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The Port of Coos Bay 2018-2019 budget reveals what appears to be a mini-boom of Capital Outlay projects. This includes $2.4 million for Channel Modification, $3 million for Rail Tunnel improvements, $9.8 million for Rail Bridges, $5.7 million for Rail Track, and $3 million for Rail Machinery & Equipment.

However, buried on page 13 line 23 of the budget you’ll see $1.75 million in capital outlay for an administration building. It appears according to page 13 line 10 that the money to pay for the building will be through a loan. Interestingly, page 1 lines 2 & 3 of the same budget shows the Port receives a corresponding amount of $1.75 million from current and prior year property taxes.

The building will house 17 current employees at a cost of $100,000 each. The cost of the building is envisioned to be new construction, but could be a remodel of an existing structure if one satisfactory to their needs can be found. It was further affirmed that the parts of the building space could be rented out to other firms lowering costs. The Port's current lease is approximately $72,000 per year.

The Port’s plans for new space could reduce property taxes other governmental bodies in the area receive. The Port is generally exempt from paying property taxes, and if they remodeled an existing building there would be a loss of current property tax revenue. If the Port became a landlord in the new facility the county assessor could view it as a commercial operation resulting in property taxes being imposed. That could reduce the impact of the entire property being reclassified exempt. A new building would deprive local tax districts of a new source of revenue.

The question is should a governmental agency expand into the private sector and compete with existing commercial landlords who now contribute to the Ports property tax receipts? Doing so would result in the Port being partially subsidized by their own competitor’s property tax dollars paid into the Port.

The Port could engage a local entrepreneur/developer to purchase the land/building and build to suit with the Port occupying the space as a long-term tenant. Property taxes would then be levied. Alternatively the Port could surrender its tax exempt status and instead of levying property taxes, start paying them.

Steve Scheer

Coos Bay

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