A tax deal with The Dalles government officials could save Google hundreds of millions of dollars if the company agrees to invest $200 million in data center construction in the city. According to OregonLive, the potential deal, offered by The Dalles and surrounding Wasco County, would offer property tax exemptions that would benefit new data center construction, along with the expansion of Google’s two existing facilities.
The Dalles city manager Nolan Young said while some believe the city is giving up a lot of tax revenue with the deal, the break is necessary to encourage Google to do business with them instead of another competing community.
“They look for places where the playing field is leveled a bit more,” Young said. “Without this agreement they probably would not be expanding in this community.”
In addition to the deal at hand, the Oregon also offers sales tax avoidance on computers, reported OregonLive. Since Google opened two Oregon data centers seven years ago, Facebook, Amazon and Apple as well as numerous service providers have opened data centers in Oregon. OregonLive also reported that data hosting company Rackspace is planning to build a data center at the nearby Port of Morrow as well.
Data Center Design
Oregon Live reported that the deal stemmed from news that Google was mulling expansion of its 37-acre data center campus in The Dalles. The third Google facility would be almost double the space of their other two facilities, with 164,000 square feet, compared to the 94,000 square of the two current data centers. Additionally, the new facility would maximize its data center space, offering two floors in an 85 foot tall building. The two current facilities each offer a single floor in a 55-foot tall structure.
Google’s two facilities use 37 megawatts each; the power used by each facility is equivalent to the power drawn by 27,000 homes, according to Oregon Live. Currently, Google utilizes the Northern Wasco County PUD for its power, and pays approximately 40 percent less for electricity than customers in the Portland area. Google’s power rate is at 4 cents per kilowatt hour.
However, Oregon Live stated that city franchise fees associated with Google’s power consumption have a major impact on the area. The company pays approximately $340,000 annually to the city in electricity-related fees, which comprises more than 7 percent of The Dalles’ general fund revenue.
Tax Break Package Payments
The Dalles Chronicle outlined the structure of the potential deal, which includes an initial payment of $1.2 million and subsequent annual payments of $800,000. The funds earned through the deal would be split between The Dalles, Wasco County and the Northern Wasco County School District.
Compared to the previous deal between government representatives and Google which allowed them to build their previous two facilities, this tax break package increases the payments made by Google to the city and county, according to the Chronicle. The proposal has a 15-year life, and would also lock in the property tax breaks over the course of the deal.