Semiconductor bill that would give Gov. Tina Kotek land-use power moves ahead

Oregon lawmakers are on the verge of granting unprecedented power to Gov. Tina Kotek as the state scrambles to make a competitive case for major federal funding that could inject new life into its vaunted semiconductor sector.

That proposal cleared its first hurdle on Wednesday night, but uncertainty remained about whether the extraordinary powers go far enough to ensure Oregon will have thousands of acres of industrial land primed to attract new facilities.

At the same time, conservation groups and concerned citizens say plenty of suitable industrial plots already exist. They are warning lawmakers against salting away prime farm lands — currently preserved under state land-use laws — for investment that may not ever arrive.

The debate is wrapped up in Senate Bill 4, the Legislature’s first big swing this year at helping Oregon compete for some of the $52.7 billion set out in the federal CHIPS and Science Act to boost the country’s semiconductor industry.

Following eight weeks of hearings to build a proposal, the bill passed out of the Legislature’s Joint Semiconductor Committee on Wednesday with broad bipartisan support. It contains two major provisions.

The first dedicates $190 million from the state’s general fund to prepping sites for potential new facilities — even a massive new “fab” plant that would manufacture the semiconductors that are ubiquitous in the world’s electronics. People pursuing projects funded by this “Oregon CHIPS Fund” would be required to prove state money is being used to create a net benefit in state revenues or full-time jobs.

The bill also includes $10 million to help local governments prepare industrial sites for major facilities, and another $10 million to spur tech innovations in state universities.

The second, and more controversial, provision would grant Kotek the unprecedented authority to unilaterally bring land within the “urban growth boundaries,” known in government-parlance as UGBs, that envelop Oregon cities, separating protected rural land from areas that can be developed.

UGB changes can be lengthy affairs, filled with opportunities for appeal. Legislators are hoping to streamline the process by giving Kotek the ability to rejigger UGB lines if she concludes more land must be made available to take advantage of a major semiconductor or advanced manufacturing project that can vie for federal funding.

Once she makes that determination, SB 4 says Kotek must hold a public meeting and accept testimony for 20 days. Any appeal to a UGB change would go directly to the state Supreme Court, which would need to hear the matter on a speeded up time frame.

Under the bill, Kotek has authority to shift growth boundaries through 2024. She can do so for up to eight sites, six of no more than 500 acres and two of any size.

Worries about Oregon’s tech future

With activity centered around Intel campuses in Hillsboro and Aloha, Oregon has one of the world’s largest clusters of semiconductor manufacturing. The state is home to roughly 15% of the nation’s semiconductor workforce.

But Oregon leaders have sat chagrined as Intel and other major semiconductor producers elected recently to build major facilities in states like Ohio, Arizona and Texas. A task force containing experts and some of the state’s most powerful politicians concluded that Oregon contains too few large plots of land ready to house major facilities like those contemplated in the federal CHIPS Act.

Business interests have urged lawmakers to do everything they can to get potential land eligible for development within two years. The U.S. Department of Commerce will begin accepting applications for the first wave of CHIPS Act funding at the end of the month. The governor’s office said earlier this week it has been in discussion with between eight and 10 companies that plan to vie for the funding.

One influential business group said Wednesday that SB 4 does not go far enough. In a letter to lawmakers, Duncan Wyse, president of the Oregon Business Council, argued that the proposed law included opportunities for delay and appeal that were likely to push land acquisition past the two-year target.

“This timeline is for good reason — the entirety of the CHIPS Act has a time-limited, five-year window, and chip firms are making investment decisions now,” Wyse wrote. “Unfortunately, we do not believe SB4 will accomplish this goal in its current form.”

Wyse’s organization retained a land use attorney who spoke with the Semiconductor Committee earlier this week about changes business interests would like to see to ensure the state could avoid appeals to any decisions Kotek makes. Those suggested changes were not ultimately included in SB 4.

That left some lawmakers feeling dissatisfied as the bill moved on Wednesday evening. State Sen. Janeen Sollman, the committee’s co-chair, said she was “personally disappointed and disheartened by where we landed.”

A Hillsboro Democrat, Sollman has repeatedly introduced bills that would free up farm land near her city for future growth. That same land has long been caught in a tug-of-war between agricultural use and urban expansion. It was specifically called out by the Semiconductor Task Force as a place lawmakers and Kotek should look to expand industrial land.

“We need to listen to the semiconductor task force,” Sollman said. “I’m really hoping that we can work with the governor’s office to truly respect our farmland … but really be smart about where that growth could be to benefit the area.”

At the same time, conservation groups have been raising an alarm about the powers SB 4 grants Kotek — and are particularly concerned about the much-discussed land near Hillsboro.

Groups like 1,000 Friends of Oregon and Save Helvetia are urging lawmakers to more closely examine industrial land that is currently available — including hundreds of acres being touted by the City of Wilsonville as ideal for new semiconductor facilities. Wilsonville has scheduled a tour of that land for elected officials and media members this weekend.

Some farmers adjacent to potential expansion near Hillsboro argue the state risks doing away with prime soils for projects that might be illusory.

“There is a win-win here that is pretty straightforward, which is put [new projects] on one of the many many industrial sites that have been offered,” said Aaron Nichols, owner of Stoneboat Farm, which sits north of property currently reserved for rural uses that could be brought within Hillsboro’s urban growth boundary.

Nichols created an online petition urging lawmakers to eliminate provisions of SB 4 that would grant Kotek ability to skirt normal land-use laws. It received more than 2,400 virtual signatures.

At least one lawmaker shared the concern. State Rep. Bobby Levy, R-Echo, voted against SB 4 in committee after saying she was worried about implications for farm land. “It’s just important to me that we understand how important agriculture is to our economy and, if we look at the land that’s being looked at, be cognizant of what we might be hindering,” Levy said.

The bulk of lawmakers on the committee, though, signaled hope that SB 4 was a first, meaningful step in what they consider a once-in-a-lifetime opportunity to jolt Oregon’s semiconductor industry.

“Everybody on this committee wants the same thing, which is to make sure that we have continued economic prosperity for Oregon for many, many decades,” state Senate Majority Leader Kate Lieber, D- Portland. “What is exciting about this bill is that I think that is going to be a start.”

SB 4 now heads to the state’s budget committee, which is expected to swiftly approve the $210 million contemplated by the bill next week. Assuming that happens, the bill is likely to get a floor vote in the Senate before the end of March.

Meanwhile, lawmakers are far from finished discussing semiconductors. The Legislature is expected to take up new and expanded tax breaks for things like research and development activity or major construction projects, and to put tens of millions of dollars toward helping make industrial sites shovel ready.