Oregon county approves tax break for International Paper mill

Thursday, Jul 23, 2015

The Lane County Board of Commissioners approved a five-year tax break totaling $8.56 million for the International Paper linerboard mill in Springfield.

The company requested the break as it considers a $101.6 million upgrade to its 66-year-old mill, mainly to replace two “functionally obsolete” pieces of heavy equipment.

Under the deal, the company isn’t promising to add any new jobs to its Springfield workforce of around 280. The agreement allows the company to reduce its workforce by 20 percent at any point during the five years, though company officials say they don’t plan to do so.

The commissioners said Tuesday they supported the tax break because of the size of International Paper’s investment, because the break won’t reduce the amount of property taxes the company currently pays, and because the company pays employees, on average, above the county’s median wage.

“The concern that I have is for ongoing employment” at the plant, Commissioner Pat Farr said. “By investing this amount, it’s insurance that the mill will not close down.”

Added Commissioner Sid Leiken: “It’s impressive that IP is willing to make this kind of investment” in Springfield.

Commissioner Faye Stewart said he toured the plant a few years ago and was impressed with how highly automated it already is. He said he believed it was “unlikely” that International Plant would be unable to keep it running with fewer employees than it now has.

“It’s absolutely incredible what they’re doing there with the number of employees they have,” he said.

Only one member of the public showed up to testify. Sandi Mann said she was concerned about the plant’s impact on air and water quality in the area. The plant operates under government permits to emit air pollution and to discharge process water into the McKenzie River. Before approving the tax break, local elected officials should require a new study of those impacts, she said.

“Nobody seems to care” about the hefty tax break, Mann added, referring to the lack of public comment on the proposal.

Commissioners downplayed Mann’s concerns about air and water quality.

Stewart said the plant, under its emissions permits, has to meet “some very stringent requirements” to prevent pollution.

Under state law, property tax breaks awarded in an enterprise zone typically are reserved for projects that increase jobs by at least 10 percent. But the zone’s sponsors can waive that requirement if an eligible company spends more than $25 million on a project.

International Paper is eligible for an extended five-year deal because it agreed to additional terms, including that all new hires during that time would receive, on average, total compensation of more than 150 percent of Lane County’s average annual wage of $38,353 — or $58,530.

The company’s current average employee annual compensation, a figure that includes wages and most benefits, is $95,882.

The company, headquartered in Tennessee, will decide in coming weeks which of its mills will receive capital funding. If selected, construction on the Springfield linerboard mill would begin in September and end in 2016.

Other News