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Oregon semiconductor bill could temporarily change state’s approach to land use

Courtesy of Intel Corporation
During an event on April 11, 2022, Intel announced a new name for the nearly 500-acre campus that is home to its D1X development factory: Gordon Moore Park at Ronler Acres. The new name for the Hillsboro, Oregon, campus recognizes the site’s unique contributions to driving Moore’s Law, Intel co-founder Gordon Moore’s 1965 prediction that has guided innovation in the semiconductor industry for more than 50 years.

Initial legislation aimed at boosting the semiconductor industry would also allow the governor to change urban growth boundaries.

A bill in the Oregon Legislature would give Gov. Tina Kotek the remarkable — albeit temporary — power to redraw urban growth boundaries through executive order, bypassing the state’s long-established land use system.

The goal is to pull more rural land, including farmland, inside urban growth boundaries, and designate it for industrial use by chipmakers, advanced manufacturers and their suppliers.

The land use provision may well prove the thorniest part of emerging legislation designed to bolster Oregon’s semiconductor industry. The state is racing to attract and support chipmakers and their suppliers, companies that will soon vie for $52 billion in incentives from the federal CHIPS Act.

Senate Bill 4 would also put $200 million into a semiconductor and advanced manufacturing fund to be run by Business Oregon, the state’s economic development agency. The fund would provide loans and grants to companies seeking CHIPS Act money and could be used for research and development, buying or developing land, or partnering with colleges and universities for workforce development.

Semiconductors are Oregon’s largest export. And, thanks largely to Intel, the state has batted above its weight in chip jobs, employing about 15% of the nation’s semiconductor workforce.

A recent economic analysis determined that a new $9 billion semiconductor campus would directly employ 8,500 people at an average compensation of $160,000. The analysis, by ECONorthwest and the Oregon Business Council, found such an expansion could boost net state revenue by $2.8 billion over 20 years.

But lawmakers and a semiconductor task force have warned that Oregon risks losing semiconductor investments to states with bigger incentives and vast tracts of readily available land. Intel, for example, bypassed Oregon to launch the development of its new megafabs or chip factories, on hundreds of acres in Ohio and Arizona.

The task force, comprised of economic development officials and business and elected leaders, urged lawmakers to change state law to allow the expedited absorption of rural reserve lands into the urban growth boundaries of Hillsboro and North Plains, with the goal of developing two large industrial sites.

“It will require extraordinary action out of the legislature and/or the governor. It’s probably a combination of both,” task force member and Port of Portland official Keith Leavitt told lawmakers at an earlier hearing.

The bill appears to be the first pass at that extraordinary action.

It would allow the governor to alter urban growth boundaries by executive order through June 2024.

That unilateral power would be a marked if temporary, deviation from the land use system state leaders created and have defended for years. Expanding or changing urban growth boundaries typically involves a painstaking process involving multiple levels of government. The kind of legislative intervention that expanded Hillsboro’s urban growth boundary in the “Grand Bargain” of 2014 is considered extraordinary.

Land use changes can also get bogged down in extensive appeals, however. Semiconductor boosters say that robs the system of the nimbleness needed to attract major investments. Some farmers and conservationists have already protested what they see as attempts to erode protection for farmland.

Under the bill, any rural reserves the governor brings within an urban growth boundary would have to be adjacent to it, and not extend three miles beyond it. The governor would have to hold a public hearing about the proposed change and accept public comments. And any land not developed for its intended purpose within a set time would revert to its prior status.

Copyright 2023 Oregon Public Broadcasting

Kate Davidson is OPB’s business and economics reporter. Before moving to Oregon, she was a regular contributor to "Marketplace", a reporter at Michigan Radio focused on economic change in the industrial Midwest and a producer at NPR.