Why is it important?
In order to attract, retain and support the growth of industries from metals manufacturing to high tech manufacturing to solar and clean tech manufacturing, Oregon needs an inventory of competitive shovel ready industrial sites. There is a broad consensus that the state is lacking in competitive sites due to a wide range of state, regional, and local issues. Some of the traded-sector business that Oregon wants are relatively large and require parcels sized and with services to accommodate them. In some places Oregon is critically low on land that is ready to go for such businesses.
Where We Stand Today
In 1973, the Oregon legislature enacted Senate Bill 100 establishing Oregon’s pioneering state land use system. Through this system, Oregon has been widely recognized as a leader in creating a system to protect quality of life while providing land in support of economic development.
But much has changed since 1973. In the 1970s, agriculture and forestry were the dominant industries in Oregon, and the land use sysetm appropriately was desigend to protect and preserve for agriculture and forestland. Today, these industries remain critical to Oregon’s economic health. The state has also diversified dramatically into high tech, clean tech, advanced manufacturing and other industries with land needs. We must expand the focus from resource land protection to include the needs of high paying manufacturing industries in and near urban areas. The current system is not parituclarly sensitive to those needs, as evidenced by the shortage of industrial land in many parts of the state.
Industrial land for traded sector industries was a key priority when the Oregon Business Plan launched in 2002. Thanks to the leadership of Governor Kulongoski and economic developers across the state, Oregon developed a certified industrial lands program to identify and inventory “shovel ready” industrial lands. Oregon launched the “Oregon Prospector,” an innovative online tool to help companies identify “shovel ready” lands.
The Governor’s early leadership on this issue should be appluaded and it has paid off in landing several large industrial developments–companies that are returning dividends for the state’s economy and tax revenues. However, there is a growing consensus in Portland and around the state that the “low-hanging fruit” has been picked. If the next Intel were to knock on Oregon’s door today, where would they set up shop? What about the next Solar World? Unfortunately, the answer is somewhere else. Oregon simply does not have the industrial land supply to meet the needs of these industries.
The problems with industrial land supply are multi-fold. Here are a several:
- Insufficient coordination of economic development strategies among various levels of Government
- Absence, in most communities, of a short-term land needs analysis
- Lack, in most communities, of a competitive short-term supply of land. Oregon’s land use laws make it very difficult to get enough land, and to make that land ready for employment uses. Oregon cities face years of expensive processes and appeals to make relatively modest amounts of land available for employment.
- Lack of mechanisms to protect key areas of industrial designated land. Even where development constraints are not fatal, other land uses like commercial, housing, retail, schools, churches and open space and natural resource conservation compete with industrial uses for the existing zoned land and the conversion of industrial lands to other uses reduces the available industrial land supply.
- Lack of mechanisms to pay for the infrastructure upgrades required when developing industrial sites.
The Oregon Business Plan Strategy
The Business Plan recommends alleviating these problems by changes in policy, practice and attitude that increase (1) the supply of shovel-ready, large-lot, industrially-zoned land; (2), infrastructure funding, and (3) the speed of the entitlement (permitting) process.
Priority Action Items
1. The Governor should set a clear “Tone at the Top” that economic development, industrial site availability and efficient permitting is a top priority. A world class competitive business environment requires direction from the Governor and agency heads that economic development is a priority for every agency and that the timely resolution of regulatory issues and delivery of permits is essential for the state’s economic prosperity.
2. The legislagure should require jurisdictions to maintain a short term, five year rolling supply of development ready industrial sites that meet current and anticipated market needs. While jurisdictions may have a twenty-year supply of vacant industrial land in the aggregate, often the bulk of that land is not development ready. Expanding companies require development ready sites, not an aggregate supply of industrial land identified to meet land use planning regulations. Prospective and expanding Oregon companies will not wait until the last years of the planning period to find a place to build – their market will drive them elsewhere. The requirement for a twenty-year land supply helps jurisdictions do long-term planning and investment but does not ensure that the immediate needs of users and the market for readily developable land are met. A five-year land supply that is immediately developable is also needed to ensure the needs of specific companies and the market are being addressed.
3. The Governor should lead a process to identify and expedite permitting of statewide and regionally significant industrial sites. Investments in industrial development that provide above average wages and that employ a skilled work force are of such economic significance to the economic recovery of the state that they merit expedited siting. Such projects bolster the economies of their communities and contribute to the economic health of the state as a whole. Permitting for projects of statewide and regional significance should be expedited through a consolidated review and permit delivery process.
Working with local government, private industry, and regional economic development organizations, the Business Development Department, the Department of Land Conservation & Development, and the Department of Transportation should cooperatively identify statewide and regionally-significant industrial areas and assess their level of readiness.
4. The legislature should protect statewide and regionally significant industrial sites from conversion to other uses or regulations that reduce development capacity. State authority is needed to discipline local jurisdictions from making zoning changes or regulatory overlays that reduce the supply of industrial land for other uses without replenishment. If a local jurisdiction converts a portion or all of a site to a non industrial use, or implements a regulation that reduces the acreage available for industrial development, the state should require the jurisdiction to replace that site or acreage with a site that has like characteristics, including proximity to infrastructure, land characteristics, and appropriate siting for the use in a time line that maintains a five year supply of immediately developable industrial land. This action would support a “no net lose jobs” policy, similar to the City of Portland’s no net loss housing policy that requires replacement of residentially zoned property.
5. Through legislation and rule-making, amend the Transportation Planning Rule (TPR, state land-use Goal 12) to give more flexibility for development that creates new jobs and industry. Integrating transportation and land use planning is a laudable goal and a critical component of Oregon’s land use system. However, it is clear that one Oregon land use goal (goal 12- transportation planning) is clearly trumping another (goal 9-economic development), in land use decision-making, leaving economic development opportunities unrealized. It is possible to reconcile transportation planning and economic development, but it will take a new approach. This could be done in several ways.
We recommend a revision of the TPR that balances the amount of investment required to meet the TPR with other goals. These goals should include job creation, how much the anticipated development will generate in state income tax revenue, etc. For example, the Purpose section of the TPR should be amended to require that the concurrency provisions of the TPR be balanced with the state’s economic development needs under Goal 9 and its related administrative rules, and that Section 0060 of the TPR should be amended to add a new subsection (d) to allow a local government to determine that a finding of significant affect may be mitigated by a concurrent finding of significant economic benefit to be derived from the proposed plan or land use regulation amendment.
Another solution involves metering the TPR assessment based on the incremental use of the site over time, rather than paying the fee on the maximum anticipated impact.
A third idea would be applying the TPR assessment to a corridor standard level of service, rather than the immediate impacted area.
The legislature recognized the problems with the TPR when it passed HB 3379 in 2009 to provide more flexibility on the TPR. Unfortunately, the bill was significantly watered down in the committee process and the subsequent agency implementation of it has not addressed the major problems with the rule as it is currently implemented.
6. The legislature should create mechanisms to pay for infrastructure and remediation. Oregon needs a source of funds to provide infrastructure to and help remediate development constraints on industrial lands. Potential solutions include a shared income tax revenue model by sequestering a portion of new revenues from jobs created in a new business location to help pay, in part, for infrastructure improvements. Also, a full review of other financing instruments should be considered (e.g. bonding, LID, TIF, SDC, local taxing districts, etc.).
7. State and local governments should create incentives to spark investment in and clean up of Brownfield sites. Many of the potentially developable sites are contaminated to the degree that new investors cannot take on the liability or cost of clean up. Solutions include financial incentives for voluntary clean up, tax credits and job creation bonuses. Creative revenue sharing solutions need to be devised that allow local jurisdictions, the private sector and the state to form partnerships to make clean up and redevelopment possible.
8. Oregon should adopt new approaches to wetlands mitigation. The theory behind UGBs is that there is lot of planning and analysis done up front on all the trade-offs, but once that is done, the land inside the UGB is supposed to be available for development. This has not always been the case, but recently we’re seeing DSL require ‘need’ analysis for wetlands inside the boundary on a project by project basis, when all that sort of study should be done at the planning (i.e. UGB) level, not at the permit counter.
Communities particularly affected by this include the mid-Willamette Valley and the Columbia Gorge. When wetlands are present on an industrial site, a potential developer faces the need to obtain permits from both the DSL and the ACOE. These permitting processes add time, effort, expense and uncertainty to the development process. There are opportunities to expedite the resolution of these issues that protect both environmental economic interests.
These include: the development of Regional General Permits for high priority industrial sites that have issues like wetlands mitigation that involve multiple agencies and jurisdictions. Another opportunity is to facilitate use of an ecosystem services approach, where developers can pay nearby landowners to provide the same equivalent ecosystem benefit that would be provided by keeping the site out of development.
9. Oregon should employ a patient developer to assemble and address constraints over time to prepare sites for development. Promote and enable ports and port-like development authority’s the financial and legal ability to assemble parcels, mitigate development constraints and hold sites over time to ensure there is an adequate five year rolling supply of industrial sites in each jurisdiction. Many parts of the state are underperforming due to a lack of such developers. Further, other issues like environmental mitigation, industry recruitment, and infrastructure development are facilitated and improved through professional land management and development.
10. The Governor and legislature should review and reform the appeals process to prevent unwarranted project delay. There is concern that excessive appeals by those with questionable standing or little “skin in the game” are slowing down permitting processes, not just in land use decisions but across business activities. Oregon should review its appeals process in order to identify and rectify sources of unwarranted project delay. Possible reforms include limitations on who has standing to file an appeal and/or the introduction of fees for filing appeals.