Oregon revamps tax law to make state more data center friendly
A few years back it looked like Oregon was going to be the place to build your data center. With Apple building a gigantic facility and Facebook opening one almost next door, plus Amazon making a lot of noise about building a large chunk of their data center infrastructure there, it seemed that Oregon was well on its way to being the Pacific Northwest location of choice for data center development.
And then the investment just stopped.
Even announced projects, like Apple's plan to greatly expand their footprint in Oregon, failed to materialize. With the completion of the Apple data center in 2013 next to nothing in the way of major development was announced to be built in Oregon. It had turned out that building in Oregon wasn't quite the bargain that companies had perceived it to be.
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While companies were drawn to Oregon as a data center site due to the lack of state sales tax and special enterprise zone agreements that exempted servers from local property taxes it turned out that the way that Oregon calculates property tax, using a technique called central assessment, was adding millions of dollars to these large companies' data center state property tax bills.
The practice of central assessment included intangibles such as the value of a company's brand and other difficult to define criteria in calculating the overall property tax bill. Many estimates brought out during the stumping for Oregon Bill SB 611 claimed that the additional tax costs were actually offsetting the savings that drew the companies to Oregon in the first place.
The new bill is sitting on the desk of Oregon's Governor Kate Brown, awaiting her signature, and is heralded as the trigger event that will restart data center development in the state. According to an article on oregonlive.com, Amazon, for example, is ready to start building 11 additional data centers once the bill is signed into law.
While not quite a foray into the law of unintended consequences, it would seem that Oregon's property tax reform will also change the parameters that data center operators look for when building new sites.