Oregon Senate passes data center tax bill

Bill written to help counties keep incentive promises to companies

17 February 2012 by Yevgeniy Sverdlik - DatacenterDynamics

Oregon Senate passes data center tax bill
A rendering of Facebook's data center in Prineville, Oregon. Image courtesy of Facebook.

The Oregon Senate voted in favor of adjusting the state’s tax codes to make sure companies with data centers there get to keep the tax incentives that attracted them to Oregon in the first place.

The state’s 30-member Senate passed the bill unanimously earlier this week, the Statesman Journal reported.

The Journal quoted senate president pro tempore Ginny Burdick acknowledging the need to update Oregon’s tax codes to reflect the realities of the digital age.

“Much additional work needs to be done, and that’s very clear, to address the broader economic development and equity issues surrounding how communication companies are assessed in a world of rapidly changing technology,” Burdick said during a legislative session.

The legislation now goes to the House of Representatives. If passed by the House, it will go on the governor John Kitzhaber’s desk for approval.

The bill was introduced after Facebook – which has a massive data center in Prineville, Oregon – complained that it had been assessed for a much higher property tax than it was expecting by the state’s Department of Revenue.

Before the company decided to build the data center in Prineville, it entered into an “enterprise zone” agreement with the local county government, which exempted it from a variety of tax obligations as an incentive to invest into the large construction project.

Companies in enterprise zones are usually exempt from being centrally assessed for taxation by the state. However, the revenue department had classified Facebook as a communications provider, which made it subject to “central assessment” regardless of its agreement with the county.

After Facebook and a number of other high-tech firms – including Google, Adobe and Rackspace – complained, the revenue department hurriedly put a temporary rule in place to exempt data centers from central assessment. At the same time, the department put in motion a process to put the rule on the books permanently.

The department’s spokesman Derrick Gasperini said the permanent rule should go into effect in July.

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