method has been discussed before at many committee meetings regarding storm sewer issues.
“I’m so glad that we’re getting to the point where we may be taking a major step forward,” he said. “I really wish all the success to the BP-Husky expansion and redevelopment because I think that’s a tremendous asset to our community.”