New deal would fine Intel for creating too many jobs

Hans Greimel

Tuesday, June 22, 1999 | 9:43 a.m.

HILLSBORO, Ore. -- In the past decade Intel's billion-dollar computer chip plants have transformed this sleepy farm town into a silicon forest of high-paying jobs, new subdivisions and rush-hour traffic jams.

Now, having found out that it's possible to have too much of a good thing, the locals are offering Intel a new set of tax breaks that contain a unique proviso: Don't create too many jobs.

As part of a proposed $200 million tax-break package, the county would, in effect, fine Intel $1,000 for every manufacturing job created over a cap of 5,000.

It's an unprecedented answer to the problem of too much economic development, too fast. And it comes at a time when other communities are going to extremes to attract big businesses and the jobs they bring.

"We're not against growth," said Washington County spokesman Walter Peck. "We just want them to grow responsibly. We're in the catbird seat."

Intel has 11,000 employees in Washington County, including 4,000 manufacturing jobs at three chip plants and one mother-board factory. Intel's employees constitute the biggest single-company work force in the state and are the linchpin of an electronics manufacturing industry that has helped give Oregon one of the nation's fastest-growing economies.

But officials in this suburban Portland county say all those employees come with a price and taxpayers shouldn't keep footing the bill for new roads, schools, water lines and police.

"There are a number of people in the community concerned about the quality of life," said Tom Brian, chairman of the Washington County Commission. "They want to preserve wetlands, open spaces, not have streets crowded with traffic. Our community is very sensitive to rapid growth."

Hillsboro has seen its population increase from 45,000 to 68,000 in just the last three years. Already, freeway interchanges are choked with encroaching strip malls, and newly paved boulevards stand ready for future rush hours.

"I lived in it once, and I don't want to live it again, with the industry, crowds, traffic, higher assessments," said Sharon Cornish, a Los Angeles transplant who moved north in 1966.

The employment ceiling at Intel is part of a state tax break known as the Strategic Investment Program, which is designed to ease the property tax burden on companies making big investments.

It lures companies with the promise of an initial $100 million cap on the taxable value of a company's investment in plants and equipment. That means big savings for Intel, which plans to spend $12.5 billion to retool its plants, a procedure it has to go through every two or three years just to remain competitive.

"If the SIP were not approved, what Washington County would see is a dwindling Intel manufacturing presence here," said Bill Mackenzie, spokesman for the Santa Clara, Calif.-based company. "We're not talking about picking up and moving out the next day, but a gradual process."

Still, the new job clause worries some local officials who say it could set a troublesome trend for a county that held unemployment to 3.9 percent last year, compared with 6 percent for the state.

"The notion that employers have to pay a premium for bringing in additional employees could set the wrong tone," said state Rep. Jim Hill of Hillsboro. "That's where I don't want to go."

Intel agreed to the 5,000-employee cap partly because it doesn't foresee hiring more than 1,000 additional floor workers anytime soon.

"It's not saying you can't grow. It's just saying if you do, you're going to pay this additional fee," Mackenzie said. "They would be taxing us over and above what we already would pay in terms of local growth, roads and sewers. It simply adds additional responsibility."

Anti-growth activists say the county should have driven a harder bargain with Intel, which had $6.07 billion in profits in 1998.

Each new resident sets the county back roughly $33,000 in infrastructure costs, said Andy Kerr, president of Alternatives to Growth Oregon.

"When you run the numbers, the taxpayers are still getting screwed," he said. "All we're doing is trading nickels. What is $1,000 going to do to provide an infrastructure for new workers? It's a drop in the bucket."