Google tax agreement gets full approval

Public comment regarding the agreement at both the city and county was minimal, and both governing bodies approved the agreement unanimously, Wasco County on Oct. 20 and the City of The Dalles Oct. 25.

“This is not something we have rushed into,” noted city councilor Dan Richardson. “I know a number of people are skeptical about the city dealing with such a big company. This is a $100 million dollar decision, the costs are modest but the gains are not, they are big.”

The agreement was largely unchanged from that brought before the city and county at the beginning of the year by a negotiating team and presented at public hearings in February 2021. The only substantive change was a five-year increase in the window during which the two potential projects covered by the agreement can be constructed from 20 to 25 years. The 15-year lifespan for each tax abatement was unchanged.

The agreement does not guarantee the facilities will in fact be built, and will not impact any legal or regulatory requirement related to building new facilities.

Key components

• Agreement covers up to two distinct SIP projects

• Provides a total maximum 25 year window for two projects, each with a maximum 15 years of partial tax abatement before returning to full tax

• A one-time $3 million initial payment to the city and county for each project during construction

• State prescribed taxes tied to the total investment of each project

• State prescribed Community Service Fee (CSF) for each project

• Guaranteed Annual Payment (GAP) for each project

The GAP is based on a percentage of total property tax equal to the combined payments of statutory property tax, CSF, and GAP. The GAP for Project 1 will be based on 50% of property tax due if there was no SIP agreement. Project 2 will be based on 60%.

• Transfer of 35 acres of property from Google to the county

• Right of First Refusal, giving the city and county the option to purchase the property from Google should they cease operations for up to 10 years after the completion of the final abatement, along with a $500,000 credit for each developed project to offset potential demolition and redevelopment costs.

Tax impacts

Wasco County tax assessor Jill Amery told The Dalles City Council there is a 3% cap on valuation increase every year, per a ballot measure passed in 1997. For 2020, there was a 13.6% market value increase. However, Measure 50 perscribes a 3% maximum assessed value increase — both are calculated, and the lower value becomes the assessed value property owners are taxed on.

“Although we saw a 13.6% market increase, most people will only see a 3% increase in their taxes this year,” Amery said.

“People are asking, ‘If Google doesn’t have to pay their taxes, why do I?’ One thing people need to understand, it’s not just Google. It is also other companies in enterprise zones in the county, non profits and others that do not pay any taxes.” Amery said there are 20,000 tax accounts in Wasco County, 2,794 of which are exempt or partially exempt accounts. “That is a large number of exemptions,” Amery said. “It’s not just Google, it’s not just enterprise zone. There is a wide array of government, non profits, religious and social welfare exemptions. The enterprise zone and SIP agreements get a lot of attention because they are large, because they are designed to spark significant investment in communities like ours.”

Amery noted the difference in the SIP agreement before the council is that it brings in revenue each year, to the districts and the community, much differently than the enterprise zone. “In 2022-23, Google’s first facility will become fully taxable. We have had to wait 15 years for that. This SIP agreement is different, we will see those funds every year.”

The assessor’s office does a “top-10” taxpayer list every year, Amery noted, and this year Google again ranks as No. 7 on that list. “They already, with three enterprise zone agreements, are the seventh highest taxpayer in the county. If both projects come to fruition, Google will be the top tax payer in the county by a factor of two or three times,” she said. The current No. 1 tax payer, Union Pacific Railroad.

“It’s not insignificant, the agreement we are talking about. It is not a free ride. It represents a significant amount of revenue flowing into the community.”

Amery also told the council that statewide, SIP agreements averaged about 40% of full tax. “These agreements are 50 and 60% of full tax, which is pretty significant.”

Mayor Rich Mays added that if Google’s enterprise zone in lieu payments since 2005 were counted as “taxes,” the company would already the #1 taxpayer in the county.

Council response

Councilor Timothy McGlothlin spoke of many of the projects funded in part or fully by Google donations over the past decade or more, noting his appreciation for local Google staff and saying, “I for one am glad they are here.”

Councilor Rod Runyon noted he has been involved in each Google server project, first as a Port of The Dalles Commissioner, then as a county commissioner, and now as a city councilor. “Google has been a good neighbor,” he said, and the SIP agreement would be a big improvement over previous enterprise zone agreements in terms of community benefit. “The SIP agreement framework is a proven strategy in the state of Oregon, and it has some real bonuses for the communities where it is employed,” Runyon said.

Councilor Scott Randall said, “We have had close to a year to review and analyze and discuss this agreement, and also hear public comment and citizen feedback. I know it’s not universally supported by the community, but I’m confident this agreement is mutually beneficial to the city and to Design LLC and I intend to vote in favor.”

The agreement was passed unanimously by both the city council and the county commission.

About SIP agreement

The SIP is a state program overseen by Business Oregon. It provides up to 15 years of partial tax abatement and is similar to an Enterprise Zone, also a state program, under which previous Google data centers in The Dalles were built. The local negotiating team included Matthew Klebes, enterprise zone manager; The Dalles Mayor Rich Mays; Wasco County Commissioner Steve Kramer; Wasco County Administrator Tyler Stone; Wasco County Tax Assessor Jill Amery and The Dalles City Manager Julie Kruger. Former The Dalles’ mayor Steve Lawrence also sat in on many of the meetings, having negotiated with Google in the past.