Downtown Business Incentive Credit Program Information

Overview of the Downtown Business Incentive Credit Program

Portland City Council adopted the Downtown Business Incentive (DBI) credit program on September 14, 2023 (Ordinance 191451). Council passed Ordinance 191644 on February 28,2024 to expand the eligible boundaries for the DBI credit program to include the entirety of Portland's central city.

The Downtown Business Incentive credit program is a $25 million temporary nonrefundable tax credit designed to incentivize commercial lease signings and lease renewals that will contribute significantly to the recovery and revitalization of Portland’s central city. This program will retain and support future investments from a variety of central city tenants that drive job creation, pay taxes, and generate economic activity throughout the City’s core.

An analysis conducted by EcoNorthwest demonstrated that four sub-districts were hardest hit in terms of reduced employment and foot traffic: Lower Albina, Lloyd, Downtown, and Old Town/Chinatown.

These are the sub-districts eligible for this credit program: 

• Central Eastside
• Downtown
• Goose Hollow
• Lloyd
• Lower Albina
• Old Town/Chinatown
• Pearl
• South Waterfront
• University/South Downtown
• West End

Credit Requirements

Any business that meets the following criteria may participate in the DBI credit program: 

1. Be registered with the City of Portland's Revenue Division and be in compliance for the prior periods.
2. Either: 
   • Enter into a new lease, or extend a current lease, during the 2023 or 2024 calendar year for building space within the eligible sub-district boundaries for a period of four years or more; or
   • Own and occupy that building space within the eligible sub-district boundaries. 
3. Maintain 15 employees or more working at least half their time in the leased or owned building space within the eligible sub-district boundaries over the four-year period.

Generally, the credit will be allowed for leases or lease extensions that begin in the 2023 or 2024 calendar year. A new lease or lease extension that starts in calendar year 2025 or 2026 may qualify for a tax year 2024 credit if the lease is signed before December 31, 2024.

Credit Limitation

The DBI credit program allows a one-time, nonrefundable tax credit, claimable over four years, starting in either tax year 2023 or 2024 to any business that meets the credit requirements.  

The maximum credit available to each eligible business is $250,000, limited to the lesser of:

• 1% of City of Portland “income subject to tax” as shown on the business tax return in the year of origination; or 
• $30 per square footage of building space covered in the lease or building space used by a building owner’s staff in the eligible sub-district. 

The Revenue Division may reduce the eligible credit on a pro rata basis once the program cap of $25 million is reached. The Revenue Division will notify any business whose credit is reduced under these circumstances. 

Claiming the Credit on the Return

Applying for the Credit

A qualifying business must apply for the credit. The due date for submitting the application for tax year 2023 was extended to March 31, 2024. The due date for submitting the application for tax year 2024 will be January 31, 2025.

If the business is leasing new space, a lease entered into in 2023 may be used to calculate the credit on either the 2023 or 2024 business tax return. The year of origination will be 2023 if calculated on the 2023 business tax return or 2024 if calculated on the 2024 business tax return.  

If the business is extending their existing lease, the lease must be extended from the end date of their current lease that expires in 2023 or 2024. A lease extended in 2023 may be used to calculate the credit on either the 2023 or 2024 business tax return. The year of origination will be 2023 if calculated on the 2023 business tax return or 2024 if calculated on the 2024 business tax return.

A new lease or lease extension that starts in calendar year 2025 or 2026 may qualify for a tax year 2024 credit if the lease is signed before December 31, 2024.

Building space owned during 2023 can also be used to calculate the credit on either the 2023 or 2024 business tax return.

Calculating the Credit

A business that is approved for the DBI credit will calculate their total credit in the credit approval year (“year of origination”). This credit will be divided into four equal portions and deducted on the business tax return in the year of origination and over the following three years business tax returns. 

Claiming the Credit

The portion of the credit claimed, in each of the four years, cannot exceed the City of Portland Business License Tax on the business tax return for that year. If the portion of the credit allowed for one of the years exceeds the City of Portland Business License Tax on the business tax return for that year, it cannot be carried forward or used on the business tax return for another year.

Employee Attestation

The business is required to provide an attestation that they had 15 or more employees working at least half their time in the leased office space in the sub-district for each year they claim the credit. 

Credit Repayment

If the business breaks the lease prior to the end of the lease period, sells the building before the four-year period of the credit lapses, or fails to meet the employee requirements during the four-year period of the credit, the entire credit previously claimed must be repaid with statutory interest. No penalty will apply to the tax due related to the lost credit.

Key Dates and Deadlines

A business is only eligible to apply for one credit (for either 2023 or 2024). Only one application will be required for the credit.

Address Lookup Tool and Sub-District Boundaries

Downtown Business Incentive Credit Program Sub-district Lookup Tool

This interactive map is to help identify most addresses in the sub-districts, but the boundaries outlined for the sub-districts in Portland City Code override any conflicting information the map may display. If the address is located on the edge of the sub-district's boundaries, please refer to Exhibit D to determine location eligibility. Properties within or abutting Central City boundary are eligible for the DBI credit program.

Downtown Business Incentive Credit Administrative Rules and Policies

BTAR 875.23-1A - Downtown Business Incentive Credit, Generally (LIC-5.10)

BTAR 875.23-2 - Changes to the Amount or the Loss of the Downtown Business Incentive Credit (LIC-5.11)

Tax Administration Policy - Downtown Business Incentive Credit Preapproval

Tax Administration Policy - Downtown Business Incentive Credit Definitions