Big Property Tax Breaks Help Lure Big Companies to Morrow County

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The Port of Morrow Commission on Wednesday, May 10, voted to approve a deal to allow Amazon to pay tens of millions in fees on five new data centers it plans to build in the county in lieu of paying more than $1 billion in property taxes. (Hermiston Herald file photo)

Port, county and city officials in Morrow County have approved a deal to have Amazon pay almost $40 million in fees during a 15-year span on five new data centers.

In return, Amazon won’t pay property taxes of more than $1 billion on the new centers. But Port of Morrow Commissioner Rick Stokoe said no business is competing to come to the county to pay as much as it can in property taxes.

“Who is willing to pay more taxes?” he said. “No money in means no money out. If we don’t offer property tax exemptions, these companies are not coming here.”

Amazon intends to build five new data centers in the county, adding to its existing four centers, as part of a $12 billion project. The project could create hundreds of jobs in the area.

Stokoe said he didn’t know how many jobs Amazon has created nor how many more people the new data centers will employ.

“But I do know they are very appreciative of the high-paying jobs Amazon provides,” Stokoe said following the port commission’s vote Wednesday, May 10, to approve the deal to exempt Amazon from paying property taxes.

Vote comes with contention

The Boardman City Council and the Morrow County Board of Commissioners the previous week also approved the incentives. During the public comment period at the city council meeting, a couple of residents spoke about the need to allow owning chickens inside the city limits. No one made any comments about Amazon and any tax breaks.

Stokoe said the port commission vote was unanimous in favor of five resolutions to approve the incentives the with two commissioners — Jerry Healy and Marv Padberg — recusing themselves from voting on one of the resolutions.

Healy, Padberg along with Don Russell, former Morrow County commissioner, and Gary Neal, former Port of Morrow general manager, are owners of WindWave, a provider of fiber-optic services to Amazon data centers in Morrow County.

As The Oregonian reported, two state investigations are looking into potential conflicts of interest among the port officials and Russell. The Oregon Department of Justice is looking into how the public officials acquired Windwave from a nonprofit, Inland Development Corp., on whose board two of Windwave’s buyers served.

The Oregon Government Ethics Commission in December 2022 voted to conduct full investigations of the four because they may have used their positions to benefit themselves as owners of WindWave. According to The Oregonian, their potential conflicts were the focus of attention May 10 as port commissioners debated for about 20 minutes over the propriety of the two commissioners’ participation in the vote on Amazon’s new enterprise zone incentives.

Port Commissioner John Murray said he supports Amazon’s growth but noted the commission was voting without waiting for guidance from the state ethics board on whether it was appropriate for Padberg and Healy to participate.

“I guess I have a problem with that,” Murray said. “It looks bad.”

Healy decried “misleading statements in the press” and said Windwave has “no exclusivity or guarantee” with Amazon.

What Amazon pays in the deal

Amazon will pay $5 million in a community development fee when construction begins, according to the incentive package, then a minimum of $2 million per year in an annual improvement payment during each year of the tax exemption, plus more than $100,000 each year per data center to local schools and for public safety. These centers also would not be exempt from bonds for schools, public health and the like.

Morrow County Tax Assessor Mike Gorman said the county’s total assessed value in October 2022 was just shy of $3.76 billion, and the real market value is closer to $9 billion.

“It wasn’t that long ago, less than 20 years ago,” he said, “the county’s assessed value was less than a billion.”

Amazon Web Services announced the opening of the U.S. West Cloud Region in 2011. The region consists of data-center clusters in Morrow and Umatilla counties. In 2020, their property taxes and fees amounted to $35 million: $22 million in Morrow County and $13 million in Umatilla County.

Amazon is Morrow County’s top property taxpayer at $26 million. Some of the company’s older data centers have come onto the tax rolls as enterprise zone deals ended. Amazon didn’t leave when it had to pay property taxes.

“And those campuses are still there,” Gorman said.

Stokoe sees community growth at stake

Justin Nelson is the Morrow County district attorney, the legal counsel for the board of commissioners and a lifelong resident of the county. He said he knows some residents are not pleased with the enterprise zone deals Amazon has received, but he has not heard a lot of public input about that.

He recalled, however, someone was concerned that Amazon’s growth could mean more power lines in the area.

“It might not just purely be tax abatement,” he said, for why locals oppose deals for Amazon.

He also said he sees what attracts big operations like Amazon to Morrow County. It has lower property costs than the Portland/Metro area and Willamette Valley, for example, access to water and the power infrastructure to meet demands.

In addition to serving as a port commissioner, Stokoe is the Boardman police chief. While the county, port and cities are giving big tax breaks to big companies, Stokoe said the people of Morrow County also are benefiting from good-paying jobs.

“There are jobs that wouldn’t be here paying those employees if they didn’t have that opportunity,” he said. “It’s good for the community.”

Amazon is not the only company getting a break on property taxes. Lamb Weston also qualifies for the exemption, Stokoe said, because it meets the criteria, such as a minimum investment of $25 million, creating a certain number of jobs and paying at least the median wage.

“Most of these positions are getting paid more than the median wage,” he said, so much so that Morrow County, with a population of 12,635, making it the 29th most populous county in Oregon out of 36, is in the top three counties in the state for highest wages.

The jobs the data centers and other big employers create allow locals to support their families, live more comfortably, support local businesses and, as housing developments grow, even to buy their own homes in the county, thus growing the property tax base.

“I think the majority of our community understands this is something we’ve been trying to do for years,” he said.

Data centers are in the spotlight now, but Stokoe said the port is working to attract new businesses and diversify the local economy. But companies have to be willing to locate here, and the tax exemptions make the county more attractive.

“We have a metal manufacturing company coming in,” he said.

It’s too soon to say much about that, he added, and even too soon to say if the company would qualify for an enterprise zone exemption.

Without the enterprise zone as an incentive, Stokoe said, those businesses won’t come to Morrow County. He said he saw that for himself in a closed-door meeting with then-Gov. Kate Brown and big business representatives who stressed their operations would leave the state if not for the enterprise zone.

“If they don’t come to us,” he said, “we’re not giving anything away because there’s nothing to give away.”

1 COMMENT

  1. Not all the community feels that we need to keep adding more Amazon it would nice to keep our farmland and add some shopping centers so we don’t have to go tri cities to buy decent clothes furniture and groceries we will be able to fund the town we live in and add a varity of decent restaurants

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