Google wins OK from The Dalles, Wasco County for data center tax exemptions

Wasco County commissioners and The Dalles city council have each voted unanimously in favor of a package of tax exemptions for a new Google data center.

Google already operates two data centers on its riverfront property in The Dalles. With the tax deal in hand, it scheduled a "major economic announcement" and groundbreaking for Thursday morning, signaling that it intends to proceed with construction immediately on the new building.

"We're delighted to have passed this milestone," a Google spokeswoman said this afternoon.

Google's new tax deal

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.)

Plans submitted to the city suggest that

. Its two existing data centers are each one story, 94,000-square-foot structures.

The "enterprise zone" deal,

, exempts the new building and the equipment inside from property taxes. That would save Google tens of millions of dollars, and potentially hundreds of millions of dollars, over the 15-year life of the deal.

In exchange, Google pledged to invest at least $200 million in the new data center and add at least 10 more jobs to a work force that already numbers around 150. The actual totals are likely to be somewhat higher, given the size and staffing needs of Google's current facilities. The company has spent at least $700 million in The Dalles since 2006.

Google will make a $1.2 million up-front payment to the city and county, and then pay $800,000 annually. That's more than three times the size of Google's payments under its initial deal, which remains in effect for its two existing data centers in The Dalles.

Google, Apple, Facebook, Amazon and the data hosting company Rackspace have all chosen Oregon for large data centers,

.

Data centers don't employ many people -- the computers do the heavy lifting -- but do provide an economic stimulus during construction. And franchise fees generated by their robust electricity use provide revenue for local jurisdictions. In Google's case, those fees provide around 7 percent of The Dalles' general fund revenue.

No company has announced a brand-new Oregon data center since Apple confirmed plans to open in Prineville in February 2012. Instead, existing data centers are growing.

, Google appears poised to start construction, and

.

The Dalles city council approved Google's new deal 5-0 on Monday night, and Wasco County commissioners voted 3-0 in favor of the deal this morning. County commissioner Scott Hege said the commission had "a robust discussion" with members of the public about the deal.

"We had a lot of folks that were asking some pretty stern questions," he said. "They were good questions."

The commission fielded questions about the scale of Google's tax breaks and the economic impact of the project. Hege defended the agreement.

Google could have looked elsewhere in the Northwest for a better deal, he said. And even with the discounts, he said, Google will contribute significantly to the community.

"They are, by a long shot, the largest payer of fees and/or taxes in Wasco County," Hege said.

Note: This article has been updated with brief comment from Google and the company's announcement that it plans to start building immediately.

-- Mike Rogoway; twitter: @rogoway; phone: 503-294-7699

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