A state board approved $120 million in publicly issued bonds last week to help finance a $600 million water treatment project at Intel, and the state’s business development department plans to supplement that with $30 million from its own bonding authority.
That’s just half the $300 million the company requested, but state officials indicated they may request more in the future. They said they are trying to balance support for Oregon’s largest corporate employer against growing needs for bonding authority to help finance homebuilding to address the state’s housing crisis.
The tax-exempt bonds, known as industrial development bonds, cost Oregon little or nothing. It’s Intel, not the state, that is responsible for repaying them.
But Oregon has limited private bonding authority. So officials with Business Oregon, the state’s economic development department, said they limited last week’s request while they assess a potential request for bonds to finance housing construction.
Semiconductor production is a water-intensive process, as machines clear layers of material between each step in manufacturing. Intel uses nearly 3 billion gallons of water each year at its manufacturing campus in Washington County. Hillsboro officials have said the project could reduce the company’s water use by a third.
At last week’s committee meeting, Intel representatives told members of the state’s private bond committee that in addition to conserving water, the project will enable additional manufacturing capacity in Oregon.
The company said last month it plans to expand its Oregon manufacturing site, beginning in 2019. On Monday, The Oregonian/OregonLive reported Intel is talking with contractors and tradespeople about building a new, multibillion-dollar factory in Hillsboro.
“To continue innovating and manufacturing in Oregon, Intel is investing in adaptable waste management systems,” Intel said in a written statement Tuesday. “The support of Business Oregon and the Oregon Private Activity Bond Committee to finance this project will help further economic development, environmental sustainability, and support the state’s small businesses through Intel’s supply chain impacts.”
By using tax-exempt bonds, Intel would pay interest rates as much as 25 percent below standard corporate bonds. That could save the company millions of dollars given the scale of the project. (Intel receives Oregon tax breaks worth millions of dollars – $193 million last year alone – through other programs.)
Still, state officials must weigh competing priorities as they decide how much to allocate for various projects.
In addition to the $120 million for Intel, the Private Activity Bond Committee voted last week to allocate nearly $115 million for housing, including $37.5 million for a first-time homebuyer program.
The committee also approved as much as $15 million for a renewable energy program at the Port of Morrow.
The allocations still need final approval from Oregon Gov. Kate Brown, the state treasurer’s office and Business Oregon staff.
-- Mike Rogoway | twitter: @rogoway | 503-294-7699