Commission Agenda Item
Cover Sheet
06/02/2023
TO: Chair Gopalpur and members of the Oregon Business Development Commission (OBDC)
FROM: Art Fish, Business Incentives Coordinator
SUBJ: Determination of Strategic Investment Program (SIP) Eligibility for Amazon Data Center
On November 7, 2022, Amazon Data Services, Inc. (ADS) applied to Business Oregon for the OBDC’s
determination to receive a 15-year period of SIP tax treatment on new investments.
Program Background
SIP is a multilayered partial property tax abatement currently used by 20 major investments
across northern Oregon. Oregon Law for SIP prescribes:
• A 15-year period, beginning with the tax year once sufficient property is placed in service.
• Exemption on project property’s real market value (RMV) in excess of a taxable portion,
which grows 3% per year, and adjusts relative to the overall size of the project as follows—
Total investment costs
Taxable portion of RMV
$0.5 billion or less & rural
$25 million
$0.5–1.0 billion & rural
$50 million
Urban, or >$1.0 billion & rural $100 million.
• Community service fee (CSF) – lesser of 25% of tax savings or $2,500,000 – per year.
• That the requisite local-government agreement may contain additional conditions on the
business firm, which have tended to involve further local payments.
• No employment criteria, although state statutes do—
o Require a first-source hiring agreement with publicly funded job training providers, like
with businesses benefitting from lottery funds or standard enterprise zone.
o Exhort the employer to hire from within the surrounding region.
Accompanying this memo is the latest summary of SIP projects in the 2021–22 tax year as posted
at the agency website. Four of the projects will be out of the program and fully paying taxes in
2023, while two others have since begun using the program. Five additional projects are expected
to start abatements in 2025 or later. Other SIP applications are pending local approval.
Update on Data Centers in Oregon
A brief overview of data centers and property tax abatement seems in order.
With respect to SIP, in addition to the Morrow County project presented here:
• Amazon has an active SIP in Umatilla city/County, as approved in 2017.
• The OBDC’s most recent determinations were for two Google projects in The Dalles, Wasco
County, one of which will be operational by next year.
Re: SIP Determination for Amazon, Morrow County – 06/02/2022
Property tax abatements for data centers have more commonly occurred in enterprise zones.
Long-term rural enterprise zone (LRZ) program
In this program, a certified business’s new facility property is simply exempt for 7 to 15 years.
The LRZ program is, however, geographically limited and has hiring and pay requirements.
The enterprise zone’s sponsoring city, port or county governments in an eligible county are
fully charged to authorize such facilities through a written agreement, often with additional,
monetary requirements. Ten data centers are currently receiving 15-year LRZ abatements:
• Three by Amazon in Morrow County, in and around the City of Boardman,
• Two by Apple and three by Facebook, in Prineville, Crook County, and
• Two by Google in The Dalles – where its original data center went on the rolls last year.
Although lumber and food processing account for 6 of the 16 currently exempt LRZ facilities,
the 10 data centers above represent 94% of the $153 million in LRZ property tax impact for
2022–23. This reflects the sheer size of capital investment ($9.3 billion) at data center
operations. Nevertheless, unlike SIP, LRZ investments can be more moderately sized, for
example, an Astoria Brewery.
Amazon represents 12 of 13 additionally certified LRZ facilities that would begin 15-year
property tax abatements in the future by 2030 (regardless that the program sun-sets under
current law 25 months from now). Seven of the 12 are in Umatilla County, and five were
recently certified in Morrow County’s Columbia River Enterprise Zone.
Standard, 3 to 5-year enterprise zone exemptions
Amazon is finishing up such exemptions on older property in the same two Northeast Oregon
counties. Initially in my working with Amazon (early to mid-2010’s), they were reluctant to
pursue longer-term tax abatements periods. Among hundreds of other businesses, various
data centers have received standard exemptions on qualified property in other zones,
overwhelmingly, in Hillsboro’s urban enterprise zone.
Program Criteria
Receipt of property tax benefits under SIP depends on the OBDC’s finding that the project is
eligible under the law. Morrow County has fulfilled necessary procedures:
• Public hearing by the Board of County Commissioners (April 5, 2023),
• Entering into a written agreement with Amazon, and
• County board’s voting to forward project to OBDC.
Also as demanded by law: (1) the project and business are in a traded-sector industry – global
internet services, and (2) the investment will exceed the $25-million minimum for a rural project.
Project and Company
Project construction began on November 14, 2022. It is expected to begin operations presently and
to be fully built within the coming year, with:
• 230,000 square feet per main building housing computer networking equipment,
Business Oregon Page 2 of 3
Re: SIP Determination for Amazon, Morrow County – 06/02/2022
• $2.37 billion in total investment (standard amount proposed for recent and planned ADS
projects in Oregon) consisting of $320 million for construction and heavy (
e.g.
, cooling)
equipment, and $1,950 million for servers and other personal property,
• 80 new employees in addition to 1,302 existing ADS employees across Oregon in 2022,
much of them in NE Oregon, aside from other types of Amazon operations, and
• $85,000 in average annual wages or salary, which is 42% higher than the 2022 Morrow
County average wage, the sixth highest among Oregon’s counties.
The applicant (ADS) is the data center development arm of Amazon, and it is quite distinct from
the Seattle-based company’s online retailing business. Through its data centers, Amazon is
arguably the premier global provider of web/data hosting services and cloud computing for a
remarkable array of customers, about which more can be learned at
Data Centers - Our Data
Centers. These services vastly dwarf the computing needs of Amazon’s own online business. In
this still (must remind ourselves) rather new industry, NE Oregon offers attributes along with
property tax abatement that have made it a premier hub for Amazon.
Project Estimates
Based on assumptions for the extent and timing of the project’s initial investments, I estimate
that over 15 years, they would otherwise generate $195 million in property taxes, relative to which:
• Taxes paid on the taxable portion would be about $31 million.
• CSF payments for county and taxing districts to share would approximate $33 million.
• Under additional requirements in the agreement, Amazon will pay nearly $18 million
($5,030,000 upfront and $850,000 each year).
As a result, Amazon would enjoy a net benefit of $113 million, aside from contributions that it is
obligated to make towards bonded indebtedness respective to future taxing district levies, to
which it would otherwise be subject.
Requested Action:
Informational Only For Commission Input/Discussion For Commission action
Determination that the Amazon data center project is subject to tax treatment under ORS 307.123,
by approving resolution SIP‒23‒01, which contains further details on the eligibility of the project
and other findings.
Business Oregon Page 3 of 3
RESOLUTION SIP–23–01
OREGON BUSINESS DEVELOPMENT COMMISSION
DETERMINATION OF APPROVAL FOR STRATEGIC INVESTMENT PROGRAM
Amazon Data Center
WHEREAS, the State of Oregon Legislature created the Strategic Investment
Program (“SIP”) under ORS 285C.600 to 285C.635 (2021), so that enormous capital
investments in taxable property by traded-sector industries could be subject to
alternative assessment and taxation, in order to foster economic growth and to
improve employment opportunities.
WHEREAS, the Oregon Business Development (“OBD”) Commission is charged by
law with determining eligibility and establishing the description of the project
for purposes of assessment and
ad valorem
taxation under ORS 307.123
(“SIP abatement”).
WHEREAS, Amazon Data Services, Inc. (hereinafter, “Amazon”) proposes to
construct and outfit a data center at a location in Morrow County meeting the
definition of a “rural area” under ORS 285C.600.
WHEREAS, on November 7, 2022, Amazon made application to Business Oregon
(the Oregon Business Development Department), which has reviewed and found
it to be complete and in order as described in OAR chapter 123, division 623.
WHEREAS, pursuant to documentation of the proposed project as reviewed by
department staff, the OBD Commission also makes the following
FINDINGS
:
1. The project is an “eligible project” under ORS 285C.600 and 285C.606.
2. The project will directly benefit a “traded sector industry” under
ORS 285B.280, in that the proposed project will be used to provide global
internet products and services.
3. The project’s total cost will exceed $25 million.
4. Property/property value that will constitute the project is not:
a. Previously owned or leased by the applicant,
b. Previously exempt under SIP or ORS 285C.175 (enterprise zones), or
c. Part of any investment for which the applicant is authorized in an
enterprise zone.
RESOLUTION SIP–23–01 — STATE OF OREGON BUSINESS DEVELOPMENT COMMISSION
Page 2 of 4
5. On April 5, 2023, the governing body of Morrow County held a public hearing
regarding the project.
6. The county government has entered into a written agreement with the
applicant, consistent with the provisions of ORS 285C.609(4) and (5),
including provisions for the payment of the community service fee.
7. On April 5, 2023, the Board of Commissioners for Morrow County requested
the OBD Commission’s determination that the project shall receive the SIP
abatement. (Resolution #R-2023-4)
8. The applicant has obtained a first-source hiring agreement with publicly
funded job-training providers through the Oregon Employment Department
office in Hermiston.
9. The applicant has made payment to the department under ORS 285C.612 for
the required application fee and will pay the administrative fee of $10,000 in
total as due after approval by the OBD Commission.
10. The applicant has committed to the following:
a. To respond in a timely manner to the requests and needs of the
county assessor for Morrow County and the Oregon Department of
Revenue in their administering the project’s SIP abatement, including
but not limited to OAR 150-307-0100, and
b. To ensure for any leased property constituting the project that the
ultimate lessee is responsible for the payment of taxes on property as
assessed and levied under ORS 307.123.
11. The OBD Commission has not imposed any additional condition on Amazon
related to this SIP project.
12. OBD Commission’s consideration of the SIP application was included on the
agenda for the public meeting scheduled on June 9, 2023, at the offices of the
Port of Morrow, in Boardman Oregon.
WHEREAS, the county, city, and special taxing districts (comprising at least
75 percent of such districts’ taxing authority where the exempt property is
located) shall agree on the distribution of the community service fee within
three months, providing the department with a copy of the agreement;
otherwise, the OBD Commission shall establish the distribution formula after
such time.
RESOLUTION SIP–23–01 — STATE OF OREGON BUSINESS DEVELOPMENT COMMISSION
Page 3 of 4
NOW, THEREFORE, THE OREGON BUSINESS DEVELOPMENT COMMISSION
DOES HEREBY RESOLVE THAT:
A. The project that Amazon proposes to operate is approved under
ORS 285C.600 to 285C.635 for the SIP abatement, such that real and
personal property owned or leased by the company in Morrow County
shall be assessed and taxed as provided under ORS 307.123.
B. This approved project is defined by the project description prepared by
the department and appended to this resolution.
C. The Commission Chair may execute this resolution.
D. The department shall furnish executed copies of this resolution to the
applicant/Amazon, Morrow County Assessor, and the Oregon
Department of Revenue.
ADOPTED BY OFFICIAL ACTION OF THE BUSINESS DEVELOPMENT COMMISSION FOR THE
STATE OF OREGON, ON THE NINTH DAY OF JUNE,
TWO THOUSAND TWENTY-THREE.
_______________________________________________
Kanth Gopalpur, Chair, OBD Commission
Attached Appendix
APPENDIX TO RESOLUTION SIP–23–01
Page 4 of 4
PROJECT DESCRIPTION
The proposed project as approved comprises real and personal property that
Amazon Data Services, Inc. owns or leases, and that are constructed or installed
and placed in service in phases or stages, beginning on or after November 7,
2022, exclusively on tax lot 1701, Section 25, Township 4 North, Range 25 East of
the Willamette Meridian, Morrow County, State of Oregon.
The project encompasses improvements to or on the land, newly constructed
buildings or structures, and real property machinery & equipment, fixtures and
personal property located on, at or in such land, structures or buildings,
including without limitation, computer networking gear, computer services
equipment and related facility infrastructure, unless fully acquired by Amazon
Data Services, Inc. or any commonly controlled business firm before
November 7, 2022.
The project further includes repairs, replacements, renovations, remodeling and
retrofits of such property that are made during the period of assessment and
exemption under ORS 307.123.
The company estimates the total cost of project investments at $2,350 million,
but it may be in reality more or less.
no data
Oregon Strategic Investment Program (SIP) Projects based on 2023 Annual Employment and Payroll Reports*
Business firm – Project name
(In order of determination by the
Oregon Business Development Commission,
following county process)
County
2021–22
property
taxes
paid
†
Gross taxes
saved on
exempt
property
†
Special
SIP fees
paid
in 2022
†
Net
revenue
foregone
locally
†
Year out of
15-year
exemption
period
†
Total invest
-ment by end
of 2020
†
($_million)
Invest
-ment
since 2020
($_million)
Newly
created
jobs
‡
Retained
jobs
‡
Average
wages/
salary
(all jobs)
‡
Average
wages and
b
enefits
(all jobs)
‡
Estimated
state personal
income tax
‡
revenue
Intel Corporation – SIP2005 Washington
$2,324,000 $87,230,000 $40,038,000 $25,944,000 12th $24,978 – 2,482 7,246 $179,191 $201,145 $62,571,000
Georgia-Pacific Consumer Ops. LLC – Wauna Paper Mill–#7
Genentech USA, Inc. – Hillsboro Fill Finish Facility
EDP Renewables NA/Telocaset…, LLCs – Elkhorn Valley
Avangrid Renewables – Klondike Wind Power III
Portland General Electric Company – Biglow Canyon Windfarm
Clatsop
Washington
Union
Sherman
Sherman
$359,000
$4,710,000
$361,000
$578,000
$560,000
$2,579,000
$2,055,000
$363,000
$3,182,000
$8,897,000
$500,000
$1,145,000
$121,000
$3,142,000
$6,308,000
$1,264,000
-$3,208,000
-$119,000
-$663,000
$1,629,000
14th
12th
14th
14th
14th
$522
$792
$205
$457
$987
$49.9
$44.1
-$0.2
$0.6
-$3.4
53
454
10
19
22
0
0
0
0
0
$85,732
$157,463
$83,124
$62,407
$73,093
$97,926
$173,155
$97,881
$84,249
$120,005
$257,000
$4,636,000
$46,000
$64,000
$87,000
Invenergy, LLC – Willow Creek Energy Gilliam‒Morrow
$365,000 $555,000 $123,000 $53,000 13th $130 $1.5 4 0 $77,077 $85,462 $17,000
Avangrid Renewables – Hay Canyon & Star Point Wind Farms
Avangrid Renewables – Pebble Spgs. & L. Juniper II A-B Wind
Exelon Corporation – Echo Windfarms
Sherman
Gilliam
Morrow‒Umatilla
$561,000
$379,000
$460,000
$1,666,000
$2,447,000
$222,000
$1,160,000
$2,096,000
$176,000
-$108,000
-$185,000
-$372,000
13th
13th
13th
$328
$535
$108
$2.1
$1.8
–
12
14
8
0
0
0
$77,581
$86,480
$76,905
$104,735
$116,748
$101,679
$52,000
$69,000
$36,000
Eurus Energy America Corporation – Combine Hills II Umatilla
$377,000 $376,000 $167,000 -$168,000 12th $137 – 6 1 $59,659 $65,448 $21,000
NEXTera Energy Resources, LLC – Stateline 3 Wind Umatilla
$464,000 $0 $377,000 -$737,000 12th $188 – 2 0 $138,877 $167,093 $22,000
Caithness Corporation – Shepherds Flats–Gilliam County Gilliam
$336,000 $7,523,000 $3,806,000 $2,835,000 10th $968 $199.2 26 0 $87,855 $89,935 $129,000
Caithness Corporation – Shepherds Flats–Morrow County
Portland General Electric Company – Carty Generating Station
Portland General Electric Company – Port Westward II
Morrow
Morrow
Columbia
$495,000
$346,000
$346,000
$3,267,000
$5,702,000
$2,480,000
$1,504,000
$2,170,000
$1,211,000
$780,000
$2,242,000
$644,000
10th
5th
7th
$283
$533
$306
$115.2
$13.5
$13.4
9
24
32
0
0
0
$87,856
$154,925
$144,237
$89,936
$203,291
$186,948
$44,000
$242,000
$304,000
Intel Corporation – SIP2014–1 Washington
$2,002,000 $146,651,000 $29,308,000 $83,101,000 5th $12,817 $13,723.9 5,175 6,983 $179,191 $201,145 $75,351,000
Avangrid Renewables – Montague Wind Power Facility Gilliam
$292,000 $2,688,000 $1,316,000 $898,000 2nd $266 $0.1 4 0 $95,624 $129,092 $24,000
NEXTera/Portland General – Wheatridge Wind & Solar/Storage Morrow
$326,000 $6,222,000 $2,500,000 $2,357,000 1st $632 $6.5 7 0 $89,523 $104,189 $34,000
Amazon Data Services – Vadata Umatilla Umatilla
$481,000 $24,975,000 $4,500,000 $14,496,000 3rd $2,175 $2,603.6 180 130 $94,262 $106,198 $1,253,000
DESRI – Orchard Wind Farms Morrow
$311,000 $556,000 $130,000 $72,000 1st $85 $0.0 2 0 $104,031 $158,758 $12,000
CoHo Distributing LLC – Columbia Distribution Warehouse Clackamas
$489,000 $523,000 $151,000 -$123,000 2nd $55 $2.8 27 300 $53,058 $65,936 $424,000
T O T A L | A V G. $16,900,000 $310,200,000 $101,900,000 $130,600,000 no data $47,000 $16,800 8,573 14,660 $176,064 $197,796 $146,000,000
* For purposes of "gain share" distributions to local governments under 2007 Oregon state law, rather than verification of a statutory hiring requirement, of which there is none.
† For latest property tax year ending on prior June 30, taxes paid are on taxable portion, which begins at $25, $50 or $100 million and rises 3% per year, and possibly other associated property. For local revenue, taxes saved are adjusted using
average county factors for local levies, compression effects and early payment discounts, and then reduced by subtracting taxes paid (as likewise adjusted), statutory community service fee and locally negotiated payments.
‡ Newly created and retained jobs (FTE–2,080 hours/year) for previous calendar year, excluding (indirect) jobs for construction, vendors, suppliers, other company operations, or on-site contractors other than a general project operator.
State revenues based on average wage and tax rate by income level; does not include other sources of public revenue or income taxes related to construction, indirect jobs or employee spending, and only 40% from retained jobs.
Source
: Business Oregon (Oregon Business Development Department), Salem, Oregon, using data reported by business firms and
Tax Statistics
of the Department of Revenue.
May 25, 2023
End of worksheet
