The Wasco County Commission’s vote Tuesday to grant Google’s request for tax breaks tied to an expansion of the existing campus had many characteristics of an economics lesson. The county’s decision followed The Dalles City Council approval Monday night.
Even with millions shaved off its property tax bill, Commissioner Scott Hege said Google would begin paying $800,000 annually for 15 years after the new data storage center was built, probably in 2015.
He said that amount exceeds by thousands the taxes paid by 10 other large companies in the county. Coupled with the $250,000 already being paid under the first enterprise zone agreement, Google’s total payment will be $1.05 million once the data center is in operation.
Ranked at the top of the current list is Union Pacific Railroad, which paid $499,101 in property taxes during 2012. Burlington Northern Sante Fe Railroad was next in line with $429,626, followed by Northern Wasco County Public Utility District with $334,148. Century Link captured fourth place with $312,449, and fifth went to Gas Transmission Northwest Corporation with $252,133. Metropolitan Life Insurance Company (Fred Meyer) was sixth at $241,295. Oregon Cherry Growers netted seventh place with $221,204 and Home Depot USA paid the eighth most taxes at $177,557. Oregon Telephone Corporation was next in line with $152,551, and final place went to Orchard View Farms, which paid $147,163.
“At $800,000, this fee would be the largest paid in the county,” said Hege, who also informed the audience that Google would pay a $1.2 million project fee by the end of 2013.
He said weeks spent with Tyler Stone, county administrative officer, Nolan Young, city manager and Mayor Steve Lawrence to come up with a deal agreeable to all parties. Google wants to build a 164,000-square-foot data storage center on its 37-acre property in the Port of The Dalles’ industrial park. To qualify for a second Rural Enterprise Zone, the company has to invest more than $200 million in the project and hire at least 10 full-time employees that are paid a wage that exceeds the state average.
Google currently reports a workforce of 82 full-time staff, a figure that rises to 150 when contractors for security, food and other services are factored in.
The first Enterprise Zone, which is separate from the new deal, required the company to hire 35 workers. The commission and The Dalles City Council, co-partners in managing that zone, expect that scenario to play out again.
Stone said in the original agreement, which is still in effect for another seven years, Google pays $250,000 per year to area agencies to expand and maintain essential service. Since the company opened its doors in The Dalles in 2006, he said $748 million had been contributed to economic development in the state, as well as $777,000 to charitable causes in Wasco County. He said more than $249,000 has been donated to support science, technology, engineering and math programs in area schools and in excess of $210,000 for robotics activities. In addition, $180,000 has been used to help the city establish a wireless internet network in The Dalles.
“In addition to this agreement, there is another side out there that is putting money into this community,” said Stone.
Several citizens challenged the county’s consideration of tax breaks for a company that would have paid $8.9 million in property taxes during 2012-13 tax year without any special deal in place. They said Google paid only $67,000 in taxes because of the first Enterprise Zone and that put the financial burden for services on the backs of other property owners.
“They don’t want to pay their fair share, that’s what’s happening here and I personally don’t like it,” said resident Mike Bertrand. “They must be one of the top five in the world and yet we have to pay for the privilege of having them come here.”
He said Google, as a company that had spent $21 billion on data centers around the world since 2006, was unlikely to leave town if pressed for more money.
Heather Thompson, another resident, said Google stock had gone up 975 percent since going public in 2004 — and yet the company was asking for breaks on its tax bill.
“Each scoop of the prize is measured out to starving agencies,” she said of the plan to distribute the first $1.2 million between fire, college, parks and airport services.
The $800,000 will be split three ways, with the county and city each receiving 35 percent and the remaining 30 percent going to North Wasco County School District 21.
“This agreement is disappointing because I think we could have gotten a lot more,” said Thompson, who felt The Dalles-Wasco County Library should also have been considered for funding.
Commissioner Scott Hege, a member of the bargaining team that drafted the agreement, said the risk of having the company leave the area was too great not to forge some kind of a deal. He said a contact with ties to Google had informed him that the company had been looking into the benefits offered by other communities during the negotiating process.
“I think there really was a possibility they’d go to another community, I believe that to be true,” he said.
A letter submitted Sept. 23 to the commission by Lisa Farquharson, executive director of The Dalles Area Chamber of Commerce, supported the establishment of a second Enterprise Zone. She said research showed that The Dalles had gotten a better deal than some communities with high tech firms, even with just the original $250,000 per year agreement.
She said Apple pays $150,000 to Crook County each year and Facebook pays $110,000 in annual fees to the same county. Morrow County will collect $100,000 from Rackspace for three years and $200,000 for each of the remaining 12 years of their enterprise zone contract.
“Weighing the pros and cons of incentives is something we’ve done a lot of in The Dalles over the last few years,” wrote Farquharson. “On balance, this new agreement will benefit our community.”
Resident Joan Silver, who has served on several boards devoted to economic development, was supportive of the negotiated proposal.
“I think you did an excellent job. I feel the amounts that were negotiated will benefit us tremendously,” she said. “I have a lot of faith that Google is here to stay because they’ve said they would and I want to trust them.”
Jack Henderson, superintendent of Dufur School District, expressed frustration in a letter in not having money invested in programs in South Wasco County.
Hege was joined by Commissioner Steve Kramer and Chair Rod Runyon in saying that concern needed to be given consideration when distribution of the county’s funding share was finalized. Hege said Dufur’s needs had not been a topic of discussion because the town was located within another taxing code area. He said the situation was the same as if wind farms were installed in the southern sector of Wasco County, which would benefit taxing districts in the area where development occurs and other outlying communities.
Debby Jones, director of YOUTHINK, a prevention organization, said she had come to the Sept. 24 meeting to get educated on the issues involved in the deal. She said it was impressive to see people on both sides of the issues with such a great concern about the community. She said it was important to keep in mind that other companies had inquired about settling in The Dalles but had not done so. She said it was important to local economic development that Google stay in town.
“We, maybe, are giving away a little of what’s fair right now but I think it’s going to benefit us down the road,” she said.
Runyon said he, Kramer and Hege had all either worked with the Port of The Dalles or served on its board of directors so they knew how difficult it was to attract new companies to outlying communities.
They said it would have been too much of a gamble to push for more than the negotiating team had been able to get during weeks of meetings with Google executives.
“I feel these four gentlemen (negotiators) went to bat for this community and I feel we should honor the decisions they made,” said Kramer.
Hege said in summary: “There wasn’t anything said here today that we didn’t battle over. We had people all over the map that were positioning for different things. We struggled through this. It was difficult, it was hard-fought but I think we did okay.”
He said people needed to keep in mind that when both enterprise zones expired, they could not be renewed. At that time, he said the company would be paying its full share of property taxes on the value of their facilities. He said in 2011-12, Google’s holdings in The Dalles were valued at $1.3 billion but legislative changes to accommodate Facebook and other data centers had lowered the taxable value to $475 million, so it was difficult to foresee what the value would be by the time the zones had expired.
All three commissioners told Clarence Wilson of Hood River, a member of Ironworkers Local Union No. 29 that they would continue asking Google to hire locally when it came time for construction of new facilities.
On Monday, The Dalles City Council also made that assurance prior to voting in favor of the agreement for a new Enterprise Zone.
After learning of the approval by the two agencies for the zone agreement that they will oversee, Google spokeswoman Kate Hurow said, “We’re delighted to have passed this milestone.”
The agreements are posted for public viewing on the city’s website, www.ci.the-dalles.or.us, and the county at www.co.wasco.or.us.