Semiconductor Task Force Proposes Massive Land Expansions In Hillsboro

In our continuing coverage of the historic actions being taken by our State, we bring you this week’s update.  On Wednesday evening (2-22-23) the Joint Committee On Semiconductors presented the 2nd draft of legislation known as LC 4320, and more commonly called Senate Bill 4.  This written document does many things to immediately get Oregon back in the game as far as being an attractive place for semiconductor firms to build, expand, and establish themselves.  That statement is perhaps ridiculous because Oregon is a fantastic place to do business. We currently have a situation where 15% of the entire Semiconductor market in the US is right here, primarily in Hillsboro but, all we have done as a state, as a Region, and as taxpayers have not been enough.

The Committee has held court for weeks now as dozens and dozens of experts and economic leaders have come forth to plead for “Bold & Brave” steps to be taken to, in essence, cast aside Oregon’s careful land use systems and to provide hundreds of Millions in new tax giveaways. All heads in the room seem focused on a rushed decision and one that will leave a mark on the Land Use and Economic systems in Oregon forever.  It is a big gamble that could have disastrous or wonderful results.

This week’s hearing showcased LC 4320, a 14 Page Bill For An Act; known as Senate Bill 4- What it will do is:

Directs Oregon Business Development Department to develop grant and
loan program to support businesses applying for financial assistance under
Creating Helpful Incentives to Produce Semiconductors for America Act of
2022 (P.L. 117-167). Provides that program be administered jointly by department and Governor.

Allows Governor to designate certain lands to be brought within urban
growth boundaries for specified industrial uses. Allows local governments
to rezone lands for such uses by ordinance.

Declares emergency, effective on passage.

Let me break this down in terms of the most impactful aspects of it:

• The Oregon Business Development Department will write a program by which grants and loans from the Federal Government CHIPS ACT billions can be accessed.
• That “program” will be administered by the Governor once written.  She will be allowed to hand off up to $25,000,000 to anyone applying and qualified.
  • The Money can be used for land purchases.
  • The Money can be used for education and workforce development.
  • The Money can be used for Research and Development.
• The Governor can make allocations of over $25,000,000 with Legislative Approval.
• Program Loans will be for five years and have a 0% interest rate; many will likely be forgivable.
• Recipients of grants and loans will have a targeted employment number they must attempt to create after using the funds.
• The Governors’ final decisions are NOT subject to appeal. This appears to be unprecedented.
• $200,000,000 will be taken from the Oregon Rainy day Fund to get the money flowing, and millions or billions will be sought from the Federal Government to repay that amount and to fund applications.

The Bill contains the most controversial tool ever contemplated in Oregon land use history.  Essentially, the lands identified for expansion by the Semiconductor Land task force, headed up by Hillsboro Mayor Steve Callaway, can be brought entirely into the Urban Growth Boundary with little to no fanfare.  This will upend and disrupt the careful procedures that Oregon has held since the 1980s, effectively leapfrogging METRO, the LCDC, and the Department of Land Conservation and Development.  For most Oregonians, this will not mean a thing.  But here in Hillsboro, which has been identified as the top place in the State for such an expansion to happen, it means more massive changes.

Here is what Section 10 of the Bill says:

• (1) On or before June 30, 2024, the Governor may, by executive order, bring within an existing urban growth boundary designated lands for the purposes of providing lands available for industrial uses that relate to the semiconductor industry, advanced manufacturing, or the supply chain for semiconductors or advanced
  manufacturing.
• (2) Lands designated by an executive order under this section must
  be within a site that consists of one or more tracts of land that are:
  (a) Contiguous to the city’s existing urban growth boundary; and
  (b) Entirely within three miles of the city’s existing urban growth
  boundary.
  (3) In designating sites under this section, the Governor shall give
  consideration to the Cities of Albany, Boardman, Corvallis, Gresham,
  Happy Valley, Hillsboro, McMinnville, Medford, Newport, North
  Plains, Redmond, Scappoose, Sherwood, The Dalles, Tualatin and
  Wilsonville.
  (4) Before issuing an executive order under this section, the Governor shall:
  (a) Conduct one public meeting in coordination with the city
  nearest to the site and each county in which the site is located, to be
  held in that city for the purpose of discussing bringing within the urban growth boundary the lands or potential lands;
  (b) Accept public comments for a period of no fewer than 20 days;
  following the public meeting in paragraph (a) of this subsection; and
  (c) Approve a plan by the owners of the land and each local government with jurisdiction over the land to rezone the land under subsection (7) of this section and to develop the land, within 18 months
  after the date on which the executive order is issued for industrial
  uses under subsection (1) of this section.
  (5) The Governor may designate up to a maximum of:
  (a) Two sites, if the largest site is greater than 500 acres;
  (b) Four sites, if the largest site is greater than 100 acres but does
  not exceed 500 acres; or
  (c) Six sites, if no site is greater than 100 acres

You can Read LC 4320 in its entirety right here: LC 4320 Draft Bill

What does this all mean?  

Ok, so here it is.  Billions of dollars are being printed in Washington D.C. and given out to projects, companies, and States/Cities with land-ready and worthy players and projects.  We do not have land ready, but we have all the talent in the world and many great players. So, this is happening.  The State could face bankruptcy-like budget shortfalls without the revenues from Intel and the like.   To land another FAB or two like Intel’s Ronler Acres site, regardless of who comes, will mean Billions in revenues.  Statements were made at the hearing that a $100,000,000 grant or loan could turn into $2.8 Billion in tax revenue.  With numbers like that, it is easy to see that almost everyone at these meetings seems giddy.

Passing this bill is no guarantee that even one dollar will be generated.  But passing this bill will mean that we can never go back and that lands will be forever altered, and for Oregonians around the State, this will mean that we have to wrestle with the morality and the rightness of all of this.  Give out billions…alter farmland…create jobs… increase housing costs…and repeat.  It should make a person at least take pause.

Several key pieces of testimony were provided as part of last week’s hearing.  Some we keyed on are inserted below for your review:

Oregon Semiconductor Task Force – a Position for all the pluses

Oregon Economic Development Association – A plea for a complete package of Incentives

Save Helveita – This is a must-read as it indicates legal and ethical problems with LC 4320 and the fact that Washington County & Hillsboro may be incapable of handling this process fairly.

1000 Friends This land use powerhouse group points out how many cities are begging for the State to help them develop land already within their Urban Growth Boundaries.  They make a great point; this all seems to be more about growing the land base than using what we have.  Hillsboro has 1,000 acres of land inside the Urban Growth Boundary that remains undeveloped and is not mentioned.

Mayor Steve Callaway- Letter On Behalf Of Hillsboro– Mayor Callaway is a veteran of this land expansion stuff.  No Mayor has been involved with as much land expansion as he has as Councilor and Mayor of Hillsboro over the past 15 years.  Steve objects in this letter to the process and seems to be pushing for:

• Land expansions before projects or players are funded.  He states that land and sites must be ready now, not after identifying a user.
• He says the City wants Section 11 of the Bill, which requires that sites identified but not used for Semiconductors be removed and rezoned back to their former use.  This reversion would wipe out the motivations or reasons to develop infrastructure or site utilities and roads etc., to a property if somehow the land would revert back to farmland. He is totally right about this very poorly worded section of the Bill.
• Callaway writes that the City of Hillsboro/He is uncomfortable with Section 10(4) of the Bill, and he believes these sections will deter large companies from coming into Oregon:

  • “Confidentiality – Most large recruitment projects will be under non-disclosure agreements with high sensitivity around confidentiality of the company, site, project scope, and beyond, toprotect their own business interests and competitive advantages. The projects are likely to bedeterred due to additional components of public process as proposed in Section 10(4) as part ofthe site selection process.”

This is concerning as 10 (4) calls for one public meeting and one 20-day period for comment.  Here is Section 10 (4) of LC 4320.

So it is concerning that our City, and our Mayor, seem to be suggesting that we should not have a public meeting and that we should not accept public input.  However, this is not unlike procedures that have played out in the past, and it is true that certain business deals done out in the public eye, with public scrutiny, are not palatable to all sides.  This is especially true with land use consultants, large developers who hold options now in North Hillsboro, and large corporations who prefer to deal quietly for the reasons the Mayor gives.  But here lies the issue- without a public process for these publicly funded land deals and economic packages, there is too much room for bad things to happen.  That has been a problem in the past in such dealings in many cases across the State and Country.

To use the Mayor’s point from the State of the City this past month, there are the things that rules and regulations say we must do using the authority of the City, and then there are cases where we must use Moral Authority.  This is an issue where morally, we have to have an open process.

Here is the rest of Mayor Callaway’s letter to the committee:

In his final point, he is speaking to the fact that during the last big expansion of the growth boundary, the Grand Bargain, as it was called, Hillsboro had land all along the Western and Northern edge of town designated as Rural Reserve.  None of the plans specified by the State will work if Hillsboro cannot remove that 50-year restriction.

Final Point

I have written that this land use change is coming, and I believe it is.  It is historic and will be done quickly and with some fierce velocity.  We can expect many landowners who are deeply invested in this process to win and get in.  For many, that will mean 10s of Millions of dollars in new equity, all because a line on a map moved.

For others hoping to be left alone and live the pastoral and quiet country life on the East Tualatin Plains- this is the beginning of the end.  A time that rightfully should be marked by melancholy and sadness.  What will be lost will not be replaced here in this valley.

In such a vast area with so many conflicting sides, there will be those who will be overjoyed and those who will be outraged and try to stay on their lands- fighting the good fight, as they say.  And it may be decades before any of this fully resolves itself.

Lastly, we must face the dichotomy of the two alternate realities that are about to play out.  In one scenario, we see the jobs, the billions made, the shiny new buildings whirring and pumping, and the vast outpouring of wealth that will follow.  In another scenario, we find the grim reality that we will do all of this, prepare the land and opportunities, and that these semiconductor firms will not come.  The farmland created by the great Missoula Floods will never return, the valley oaks where the Atfalati people once thrived will be gone, and the lives displaced by the zeal of Salem will be destroyed.

Progress- looking back, I wonder if that is really what we can call all of this growth here in Hillsboro.  Times were when the air was cleaner, the people were friendlier, we did not know what the word “homeless” meant, and housing was affordable.

One thing I know, and we all need to know, is that we are at the jumping-off point, and something very different is about to happen.