THE DALLES — Residents of Wasco County have an opportunity to weigh in on the use of funds paid by Google as part of its Strategic Investment Program (SIP) agreement to build two new data centers on River Road in The Dalles.
“While the exact amounts of funding are currently unknown, these sources are expected to become available in the near future, offering an opportunity for significant long-term positive impacts on the community,” states the community survey created by the city manager’s office.
The first of these data centers is already under construction, while the second is currently in the building permit review process with the city and county, according to The Dalles Community Development Department Director Joshua Chandler.
The SIP money comes from four components of taxes and fees Design, LLC agreed to pay as part of receiving a 15-year tax abatement from the city and county. Those components are:
- A taxable portion of each data center based on the total investment cost.
- A community service fee based on 25% of Design, LLC’s tax savings, capped at 2.5 million.
- An initial payment of $3 million per data center.
- A guaranteed annual payment, which fills in whatever’s left so that all the components add up to 50% of the full tax for the first data center and 60% for the second.
Design, LLC will pay these amounts over the course of 25 years. Only one initial payment of $3 million has been received thus far.
Mayor Richard Mays noted that this agreement is the fifth negotiation between the city, county and Google since the tech giant began talks for building its first data center in 2005.
“That facility is entirely 100% on the tax rolls at this point,” Mays said, “and it's generating somewhere in the neighborhood, I believe, of $5 million a year in taxes to the community.”
According to the data center page on Google’s website, the company has invested $1.8 billion in its Gorge-based facilities and employs 200 people there.
What’s the difference between SIP funds and regular taxes?
The money from each of these components will receive a different handling by the city and county. The taxable portion will be handled like regular tax dollars, while certain percentages of the community service fee already earmarked for distribution among various entities including schools, fire service, 4-H, soil and water conservation, plus The Dalles and Wasco County.
The Dalles City Council and Wasco County Commissioners met earlier this month to discuss how to use the initial payment and guaranteed annual payment, as well as the city and county portions of the community service fee.
Mays called this meeting “the first of what we expect to be multiple meetings and a lot of community input is going to be encouraged.”
City Manager Matthew Klebes pointed out that fee dollars more directly impact the local community, because while tax dollars for schools, for example, go through the state and then to local districts, money from the community service fee goes directly to the school districts listed in the agreement.
Creating an endowment: Improve now, or invest for later?
City and county officials discussed putting the initial payment, guaranteed payment and previous funds from the third data center agreement into an endowment.
An endowment is an investment portfolio, typically in the form of stocks, bonds, real estate and/or other investments, designed to keep its principal amount intact while generating income from interest, dividends, or capital gains.
Wasco County Administrative Officer Tyler Stone emphasized that while the county has a long list of immediate needed improvements, the potential of drawing annually from an endowment is a better long-term strategy.
“My feeling is if we do the endowment, we've got to be all in on it,” said Stone.
He noted that while an abatement period means not seeing the full tax amount on these data centers for the agreement’s duration, creating an endowment with these direct payments will provide a steady flow of funds in the meantime.
“What is the opportunity cost of these dollars today versus in the future? And how do we weigh that?” he said.
Commissioner Phil Brady echoed this idea, saying, “Establishing an endowment here will give us a sense of stability that can actually keep our tax rates stable, and will protect us when something comes up.”
He added that an endowment creates a pool of funds shared between the city and county, which simplifies collaborative the experience by already accounting for the funding source.
Councilor Scott Randall said he knows of many community members who would like to see some immediate benefits from these revenues, but he agreed the endowment would create more long term financial stability.
Lowering taxes vs. saving in an endowment
While Councilor Tim McGlothlin said he is intrigued by the endowment idea, he argued the city and county should also seek to reduce taxes on citizens as a more immediate way of reorganizing funds.
“I'll just keep bringing it back up so that we don't forget that portion of the negotiations,” he said.
Pushing back, Wasco County Assessor Jill Amery said immediately paying off bonds has only small impacts for the taxpayer. For example, paying off three bonds for Mid-Columbia Fire and Rescue, parks and rec and the Columbia Gorge Community College would generate savings for the average taxpayer of $130.35 a year or $10.86 per month.
Councilor Darcy Long brought up specific immediate needs such as a new high school, pointing out that upcoming projects may increase the tax burden for residents.
“I'm concerned about the fact that projects are increasing in expense dramatically,” she said, highlighting another element of opportunity cost of these dollars. “Sometimes if we spend it today, we need fewer today than we do in the future.”
She also argued that taxpayers may be less willing to levy funds for projects if they see the city and county holding back money.
“As a financial advisor I’ll tell you: Money is emotional,” she said.
Councilor Rod Runyon suggested two endowments, one for the city and one for the county.
Commissioner Scott Hagee and Commission Chair Steve Kramer were in favor of an endowment. Mays also expressed interest in the concept of selling a revenue bond, which another entity would purchase and pay interest on, growing the principal fund.
Citizen feedback will factor into decision making
The next SIP joint meeting will include a public hearing, and Stone said he anticipates the bulk of the discussion to center around public comments.
Kramer encouraged Wasco County residents to provide their comments to the city or county on how they would like to see these SIP funds used.
These comments can be sent through a survey created by the city manager’s office on The Dalles website, www.thedalles.org/alert_detail.php.
Long asked that these written comments be included in the board packet ahead of the meeting for all the board and city council members to review ahead of the meeting.
This survey will be open for public input until July 5 at 5 p.m.
RESPOND NOW: Click here to access the city’s survey.
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