It was only a few hours after Oregon voters approved two controversial tax measures last week when Vancouver attorney James Howsley got an angry email from a client across the Columbia River.
It turned out to be the first of many. In the next 48 hours, Howsley racked up more than a dozen messages from Oregon business owners expressing their frustration over the passage of Measures 66 and 67 and their interest in moving operations to income tax-free Washington state.
Howsley, a partner in the Vancouver office of Portland-based law firm Miller Nash LLP, wasn't alone in fielding calls from owners of mostly small-to-midsize businesses in the Beaver State. Local commercial real estate brokers, the Greater Vancouver Chamber of Commerce and the city of Vancouver all reported an increase in inquiries by Oregon firms looking to relocate to the region since the Jan. 26 vote.
According to Vancouver Mayor Tim Leavitt, some of those calls came even before polls closed on the ballot measures in Oregon, which upheld state legislation passed last summer raising taxes on individuals earning over $125,000, families making over $250,000 and corporations.
And while some in Vancouver's business community characterized the spike in interest in the region as a "knee-jerk" response to the tax increases, others described a more profound shift in tone among some Oregon business owners – many of whom already do business in Washington.
"I'm not sure if this is the tipping point," Howsley said. "This level of anger has happened before and then went away. But this is different, more vitriolic."
Whether the Southwest Washington economy sees any impact from this anger depends largely on business owners like Mike McMurray, owner and president of MEI Productions, Inc., a commercial advertising company located in Bend, Ore.
McMurray contacted GVCC staff members last week to inquire about incorporation and other related costs of doing business in Washington state. "I don't know a single person in Oregon who hasn't been affected by this vote," he said. "We are all weighing our options."
But there's still a significant barrier to relocation for business owners like McMurray, operating in a still-sputtering regional economy – the troubled commercial real estate sector on both sides of the Columbia River.
"To pull up and move is a big proposition," he said. "Who am I going to sell to?"
According to Eric Fuller, CCIM, president of Vancouver-based Eric Fuller and Associates, Inc., many of the small-to-midsize Oregon business owners approaching his firm about available properties since the ballot measures' approval reported a similar quandary.
"The majority would have to liquidate something to acquire something," Fuller said. "Given the condition of the Portland area market, with the lack of debt available and the lack of capital … there is a fatal flaw, an obstacle for people to achieve their goal."
One option for Oregon businesses looking to relocate, Fuller said, is a loan from the U.S. Small Business Administration – though with interest rates expected to creep up, time may be of the essence.
But financial considerations may be only part of some Oregon business owners' equation. "When you ask them why they want to come here, it's more of a sense of frustration with the situation than it is an economic assessment," Fuller said.
Existing business owners could be just the beginning of the potential impact stemming from last week's vote to increase taxes on high-income earners. GVCC chairman Don Russo says he expects Oregon retirees and those business owners looking to sell their companies to flock to Clark County, taking advantage of both its lack of income tax and proximity to the Portland area.
"This tax increase may well push them off the fence into Vancouver," Russo said.
However, Fuller sees a period of "persistent demand," rather than a spike in the number of leases signed by Oregon-based businesses in the weeks and months ahead.
"There is going to a lot of kicking of the tires, with people contacting the CREDC [Columbia River Economic Development Council], contacting me," Leavitt said this week. "Whether or not it pans out, we'll see."
