The payments: A $1.2 million up-front payment, plus $800,000 a year afterward, to be split among The city of The Dalles, Wasco County and Northern Wasco County School District No. 21. Google's last deal provided a $280,000 initial payment and a $250,000 annual payment. (That agreement remains in force, covering Google's existing two data centers.)
The savings: Exempts the building and the equipment in Google's data center from the property taxes the company would otherwise pay. The amount of the savings depends on how much Google invests; Wasco County estimates its last deal has saved the company more than $100 million on an investment of at least $700 million.
Requirements: Google must invest at least $200 million and create 10 new jobs paying an annual average of more than $50,000 (150 percent of Wasco County's average wage.)
Where the money goes: The proposed agreement directs payments to a fire district, schools, parks, outstanding loan payments and the Columbia Gorge Discovery Center.
Google, prepping a major new data center on its property in The Dalles, has a deal with the city and Wasco County to extend property tax exemptions at its riverfront site there.
The new "enterprise zone" agreement -- announced late Thursday -- opens the door to a huge expansion of Google's operations in The Dalles, attracting at least $200 million in new investment -- and likely much more.
It substantially increases Google's payments to the city and county over the company's last deal, now nearly a decade old. It also locks in property tax breaks that could save Google a billion dollars or more over the 15-year life of the deal.
Though it guarantees just 10 new jobs, the deal provides a $1.2 million up-front payment to the city and county, and $800,000 annually after that.
The Dalles City Council will vote on the new deal Monday night, and the county commission takes it up Tuesday morning.
"We're all very pleased with where we've ended up. We feel that if Google does decide to go ahead with this project that we've put something together that really benefits both them and the local community," said Dalles city manager Nolan Young.
"There's some that feel we're giving up a lot of taxes," Young said, but he said tax breaks are necessary to beat out other communities competing for Google's business.
"They look for places where the playing field is leveled a little more," he said. "Without this agreement they probably would not be expanding in this community."
Oregon is uniquely attractive to data centers because of those tax breaks, and because the state doesn't have a sales tax to levy on data centers' expensive computers.
Since Google arrived in The Dalles with a pair of data centers seven years ago, Facebook and Amazon have also opened major Oregon data centers. Apple is building a big facility near Facebook's data center in Prineville, and data hosting company Rackspace tentatively plans a project at the Port of Morrow.
Google disclosed in April that it was contemplating expanding the data center at its 37-acre property in The Dalles, where Google already operates a pair of data centers.
Preliminary plans submitted to the city suggested that Google's new facility would be 164,000 square feet, much larger than the two, 94,000-square-foot data centers there now.
It would also be much taller - a two-story building that is 85 feet high. Its first buildings were a single story each, 55 feet tall.
In a statement Thursday, a Google spokeswoman said "We're proud to be a part of The Dalles community and we look forward to hearing the outcome of the upcoming vote."
She did not say when Google will decide on whether, or when, to expand. But Young, The Dalles city manager, said "We expect to hear something in the very near future."
State records show that Google has already invested at least $700 million in The Dalles. Its 37-megawatt facility draws as much power as 27,000 homes.
Google buys power from the Northern Wasco County PUD at about 4 cents per kilowatt hour, about 40 percent less than what comparable customers pay in the Portland area.
Despite their scale, data centers aren't major employers. The computers do most of the work, and much of their management can be done remotely. A few dozen technicians on site manage the hardware, swapping out hard drives when they fail and upgrading servers. Google has 150 employees and contractors in The Dalles.
Existing property tax breaks saved the company at least $100 million in the company's first seven years in The Dalles, according to Wasco County estimates.
While Google isn't a major employer or taxpayer, city franchise fees generated by its electricity consumption do have a major impact on public coffers in The Dalles. In 2011, an Oregonian analysis found those fees provided the city about $340,000 annually, more than 7 percent of its general fund revenue.
Even so, the tax breaks seem out of scale to Jody Wiser of the watchdog group Tax Fairness Oregon.
"Their tax savings is going to be at least $7 million a year, and they're going to create 10 jobs?" said Wiser, estimating the value of Google's property tax exemptions.
"It's at least $700,000 a job every year? I don't think we can really afford that," she said. "We have a tax system. We need to participate in it."
Wasco County commissioner Scott Hege has expressed ambivalence about Google's first deal, which provided payments less than a third the size of the new agreement. But Hege, who was not on the commission when the first deal was struck, said he feels better about this arrangement.
Google substantially exceeded the investment and hiring thresholds of the first tax deal, Hege said, so he expects the benefits this time will also be greater than the $200 million investment and 10 jobs that Google promised.
"This agreement is a good one," he said. "It's commensurate with what they're looking to do."
news by September 20, 2013 at 07:40AM
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