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Success expected for Oregon data center tax bill

Rep. touts majority support for bill that followed Facebook tax dispute

27 January 2012 by Yevgeniy Sverdlik - DatacenterDynamics

     
Success expected for Oregon data center tax bill
A rendering of Facebook's data center in Prineville, Oregon. Image courtesy of Facebook.

A bill moving through the Oregon State legislature that seeks to preserve tax breaks for owners of data centers in the state is expected to have support of a bi-partisan majority of the legislature, the bill’s author Republican representative Mike McLane announced Wednesday.

At issue is a conflict between state tax codes and economic-development agreements counties have made with data center owners to lure their data center construction projects. The agreements are for projects in Enterprise Zones. Counties exempt these projects from certain tax obligations.

McLane’s bill was a response to a conflict Facebook – which recently built a massive data center in one of these enterprise zones – had over a tax assessment it received.

The state’s Department of Revenue, which assesses property value for taxation purposes, defined the social-networking company as a communications company, using a definition in an old law currently on the books. A state assesses utilities’ property value directly, bypassing counties, which effectively voids Facebook’s enterprise-zone tax-break agreement with Crook County.

Facebook has disputed the assessment, saying it was not a communications but rather a marketing company. Still, unless the law us updated, the company faces the risk of having to pay a tax bill it has not anticipated.

The statute currently on the books is about 100 years old, McLane’s office said, and undercuts the state’s Enterprise Zone program. McLane claims the program is one of the most effective tools for attracting new business to the state.

His bill – if signed – will require the Department of Revenue to respect counties’ enterprise-zone agreements as long as the data center owners that sign them hold their promises to create jobs with above-average wages.

“The overwhelming, bipartisan support of this legislation underscores the importance of moving quickly to correct a conflict in Oregon law so that we can continue to attract new jobs and investment,” McLane said.

Of the 90 members of the legislature, 48 agreed to become co-sponsors of the bill, he said.

The issue affects more companies than Facebook. There are multiple high-profile large data centers in Oregon, including a Google facility.

Google was one of the companies that signed a letter of support for McLane’s bill along with Facebook. Other signatories included Adobe and Rackspace, among others.

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