"Salem, Hillsboro got in 'the zone' for solar jobs"

By Andy Giegerich
Business Journal staff writer
Sustainable Business Oregon
>>click here for original article

When Wilsonville residents questioned whether the city should provide $11 million in tax incentives to solar panel manufacturer SoloPower Inc., SoloPower decided to take its facility elsewhere.

And as the company begins negotiating incentive terms with the city of Portland, other cities that provided incentives to solar companies say the gamble is well worth it.

Economic development leaders in Salem and Hillsboro said incentives granted to Sanyo Solar of Oregon LLC and SolarWorld AG have so far generated as many as 1,200 well-paying jobs. The officials said they wouldn’t hesitate to offer the incentives, which come partly in the form of enterprise zones, again.

“It’s absolutely been a success: We’re happy to have Sanyo, and we’re working to recruit other companies to our energy and technology center,” said Annie Gorski, a city of Salem economic development project manager, in referring to the city’s sustainability-oriented enterprise zone.

Enterprise zones are a state-created offering intended to encourage industrial investment. Businesses in enterprise zones that invest in new plants or equipment qualify for tax abatements on the investment, an incentive that can be worth millions, especially to capital-intensive manufacturing plants.

---

SBO Special Report: Oregon's solar manufacturing cluster
See also:
Solar manufacturing advantage: Oregon
Oregon's solar supply chain fills in
Solar manufacturing is not without economic risks

---

In Salem and Hillsboro, the programs have led to jobs that pay in the $50,000 range annually to hundreds of workers. In exchange, the companies have met tight timelines for starting production and promised to hire workers who live near the enterprise zones.

Yet in Wilsonville, residents questioned whether SoloPower merits similar incentives. The Wilsonville City Council in April approved, effectively, a one-building, 26-acre urban renewal district that will help deliver $11 million in redevelopment assistance, including $4 million in incentives, to the flexible thin-film solar panel manufacturer.

In return, San Jose, Calif.-based SoloPower would have needed to employ as many as 500 workers in the outer-Portland city.

Even though Wilsonville’s city council backed the plan, SoloPower backed away from the move after residents attempted to put the package to a full city vote.

Instead, SoloPower now plans to spend up to $340 million on heavy manufacturing equipment and retrofits in Portland.

Salem residents were more accepting of the Sanyo Solar plant. The company occupies about 20 acres, for which Sanyo paid $1.74 million, within what the city calls a “renewable energy and technology park.” All new Sanyo Solar employees earn $50,031, or 150 percent of Marion County’s average annual wage.

Salem officials had expected the company’s payroll to approach the $8 million mark. Instead, the company pays its workers more than $12 million, according to the Salem Statesman-Journal.

In exchange, the company received a five-year property tax exemption, as opposed to the three typically associated with Salem’s enterprise programs, on the $44 million of facilities and other expenditures covered through the enterprise zone. All told, Sanyo spent $84 million on the site.

The company also received a 10 percent rebate on certain building and permit fees.

The Salem operation, which manufactures silicon ingots and wafers for solar cells, opened in November 2009.

“We’ve heard from Sanyo that they’re happy to be there, and, likewise, the community has welcomed them,” Gorski said.

Salem officials and Sanyo worked together smoothly during the site planning process, Gorski said.

Hillsboro officials are equally pleased with their decision to offer SolarWorld wide-ranging incentives. Primarily, SolarWorld received a five-year exemption for new investments, such as facility modifications and equipment purchases. Its first construction phase, of around $140 million, yielded some $10 million in tax savings.

In exchange, SolarWorld must, at the very least, maintain its current employment levels of around 1,000 workers for the three-year tax abatement period. It must invest $1 million in the facility, located in Hillsboro’s North Industrial Enterprise Zone area, and increase the amount of goods it purchases from Hillsboro-based companies by 10 percent annually.

SolarWorld must further pay its workers at least 150 percent of Oregon minimum wage for three years, on average.

So far, SolarWorld has pledged to pour at least $500 million into its Hillsboro plant. Its workers average $43,000 in yearly salaries. In 2010, the company spent $50.2 million locally on services and supplies.

“They’re a poster child of the appropriate usage of indirect public incentives,” said John Southgate, Hillsboro’s economic development director. “They’ve not only generated indirect investments, they’ve generated activity from suppliers.”

Silicon wafer supplier SiC Processing doubled the production at its Portland-based U.S. plant last year. The company plans to begin new production at a Hillsboro facility into which it will pour $15 million.

Southgate expects even bigger things from SolarWorld.

“They have a 100-acre site and they’re only using half of it,” he said. “Take Intel: They have this huge amount of acreage and, over time, they’re building more fabs. We think SolarWorld will do the same.”

---