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Oregon lawmakers pass major bill aimed at luring semiconductor manufacturers

A photo from November 2021 shows employees in cleanroom "bunny suits" working at Intel's D1X factory in Hillsboro, Ore.
Walden Kirsch/Intel Corporation
A photo from November 2021 shows employees in cleanroom "bunny suits" working at Intel's D1X factory in Hillsboro, Ore.

The House approved Senate Bill 4 with broad bipartisan support. Lawmakers will next consider tax breaks for semiconductor companies.

On Wednesday, top Oregon politiciansworked to sell a top Biden administration official on the state’s place of strength in the national semiconductor industry. Now lawmakers have approved a bill they hope will help inject a dose of steroids.

The House of Representatives on Thursday gave final approval to Senate Bill 4, Oregon’s first major attempt at leveraging more than $200 million in state spending into far more money from the federal government.

In a result that has felt preordained for weeks, the chamber — with strong bipartisan support — approved the bill on a 44-10 vote, sending it to Gov. Tina Kotek for her signature.

“We knew we would need to rise to the occasion and today we’re doing that,” said state Rep. Janelle Bynum, a Happy Valley Democrat who co-chaired the special committee that developed the proposal over eight weeks. “We’re delivering on that goal and seizing that opportunity.”

Made up of two major parts, SB 4 is designed to entice semiconductor companies to choose Oregon when deciding where to expand or set up shop.

One piece of the bill sets aside $210 million, the bulk of which will go toward grants and loans that semiconductor and advanced manufacturing companies can use to acquire and develop land for new facilities and carry out research.

Lawmakers expect companies vying for those payments will also apply for some of the $52 billion the federal government is offering up via the 2022 CHIPS and Science Act to bolster domestic semiconductor manufacturing. A spokeswoman for Kotek said on Thursday that the governor’s office has received one official statement of interest for the money, and expected more soon.

The second — and more controversial — piece grants Kotek unprecedented authority to shift the urban growth boundaries that restrict where development can occur around Oregon cities. Lawmakers included the provision because of worries that Oregon lacks enough large parcels of available industrial land to attract a major semiconductor facility, such as a new factory.

Under the bill, Kotek has the authority to shift growth boundaries through 2024, as long as she determines that doing so is the only way a semiconductor project can move forward. She can make that change for up to eight sites — six of no more than 500 acres and two of any size.

This land-use provision in SB 4 has generated criticism from farmers, conservation groups, and Republican lawmakers worried about granting Kotek power that could result in loss of valuable farmland. That discussion has particularly centered on protected farmlands surrounding Hillsboro, the epicenter of the state’s semiconductor industry.

“I cannot in good conscience give the governor super-siting authority to take lands and bring them into the urban growth boundary,” state Rep. Ed Diehl, R-Scio, said during a debate on Thursday. “That is not the Oregon way.”

Other lawmakers have taken issue with the decision to commit more than $200 million of Oregon’s limited budget at a time lawmakers don’t know precisely how much they’ll have to spend in the two-year budget that begins in July. Estimates on those figures won’t emerge until May.

One representative, Beaverton Democrat Farrah Chaichi, voted against the bill after pointing out that semiconductor factories consume vast amounts of power and clean water.

Despite those critiques, SB 4 received broad support from members of both parties, who have painted the bill as a once-in-a-generation chance to bolster the state’s economy for decades to come.

Oregon has been a notable player in the country’s semiconductor industry since the 1970s. Today, it represents nearly 15% of the national semiconductor workforce, playing a key role in developing the chips that are key to modern electronics.. Many of those jobs are centered around a major Intel campus in Hillsboro.

Despite that history, Oregon has recently lost out to other states in the competition to attract major new facilities. Ohio, Texas, Arizona and New York have all seen success in winning those projects — and all are expected to compete fiercely for federal CHIPS Act money.

With that in mind, members of Oregon’s congressional delegation invited U.S. Commerce Secretary Gina Raimondo to Oregon on Wednesday. Raimondo met with U.S. Sen Ron Wyden, U.S. Rep Suzanne Bonamici, Kotek, Bynum and other officials who argued Oregon should be a major recipient of federal funds.

“If I do say so myself, we rocked it,” Bynum said on Thursday. “She was impressed.”

With SB 4 now passed, lawmakers are turning their attention to tax subsidies that might further lure semiconductor activity in Oregon. One major focus is the revival of a research-and-development tax credit, after a former tax break lapsed in 2017.

On Wednesday evening, lawmakers on a Joint Semiconductor Committee got their first preview of what such a credit might look like. An initial proposal sketched out by state Sen. Mark Meek, D-Oregon City, and Rep. Nancy Nathanson, D-Eugene, would grant companies up to $10 million in tax breaks for new research and development spending within the state.

The proposal, Nathanson and Meek stressed, is more generous than similar credits offered by states also competing for semiconductor investment.

Copyright 2023 Oregon Public Broadcasting. To see more, visit Oregon Public Broadcasting.

Dirk VanderHart is JPR's Salem correspondent reporting from the Oregon State Capitol. His reporting is funded through a collaboration among public radio stations in Oregon and Washington that includes JPR.