Corrected version: In the third paragraph from the bottom of the original post, a zero was inadvertently left out of the figure Amazon Data Services would pay to the city of Hermiston in total fees over the next 15 years. This version corrects that figure.
The Hermiston City Council unanimously passed a pair of resolutions Monday night that pave the way for the construction of two new campuses for Amazon Data Services that will result in more than $400 million in total investment and the addition of around 240 high-paying jobs.
In exchange for that investment and added employment, ADS will not have to pay property taxes for the next 15 years. It will, however, pay the Greater Hermiston Enterprise Zone nearly $5 million a year in various fees.
ADS has applied for a Long-Term Rural Enterprise abatement for its two campuses. In order to meet the requirements for the abatement, a company must create at least 10 jobs that pay at least 130 percent of the county’s average yearly wage, which is currently around $58,000. Companies must also invest at least $200 million on a project within the enterprise zone.
While property tax abatement agreements tend to face opposition from some who say the companies get away with not paying their fair share of taxes during the life of the agreement, Hermiston Assistant City Manager Mark Morgan said such agreements result in significant benefits to the city.
For example, in 2017, Lamb Weston invested $293 million in a plant expansion that added 145 new high-wage jobs. As part of the tax abatement agreement, Lamb Weston pays $1 million per year in fees over 15 years. That total comes out to about 40 percent of what they would have paid in property taxes without the agreement.
Those fees allow the city to make infrastructure improvements that encourage additional development, Morgan said. In 2018-19, the city was able to build a new water tank on the northeast part of town. That additional water infrastructure made it possible for the construction of 125 new homes in the area with more on the way, as well as the construction of the new Loma Vista Elementary School.
The agreement with ADS includes an Annual Improvement Payment of $5 per square foot of data center construction. The total ADS would pay will not be less than $2 million per year and is expected to reach about $4 million per year at full build-out.
All the fees ADS will pay to the city per year for each campus will come out to $4,950,000 per year. Morgan said that figure will make each campus “the single-largest financial contributor to local government services by far.”
Additionally, ADS will give the city an upfront Community Development Contribution of $5 million within 60 days of the start of construction.
Because Umatilla County is the city’s co-sponsor for the Greater Hermiston Enterprise Zone, it, too, will have to sign off, as well.
Is this going to further impact our already reduced residential power & internet services at higher prices now with even more power going to these 2 additional campuses???
Where are they looking to build these?
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