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Google gets OK for New Data Center Tax Breaks by Associated Press The Argus Observer, September 29, 2013

THE DALLES -- Local officials have unanimously approved property tax breaks for a new Google data center in The Dalles along the Columbia River.

The Oregonian newspaper reports that Wasco County commissioners voted in favor of tax breaks Tuesday, while The Dalles city council approved the deal Monday night.

Google already operates two data centers on its riverfront property in The Dalles.

The 15-year deal exempts the new building and the equipment inside from property taxes. Google says it will invest at least $200 million in the new data center and add a minimum of 10 jobs. It will make a $1.2 million up-front payment to the city and county, and then pay $800,000 annually.

The development adds to the list of giant plants in Oregon storing digital information remotely for personal computer users and businesses.

Central Oregon and the Columbia Plateau in Oregon have proven attractive for their climate, relatively low electricity rates, the absence of a sales tax on expensive computer equipment, and tax deals such as those announced last week.

Since Google arrived in The Dalles with a pair of data centers seven years ago, Facebook Inc. and Amazon.com Inc. have also opened major Oregon data centers. Apple Inc. is building a big facility near Facebook's data center in Prineville, and data hosting company Rackspace Hosting Inc. has tentative plans for a project at the Port of Morrow.

The data centers don't require large workforces. A few dozen technicians on site manage the hardware, swapping out hard drives when they fail and upgrading servers.

Google has 150 employees and contractors in The Dalles, which has a population of about 14,500 along Interstate 84 about 80 miles east of Portland.

The deal guarantees 10 new jobs and a $200 million investment. It provides for a $1.2 million up-front payment to the city and Wasco County, and $800,000 annually after that for 15 years. The city and county governing boards plan approval votes next week.

Google disclosed in April it was contemplating expansion at its 37-acre property. Preliminary plans showed it would be larger than the first two plants: 164,000 square feet and two stories. The existing buildings are 94,000 square feet and one story.

Existing property tax breaks saved the company at least $100 million in the company's first seven years in The Dalles, according to Wasco County estimates.

In 2011, an Oregonian analysis found that city franchise fees generated by electricity consumption provided the city about $340,000 annually, more than 7 percent of its general fund revenue.

City Manager Nolan Young defended the tax breaks.

"There's some that feel we're giving up a lot of taxes," he said. But the tax breaks are needed to beat out other communities, he said. "They look for places where the playing field is leveled a little more," he said.

Jody Wiser of the watchdog group Tax Fairness Oregon said the tax breaks are excessive.

"Their tax savings is going to be at least $7 million a year, and they're going to create 10 jobs?" Wiser said. "It's at least $700,000 a job every year? I don't think we can really afford that," she said. "We have a tax system. We need to participate in it."