State & Local Tax

City of Portland Providing New Local Tax Incentive to Encourage Employers to Bring Employees Back to the Office

September 22, 2023

City of Portland Providing New Local Tax Incentive to Encourage Employers to Bring Employees Back to the Office

On September 14th, the Portland City Council unanimously passed a Downtown Business Incentive (DBI) Credit designed to encourage businesses to sign new or extended leases as well as bring back employees to revitalize specific business districts in Portland.

The program (Ordinance 191451) established a budget of $25 million to provide tax credits on the Portland Business Income Tax return for local businesses that renew or enter into new leases in specific areas of Portland in either 2023 or 2024.   The DBI targets businesses in four sub-districts:  Lower Albina, Lloyd, Downtown, and Old Town/Chinatown.

The following are required in order to qualify for the credit.

  • Enter into a new lease or renew a lease during 2023 or 2024 calendar years for a lease period of four years or more or own and occupy building space within the eligible sub-district boundaries; and
  • Maintain at least 15 employees who work at least half their time in the leased/owned building over the entire four-year period.

The maximum credit allowed per taxpayer is $250,000 and the credit will be taken equally over a four-year period beginning in the year of origin.  The year of origin will be either 2023 or 2024, depending on the year the lease is renewed.  For a building that is owned by the taxpayer, the year of origin can be either 2023 or 2024.

The credit is the lesser of the following in the year of origin:

  • 1% of City of Portland “income subject to tax”
  • $30 per square foot of building space covered in the lease.

The city has the right to impose additional limitations on the amount of each taxpayer’s credit if the total amount of all credits applied for exceeds the total $25 million allocated in the DBI credit pool.

Taxpayers will be required to complete an annual attestation during the four-year credit period.  If any of the requirements are not met during the credit period, the taxpayer must repay the credit with interest.

The application process will be released along with specific administrative rules in October.  As the City of Portland issues additional guidance, we will provide further updates.

“Our State and Local Tax Team is available to assist you with questions related to these updated rules.  Please contact our professionals for more information at SALT@GMCO.COM