Port of Morrow commissioners signed off Wednesday on a contentious package of tax incentives for five more Amazon data centers in eastern Oregon, tax breaks Morrow County values at an estimated $1 billion.
Wednesday’s unanimous votes by the five-member port commission were the final step in securing the enterprise zone incentives, which local officials hope will secure $12 billion in new Amazon spending in their remote county, about 160 miles up the Columbia River from Portland.
Amazon already has four enormous data centers in Morrow County and is one of the community’s major employers, with several hundred local jobs tied to its operations. But its growth has produced bitter debate over how the Seattle tech company secured its incentives and an ongoing probe of possible self-dealing among those awarding its tax breaks.
Two state investigations are looking into potential conflicts of interest among port officials and a former county commissioner, who own a company called Windwave Communications that provides fiber-optic service to Amazon’s local data centers. The Oregonian/OregonLive reported on the issues last summer.
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.
Those two port commissioners, Marv Padberg and Jerry Healy, are also under investigation by the Oregon Government Ethics Commission. The ethics board is examining whether their prior votes on prior Amazon tax deals were improper, given that Windwave stood to benefit from the company’s growth in Morrow County.
Their potential conflicts were the focus of attention Wednesday 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.
“You know how this looks to everybody outside this room?” Port Commissioner John Murray said.
While Murray said he supports Amazon’s growth, he noted that the commission was voting Wednesday without waiting for guidance from the state ethics board on whether it’s appropriate for Padberg and Healy to participate.
“I guess I have a problem with that,” Murray said. “It looks bad.”
In a letter to the state ethics commission last month, Healy and Padberg said their company does have a deal to provide most of the fiber-optic service to one new Amazon data center. But they maintained they only have a “potential” conflict of interest in voting on incentives for the other four facilities.
At Wednesday’s meeting, Healy and Padberg recused themselves from voting on one package of Amazon incentives but voted in favor of the other four. Healy decried “misleading statements in the press” and said Windwave has “no exclusivity or guarantee” with Amazon.
Neither Amazon nor Windwave has responded to requests for information about the value of the two companies’ contracts.
Three other public bodies in Morrow County have already approved the deal this month. The incentives exempt Amazon from paying nearly three-quarters of the property taxes other businesses pay.
Still, fees that partially offset Amazon’s incentives figure to be a windfall for Morrow County, and the company’s continued growth will be an ongoing economic boon for the community of just 13,000 residents.
Amazon will pay about $5 million in community fees when construction starts and tens of millions of dollars more over the life of the 15-year agreements. It will also pay about $110,000 annually, per data center, to local schools and emergency services, and its data centers aren’t exempt from school bonds and similar taxes.
Amazon hasn’t said when it plans to start work on the five new facilities, or a sixth covered by a separate tax agreement.
“We’ve been an active member of eastern Oregon communities since 2011, investing more than $15.6 billion while supporting thousands of local jobs,” Amazon said in a written statement after Wednesday’s vote. “Investments like these create and support high paying, highly skilled jobs in local communities, and projects that benefit local education, healthcare, public services, and more.”
Data centers are among Oregon’s fastest-growing industries, fueled in part by tax breaks worth $180 million last year alone. They are not major employers from a statewide perspective, though they make a big economic impact in the rural communities where they operate.
Oregon’s program of enterprise zone incentives puts no limits on how much local governments can give away in negotiations with businesses. The state created the program for small manufacturers in the 1980s, but in recent years data centers filled with billions of dollars in high-end computers have come to dominate the program.
Critics question whether small counties are equipped to negotiate with some of the world’s largest tech companies. And there is wide variance in the value of the tax breaks.
Morrow County’s latest deal with Amazon will provide giveaways about twice as valuable, for example, as a similar deal officials in The Dalles reached with Google in 2021.
The enterprise zone program sunsets in two years and Oregon lawmakers are considering reforms that could limit the duration of the incentives, tie the size of the tax breaks to jobs created, and require public notice before voting on such deals.
Wednesday’s discussion at the Port of Morrow, though, focused entirely on the process the port followed in approving the incentives, and whether it was proper for commissioners to vote on a deal in which they had a potential financial stake.
“I disagree with wholeheartedly with how we got there, the pathways that we took,” said Murray, who nonetheless voted with his colleagues to approve the incentives.
“I hope people are paying attention,” he said.
— Mike Rogoway | mrogoway@oregonian.com | 503-294-7699
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