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The Data Center Divide

City of The Dalles

Pro-Data Center Policies

The Dalles offers specified data center projects up to 15 years of property-tax exemption and water and sewer support, encouraging development. The agreements require payments, limit project size, and give the city and county first refusal if operations stop.

Incentives

Tax benefitsFee waivers
2

Approves the SIP agreement, authorizing up to 15 years of partial tax abatement per project and specified project approval and permit fee relief. Generally applicable and legally required charges remain payable.

Exempts qualifying project property from property tax for 15 consecutive tax years per project. Waives specified project approval and permit charges; generally applicable and legally required charges remain payable.

current law · City of The Dalles
This resolution approves the City of The Dalles’ participation in the 2021 Strategic Investment Program Agreement with Wasco County and Google-affiliated companies for data-center projects.The Dalles Resolution No. 21-024

What this means

The measure approves a deal offering up to two data center projects 15 years of property-tax exemption each, a strong incentive to build. The deal also requires payments and applies only to the specified projects, but these conditions do not create a broad new barrier to building or operating data centers.

People behind it

  • Listed as a sponsor of House Bill 2343.

  • Listed as a sponsor of House Bill 2343.

  • Listed as a sponsor of House Bill 2343.

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  • Co-sponsor of the Strategic Investment Program agreement and party to the agreement.

  • Co-sponsor and agent of the Strategic Investment Program agreement, and party to the agreement.

  • Party to the Strategic Investment Program agreement and part of the Company proposing the data center projects.

  • Named party to the Strategic Investment Program agreement and part of the Company proposing the data center projects.

  • Party to the Strategic Investment Program agreement and part of the Company proposing the data center projects.

  • Governing body that approved the Strategic Investment Program agreement.

  • Authorized by the City Council to execute the Strategic Investment Program agreement.

  • State agency identified as administering the Enterprise Zone and Strategic Investment Program agreements.

  • Determined the Google data centers' eligibility for the Strategic Investment Program and established the community service fee distribution formula.

Restrictions & requirementsHide restrictions & requirements11
  • Each SIP project must include exactly one data center, and a single data center may not exceed 500,000 square feet of footprint or 1,000,000 square feet of total building area unless all parties agree otherwise.

  • The arrangement covers no more than two SIP projects, with each project limited to a 15-year property-tax exemption period and the two projects subject to an overall time limit.

  • The company must obtain approval from the Oregon Business Development Commission for the projects to receive the SIP property-tax exemption, and must submit the SIP applications by the applicable state deadline.

  • The company must enter into a First Source Hiring Agreement as part of the SIP application requirements.

  • After SIP application approval, the company must transfer at no cost to Wasco County at least 35 acres of property, with the final acreage and configuration subject to the company's development plans.

  • For each project, the company must make a $3 million initial payment after submitting the first construction-in-progress exemption form and no later than 60 days after the project's certificate of occupancy.

  • During the exemption period, the company must pay property taxes on non-exempt property, a community service fee of up to $2.5 million per project per tax year, and any guaranteed annual payment needed to meet the agreement's required annual payment amount.

  • If the company fails to make required SIP payments and does not cure the failure within the specified tax-year and 45-day notice periods, the project's exempt property loses its exemption and is taxed as other similar property.

  • The company must file required property-tax information and reports with the county assessor or Oregon Department of Revenue and provide copies to the county assessor during construction and the exemption period.

  • If Project 1 has not achieved commercial operation by the fifth tax year after the agreement's effective date, or if the state does not approve the exemption, the company may terminate the agreement.

  • If a data center is no longer operated on specified property, the City or County has a right of first refusal to purchase that property during the applicable period, beginning with Project 1's exemption period and generally lasting until ten years after the final exemption period or earlier termination.

Benefits & exceptionsHide benefits & exceptions11
  • The SIP agreement exempts qualifying property in each of up to two data-center projects from property tax for 15 consecutive tax years, subject to Oregon law and the agreement's deadlines. The exemption periods must end within the agreement's maximum 25-year window.

  • The agreement provides partial tax treatment rather than full taxation during each exemption period: the total annual payment for Project 1 is generally based on 50% of the property tax that would otherwise be due, and Project 2 is generally based on 60%, subject to a $3 million annual minimum for each project and the required property-tax, community-service-fee, and GAP components.

  • Each project may include a broad range of associated property, including land, buildings, warehouses, substations, real-property machinery and equipment, and personal property. Each project may be built over time, but must include exactly one data center unless the parties agree in writing to amend that requirement.

  • The company may change the portions of the overall site designated as the Project 1 Site and Project 2 Site by written notice to the County, subject to limits tied to the start of the second project's construction or exemption period.

  • For the exemption periods, the company is not responsible for taxes, fees, or other payments imposed by the City, County, or a taxing or governmental district exclusively governed by them for land-use approvals, permits, or other governmental approvals necessary to construct or operate the projects. This does not waive generally applicable charges or payments required by law or the agreement.

  • The company may assign project-related rights to lenders, affiliates, entities formed to develop, construct, own, or operate a project, lessees, or third-party purchasers without City or County consent, provided the successor assumes the agreement and the company generally remains bound unless released in writing.

  • The company may terminate the SIP agreement if Project 1 has not achieved commercial operation by the fifth tax year after the effective date or if the Oregon Business Development Commission does not determine that the project property qualifies for the SIP tax exemption.

  • The agreement preserves the parties' ability to challenge property values and tax calculations under Oregon law in the same manner as other taxpayers, including challenges to real market value, maximum assessed value, or amounts that would otherwise be due.

  • The parties must work together in good faith to preserve the agreement's substantive arrangement and relative rights and obligations if later changes in state law, regulations, or court decisions materially affect the SIP or property-tax provisions.

  • The infrastructure agreement approved for Moraine Industries LLC and Design, LLC provides for Google-funded improvements to the City's water and wastewater systems, including new water lines, a pump station, wells, storage, sewer lines, a sewer lift station, and utility corridors. The stated estimated cost was approximately $28.5 million, with the improvements expected to add about 3.8 million gallons per day of capacity.

  • Under the infrastructure agreement, Google transfers purchased water rights from the former aluminum plant property to the City, while the City continues to provide water to Google at the same rates charged to other commercial and industrial users.

Sources

current law · City of The Dalles
Wasco County and the City of The Dalles entered this agreement with Google LLC, Design, LLC, and Moraine Industries LLC for qualifying data-center projects in the county.2021 Oregon Strategic Investment Program Agreement (Google/Design, LLC)

What this means

The agreements provide substantial benefits: eligible project property can receive a 15-year tax exemption, and the city agrees to support water and sewer capacity for the data center development (15-year exemption; adequate water supply and sanitary sewer capacity). But the deals also require significant payments, limit project size, and give the city and county a right of first refusal if data-center operations stop, so the net effect is strongly supportive but conditional.

People behind it

  • Named sponsor of House Bill 2343.

  • Named sponsor of House Bill 2343.

  • Named sponsor of House Bill 2343.

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  • Named co-sponsor of House Bill 2343.

  • Named co-sponsor of House Bill 2343.

  • Named co-sponsor of House Bill 2343.

  • Named co-sponsor of House Bill 2343.

  • Named co-sponsor of House Bill 2343.

  • Named co-sponsor of House Bill 2343.

  • Named co-sponsor of House Bill 2343.

  • Named co-sponsor of House Bill 2343.

  • Proposed, with its affiliates, to build and operate the data center projects and applied for the SIP tax treatment.

  • A company party to the SIP agreement and one of the entities proposing and developing the data center projects.

  • A company party to the SIP agreement and one of the entities proposing and developing the data center projects.

  • Co-sponsor of the SIP agreement, approved the agreement, and authorized its execution.

  • Co-sponsor of the SIP agreement, approved its execution, and requested the state determination for the projects.

  • Determined the projects' SIP eligibility, approved the tax treatment, and established the community-service-fee distribution formula.

  • Administered the SIP application process and reviewed the applications for completeness before Commission approval.

Restrictions & requirementsHide restrictions & requirements14
  • Each SIP project must include exactly one data center, and a single data center may not exceed a 500,000-square-foot footprint or 1,000,000 square feet of total building area unless the City, County, and Company agree otherwise.

  • The OBDC-approved project descriptions limit each project to one contiguous data center building or complex and exclude the property and site of the other approved project.

  • The projects require approval by the Oregon Business Development Commission under the SIP, following local public-hearing and government-approval processes; without that determination, the SIP tax exemption is unavailable.

  • The Company must file SIP exemption applications by the deadline imposed by OAR 123-623-1400 and must provide required tax filings, reports, and information to the County Assessor or Oregon Department of Revenue.

  • The Company must enter into a first-source hiring agreement with publicly funded job-training providers.

  • The Company must pay a $3,000,000 initial payment for each project, property taxes on non-exempt property, a community service fee capped at $2,500,000 per project per tax year, and annual GAP payments.

  • Failure to timely make required SIP payments, including applicable interest, can cause the project to lose its exemption for the next and subsequent tax years until the delinquency is cured, resulting in taxation of the exempt property as ordinary property.

  • Project 1 must achieve commercial operation by the fifth tax year after the Agreement's Effective Date, or the Company may terminate the Agreement; the Agreement also may be terminated if the OBDC does not approve the property for the SIP exemption.

  • The Company must transfer at least 35 acres to Wasco County at no cost after OBDC approval of the SIP applications, with the final acreage and configuration subject to the Company's development plans.

  • During the ROFR period, if a data center is no longer operated on the ROFR Property, the County and then the City have rights of first refusal to purchase the property; the Company must provide an offer notice and wait up to 30 days for each government's decision.

  • The infrastructure agreement requires Design to design, permit, finance or construct eight water and sanitary-sewer projects to City standards, obtain City review and concurrence, provide monthly reports, and convey specified water rights to the City.

  • The infrastructure agreement makes development dependent on adequate water supply and sanitary-sewer capacity, requires the City to undertake a ninth infrastructure project subject to available public funding, and requires Design to construct Project 2 with aquifer-storage-and-recovery compatibility.

  • The infrastructure agreement requires the parties to obtain land-use, building, utility, and other governmental permits and approvals; Design is not required to build the specified infrastructure projects if it does not obtain the necessary development or project permits.

  • Design must comply with applicable sewer-discharge temperature requirements and may be subject to future cooperation regarding additional Middle Columbia-Hood temperature TMDL requirements.

Benefits & exceptionsHide benefits & exceptions14
  • The agreement exempts qualifying property in each project from property tax for up to 15 consecutive tax years, subject to the agreement’s limits and the statutory SIP requirements. The Exempt Property ... shall be exempt from property tax during the Exemption Period

  • The SIP limits the effective annual tax burden during the exemption period: Project 1's total annual payment is the greater of 50% of the otherwise applicable property taxes or $3 million, while Project 2's is the greater of 60% or $3 million. the greater of ... fifty (50) percent

  • The agreement permits two separate SIP projects, each with its own exemption period, while limiting the combined exemption periods to the agreement’s overall 20th- or 25th-anniversary cutoff. Each Project shall be a separate

  • The City agrees to provide sufficient, reliable, and adequate water supply and sanitary sewer capacity for the existing and new data-center development, conditioned on Design transferring water rights or otherwise providing sufficient additional supply. sufficient, reliable, and adequate water supply and sanitary sewer capacity

  • Design is responsible for designing and constructing eight specified water and sewer projects, which are to be built to City standards and transferred to the City for ownership, operation, and maintenance after acceptance. Design will be responsible for all work necessary to complete Projects 1, 2, 3, 4, 5, 6, 7, and 8

  • The City commits to design and construct a ninth water or sewer project, although that obligation depends on available public funding and may be revised if funding is unavailable. contingent upon the availability of public funds

  • The cost of eligible Design-constructed infrastructure projects may be credited against water or sanitary-sewer system development charges for the new development. become a credit towards water or sanitary sewer system development charges

  • The City must expedite permits and other approvals for the infrastructure projects and new development, and assist with approvals from other governmental agencies. expedite processing of all permits

  • The City may not discriminate against Design when setting water or sewer fees and must ensure that Design is not charged capital-cost recovery for the Design-constructed projects. shall not discriminate against Design

  • The City agrees to make good-faith efforts to supply treated surface water for aquifer storage and recovery at permitted limits, with no additional charge to Design. ASR supply rates shall be at no additional cost to Design

  • Design may discharge sewer from the new development at a modeled temperature using the methodology applied to the existing development, subject to an agreed measurement point. may discharge sewer ... at a temperature determined by modeling

  • After the City accepts the Design-constructed projects, the City assumes ownership, operation, and maintenance, and Design generally has no further obligation for related water or sewer repairs or upgrades beyond the stated warranty and exceptions. The City shall be solely responsible for owning, operating, and maintaining the Projects

  • The SIP agreement allows the company to assign project rights to lenders, affiliates, project entities, lessees, or purchasers, provided successor owners assume the agreement and the company remains bound unless released by the City and County. may sell, transfer, assign, pledge, mortgage

  • The parties must work in good faith to preserve the agreement’s substantive arrangement and comparable rights and obligations if later legal changes materially affect the SIP or property-tax framework. preserve and retain the substantive arrangement

Sources

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