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December 14, 2012

Oregon approves tax deal for Nike expansion

SALEM, Ore. — A deal proposed by Nike Inc. to create hundreds of jobs in Oregon in exchange for a guarantee that the state won’t change a favorable corporate tax structure prompted state lawmakers to approve emergency legislation Friday.

Critics have questioned the timing and purpose of the special session, but rather than head out on holiday vacations, the state’s part-time legislators met in Salem on four days’ notice to consider whether to give the world’s largest athletic shoe and apparel company the assurances it demanded.

The deal is evidence of the lengths Oregon leaders will go to in order to protect the state’s best-known company, and the economic footprint, with its trademark swoosh, that it has in the state.

“We have a wonderful, wonderful company that’s going to be remaining in Oregon because of what we’re doing here today,” said Democratic Sen. Ginny Burdick of Portland.

Gov. John Kitzhaber’s decision to call the special session stunned lawmakers who didn’t see it coming, underscoring that even as tax incentives have become a common tool for politicians to lure large employers, Nike’s deal is unconventional.

The meeting cost taxpayers $13,000 and came less than two months before the regular legislative session was set to convene. It is aimed at maintaining the status quo, rather than approving new tax breaks.

Such factors led Kitzhaber to acknowledge the emergency legislative session was “extraordinarily awkward.”

Still, Nike plans to create 500 or more jobs and invest at least $150 million in an expansion if the so-called “single sales factor” tax benefit remains in place, according to the Democratic governor. The governor will sign the bill, potentially as soon as next week, spokesman Tim Raphael said.

It was unclear whether Nike would actually move to expand outside of Oregon — a company spokeswoman refused to say — but the mere threat was enough to prompt action.

In a statement, Nike spokeswoman Mary Remuzzi thanked legislators for acting “quickly and decisively.”

“This is a very positive step forward, not only for our company but for the state of Oregon,” the statement said.

The prospect of many new workers is critical in a state that has no sales tax, limited property taxes and relies heavily on personal income taxes, said Republican Rep. Vicki Berger of Salem.

Nike employs thousands of people in Oregon, many of them at its headquarters in relatively high-wage jobs, including legal, design, sales, information technology and corporate strategy.

Company officials have been mum about their expansion plans, refusing to say where they’ll build or what the new workers will do.

The company’s presence near Beaverton, a Portland suburb, has helped make the area a hub for athletic and outdoor apparel companies. Columbia Sportswear’s global headquarters is in Beaverton, and Adidas has its North American headquarters in Portland.

Nike has deep roots in Oregon, where it was created in the 1960s by a former middle-distance runner and his college track coach. Together, Phil Knight and Bill Bowerman built the company into one of the globe’s most influential brands.

Knight also is the largest contributor to University of Oregon athletics, and his money is considered a key factor in vaulting the school’s football program into national prominence.

Kitzhaber has said Nike approached his staff about a month ago, saying the company was being courted by other states but would expand in Oregon if officials promised to keep in place the substantial tax benefits for companies that employ many people in Oregon but sell most of their goods elsewhere.

The legislation passed Friday would authorize the governor to give Nike that promise for up to 30 years.

A handful of people opposed to the legislation set up anti-Nike signs in front of the Capitol as lawmakers met inside.

“You cannot do this in such a rushed manner, and this is just not an emergency,” Susan Barrett of Portland told lawmakers.

 

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