A bill that seeks to exempt data centers and telcos from Oregon’s unusual “central assessment” property tax has cleared both houses of the State Legislature and has gone to Governor Kate Brown for signing.
Democratic senator Mark Hass, the bill’s main sponsor, told The Oregonian, that Brown had personally promised to him that she will sign it once it makes its way through the House of Representatives and the Senate.
The state established central assessment back in the 1800s, seeking to collect taxes from railroads based on their entire networks’ value rather than just the property they had within state borders, The Oregonian explained. It has been updated to include telegraph and telephone and then again to include microwave towers.
Some Oregon officials have sought to apply central assessment to cable TV companies and data centers, which are now abundant in the state. Comcast, which has both network assets and data center space in Oregon, has been fighting it in court over the past six years.
Operators that participate in a data center tax break program have been exempt from central assessment, but that exemption has an expiration date.
If Brown signs the bill, it will likely mean millions in lost tax revenue for counties.
Hass and State Representative Mike McLane, a Republican who co-sponsored the bill, have argued that central assessment may have put in jeopardy whatever future Oregon data center expansion plans companies like Facebook, Apple, and Amazon may have had.
The bill’s fate is also likely to impact future plans of multitenant data center providers in the state. If the governor does not sign the bill, companies thinking of leasing data center space in Oregon will have to reevaluate their plans because current tax code exposes them to risk of higher tax liabilities, Aaron Wangenheim, chief operating officer with T5 Data Centers, said.
“We’d obviously have to evaluate how customers are viewing this. Everyone will have to stop and evaluate what is the true impact on their business. We don’t want to be exposing our customers to risk.”
Oregon is not above competition with other states for data center construction projects, Wangenheim said. Companies often evaluate it along with Washington, Utah, and even Idaho during site selection.