Interllectual

Morrow County, Oregon, has approved tax breaks worth approximately $1 billion for Amazon to construct five new data centers in the region. The decision, made by the five commissioners of the Port of Morrow, marks the final step in securing the incentives provided by the local enterprise zone, which offers property tax exemptions to eligible companies. With these incentives, the county anticipates attracting about $12 billion in fresh investments from Amazon, potentially leading to significant economic development in the area.

Morrow County is already home to four sizable Amazon data centers, which have created numerous local job opportunities. However, the circumstances surrounding the tax breaks have generated controversy and prompted an ongoing investigation into potential self-dealing by those responsible for awarding the incentives. The state is currently scrutinizing possible conflicts of interest among port officials and a former county commissioner who own Windwave Communications, a company that supplies fiber-optic services to Amazon’s local data centers.

Two of the port commissioners, Jerry Healy and Marv Padberg, have admitted in a letter to the state ethics commission that their company has a contract to provide fiber-optic services to one of the new Amazon data centers. However, they maintain that their “potential” conflict of interest only arises when voting on incentives for the remaining four facilities.

Although three other public entities in Morrow County have previously endorsed the agreement, the precise details and value of the contracts between Amazon, Windwave, and the county have not been disclosed. The tax incentives granted to Amazon exempt the company from paying nearly 75% of the property taxes imposed on other local businesses. Notably, Amazon is the largest taxpayer in Morrow County, accounting for approximately one-third of the county’s property tax revenue, which amounted to $26 million in 2021 alone.

Data centers are among the rapidly expanding industries in Oregon, largely driven by substantial tax breaks totaling $180 million in the previous year. Critics have expressed concerns about the ability of small counties to negotiate with tech giants and the disparity in the value of tax breaks provided. Oregon lawmakers are currently considering reforms to the enterprise zone program, including limitations on the duration of incentives, linking tax breaks to job creation, and mandating public notice prior to voting on such agreements.

Critics argue that small counties may not have the resources or expertise to negotiate effectively with major tech companies like Amazon. Furthermore, concerns have been raised about the varying value of tax breaks provided under the program. For instance, the recent agreement between Morrow County and Amazon is estimated to be approximately twice as valuable as the deal reached between officials in The Dalles and Google in 2021.

In the case of Morrow County, local officials view Amazon’s presence and continued expansion as a means of diversifying the county’s economy. Following the closure of a sawmill and a coal plant, the county has sought alternative industries to support its growth and employment. Data centers, with their significant investments and job creation potential, have become a focal point in achieving this goal.

The rapid growth of data centers in Oregon has been fueled by generous tax incentives, with last year alone seeing tax breaks worth $180 million being granted to the industry. As the state contemplates potential reforms to the program, discussions are underway to establish limitations on the duration of incentives, linking the size of tax breaks to the number of jobs created, and ensuring transparency through public notice requirements before votes on incentive agreements.

The vote by Morrow County officials to grant tax breaks worth $1 billion to Amazon for the establishment of additional data centers marks a significant milestone in the region’s economic development. While the decision has sparked controversy and an ongoing investigation, local officials hope that the incentives will attract substantial investments from Amazon, leading to increased job opportunities and economic growth.

As Oregon’s data center industry continues to expand, lawmakers are evaluating the effectiveness and fairness of the enterprise zone program. With potential reforms on the horizon, the state aims to strike a balance between attracting major tech companies, stimulating economic growth, and ensuring that incentives are provided in a transparent and equitable manner.

Only time will tell how these reforms will shape the future of tax incentives for data centers in Oregon and the impact they will have on local communities. In the meantime, Morrow County remains optimistic about the potential benefits of its partnership with Amazon and the continued growth of its data center industry.