Data Centers Replace Jobs With Machines As Farmland Rolls Under Forever

At what cost are we attracting jobs to greater Hillsboro, Oregon?  A fair question indeed and one that more and more citizens of our fair city and beginning to ask as historic farms and ancient trees give way to belching machines, smokestacks, chemical towers, and whirring cooling fans.

We all know the benefits of employment and this local boy has heard the drumbeat emanating from City Hall for 35 years now.  It goes something like this (bang your fist on the desk as you chant this):   jobs…jobs…Jobs…Jobs…JObs…JObs…JOBs…JOBs…JOBS…JOBS…JOBS… J O B S!!!!  God that feels good! Yeah well, it felt a lot better when jobs were scarce here; and I was an active desk pounder in those days.

But small-town Hillsboro is gone.  That ended with the entrance of INTEL’s Ronler Acres Campus. Over 400 acres holds the main campus which employs 20,000 people making it the State of Oregon’s premier company and largest employer from the private sector. That has been a good outcome for almost everyone; about 50 jobs per acre.  High-paying jobs too;  a fair trade-off for bulldozing one of the best parcels of farmland we had. In a state like Oregon, where preservation of natural resources is at the core of our collective being, this was the big prize.  Landing INTEL was in fact like Ahab landing the White Whale. Hillsboro’s win however set the bar so high that it can never be replicated again.

As a top real estate broker, I know what the State and cities, and counties have wanted – more INTELS. More high-paying jobs.  All of us hear the chant- the fists are still pounding.  But the jobs that have come since that epic whaling adventure have never quite been the highly prized jobs that INTEL brought.  Yes, we have seen tremendous growth, and yes, there have been more high-tech companies that have come to the valley.

In my opinion, and that of others in the industry, the jobs we wanted and hoped for are not coming. Not as they did before.  Amazon, Top-Golf, medical packaging, failed solar companies, chemical companies, warehouses, and fulfillment centers have been the norm this past decade or so.

And lest you think I have no good news to fuel that drumbeat, I will advise you all that some big news will break soon.   The City recently spent $25 Million plus to buy some land off of Starr Street and they (we) are building a new mile of road to get to it.  That site, known as Project BaT, is about to be announced as the new home of an employer of 200 to 300 folks.  It could be a chemical company, battery maker, biomedical, or high-tech player.  I have been told it is a division of Hitachi but that is an unsubstantiated rumor.  If I am right, well just remember you heard it here first.  The City staff declined to answer the question about who it was or what it is- just that it is happening.

Drumbeats… indeed.

Data Centers Steal The Show

The bigger story within the story is that of Data Centers, which are pouring into Hillsboro.  These companies want our cheap land and the tax incentives we give them.  To top that off the State, PGE, METRO, and the County seem to be in a huge hurry to provide them with massive amounts of water, power, and other resources.  They are here to stay.  As if Hillsboro was not already attractive enough we just so happen to be the gatekeepers of the transpacific submarine cable route.  These massive fiber bundles run from Australia to Hawaii and then across the vast Pacific to the Oregon Coast. Once there they run to I-5 and up and down the West coast.  Consider the cables the Autobahn of the internet, and the information of the world is traveling on them at speeds never before conceived of.  As it runs through Hillsboro these data centers, which might be the pit stop in this analogy,  release new cars onto the track and send them in each direction carrying the hopes, dreams, ideas, and news of the world with them.

To do that these businesses need a few things.  

• Space in the form of HUGE buildings.
• Super Computers- and thousands of them in each building.
• Power-  Enough power in each building to power a small city, and that much is used daily.
• Water – Tens of millions of gallons weekly to cool the computers and the buildings.
• Access to High-Speed Cable – We have that here to the nines.
• A willing government to ease permitting and offer tax breaks and incentives.

The one thing they don’t need?  Workforce.  Yes, friends – they need all of the same things that INTEL needed but they do not need many people.  The process is highly automated and workers are sparsely used throughout these cavernous buildings.  That is just a fact. Perhaps 5 to 10 people per acre may be employed in such a place.  And the average salary of a data center worker is just over $58,000. Not horrible but well below the median wage for the City of Hillsboro of almost $80,000 a year.  Industry experts will tell you about the multiplier effect and that these facilities create jobs all over the country and beyond and therefore they must not be held to such a high standard.  While I appreciate that, I say Hogwash.  Let someone else have them.  Here is a nice promo piece by NTT who just absorbed the Solar World property with no real approvals needed to do so – this will become perhaps the biggest Data Center in the area – boy they love these tax breaks!

In 2014 the Oregon House passed the legislation that was known as the Grand Bargain.  That agreement was a one-of-a-kind land use deal to take all of the farmland from about Brookwood/Shute Roads in Hillsboro, and bring it into the Urban Growth Boundary, all the way to Jackson School Road.  The basis for this was to land a second whale– an even bigger whale! The supposed large mystery employer was known only as “Project Azalea”– a company with plans to hire 10,000 people and build a massive plant. Oh, and they only wanted to be in Hillsboro, Oregon.  Only 10 people or so were allowed to know who it was and secrecy was required – mandated in fact.

With no land readily available, the State, City, and County sprang to action with the State leading the charge.  Jobs…. Jobs…. Jobs... the drums pounded once again and louder than ever and this time over the historic Tualatin Plains.  The bill passed in 2014, the UGB was moved, and farmland was sacrificed for high-paying jobs.  Landowners, many of whom lobbied for the change, hit the ultimate jackpot with increases in land value from $10,000 an acre as farmland to values that now eclipse $550,000 per acre as industrial land.  The drums beat on and on and on.   But there was/is just one problem.

You guessed it.  The whale “Project Azalea” never surfaced.  No harpoon was even fired in an attempt to land it. In fact, sources I have in high places say that outside one meeting with a possible frontman, Project Azalea was nothing more than a clever ruse to get land inside the growth boundary.  Perhaps it was Apple or Taiwan Semi-Conductor as well leaked rumors had many believe.  Or perhaps this article done by the Times-Union is right. We were played by a New York consultant.

Our City was left with no choice but to zone and begin to annex land in the new expansion areas that the Grand Bargain provided for.  The planning and Ec-Dev staff did a lot of work and a lot of master planning.  While I may take issue with the level of preservation of trees and greenspaces, I think they have done a very good job overall.  In my opinion, they have dropped the ball on putting in place legitimate zoning safeguards to prevent so may data centers from coming in.  The end result now is that almost every parcel that has come available in this Westward expansion of cement and steel has been bought by a data center.  That folks is an absolute fact.

I stood on a muddy road in 2018 and heard a land acquisition manager for a data center brag and laugh about the land they had just bought.  He said that even though they paid the market rate ($400,000 per acre) they would have paid twice that much.  The reason he said was that the location and access to the high-speed cables in Hillsboro meant that they could charge more money and deliver more terabits than anywhere else.

“Money is going to rain from the sky in that building and we got tax incentives to boot,” he said laughing.

I was the wrong guy to say that in front of.  Eveeryone is free to pursue the American Dream.  But the Hillsboro I grew up in would not so easily be taken advantage of.  It has taken me awhile to come to grips with writing this and it may not matter to you, but it sure does to me.  So here is what I see:

• Data Centers are a bad use of prime industrial land.

• We were forced to rezone prime farm land in one of the most historic places in the Pacific NW to make room for companies we can not land and who are not coming to Hillsboro.

• The lack of traditional inustrial employment buyers has left the data centers in the cat bird seat- they are taking it all if they can get it.

• They create no jobs to speak of.

• The people of Hillsboro are giving way too much in tax incentives – tens of millions- that we can not afford to give away and for what?  A handful of jobs and some concrete buildings with razor wire and a heat signature rising to the moon?

• The data centers are not a clean industry- collectively estimates are that 2 to 3% of the Carbon Footprint is created by data centers and 3% of the worlds power is used up by them. While Hillsboro is about to decide to force all homesellers to have their homes Energy Scored, I stuggle to see how this environmental tragedy has been allowed to happen. 

• When asked what Hillsboro citizens gain from these data centers in direct dollars and benefits I was told “it is hard to say”.  The reality is we gain very little.  We actually are all paying as residents to allow them to exist here.  Understand that – we pay money we do not have to have them come here and hire a handful of people- and retain Billions in profit.

• In the master-pieced article written for Oregon Business by Hillsboro journalist Jason Notte Flint, Data Fields– the Oregon tax payers paid $36,000 for every Data Center job created when tax credits and subsidies were factored in.  This is a must read in my view.

• The power consumption and water consumption threatens the resources we have here in Oregon.  These businesses hire a lot of PR firms to convince people they are Green- they buy wind energy – great.  So do I as do many of you. But that does not mean we have an unlimited supply of it.   It has been speculated that one of these large data centers can use enough power in a day to equal the entire population of HIllsboro’s usage.  That may be a wild speculation- I am trying to pin that one down.

• The billions in profits these companies will make will not be reinvested into our local economy.  It will move to Wall Street and around the world.  It will not benefit our people.

Here is a map I created of who is here and who is coming.  15 Data Centers folks- and the party is just getting going!  Beat those drums boys and girls…

As I end this article and opinion piece, let me share this with you.  Here is a set of questions that have been sent to City Hall.   I will publish the answers when they are sent to us.  In the meantime, we ask for any of you readers with an opinion, information, or thoughts to comment in the section below.  Data centers are here to stay, and they have changed the landscape of our future.  I asked the question, and the answers are out there.  At what cost are jobs? I think we are being sold down the river, and I don’t like it. Maybe some of you feel the same way.

Questions to the City of Hillsboro:

1.  Please review the following list of Data Centers in the City of Hillsboro and provide us with a summary of any and all Income tax, Property tax, Enterprise Zone, or any other Tax Incentives being received by these companies or their predecessors.

2)  Given that same list of Data Centers can you tell us how much power and how many gallons of water each one is using or anticipated to use each year?  Are their rates on par with what the citizens of Hillsboro pay? Higher?  Lower?

3) Does PGE have the capacity to serve the power needs of these data centers and those to come and has the City been able to provide safeguards that these Data Centers will not overload our power grids or cause our residential power rates to rise?

4)  Same question as #3 but addressed to water, our current water supply, and our water rates?

5)  Has the city completed an economic analysis of what each job provided by a data center is going to cost or produce the City of Hillsboro when all the tax incentives and other factors are calculated?

6)  What does the City of Hillsboro perceive to be the benefits of having these Data Centers open in Hillsboro?

7)  Has the City reviewed the effect on the planet and the Carbon footprint when approving all of these data centers?

8)  Does the City regulate or monitor the number of computers or amount of data, and power or water, that each data center uses?  Is there any way to know what they are doing inside the business in terms of usage?

Thank you very much-

Stay tuned for more on this topic – we want to find a way to see if these Data Centers can consider becoming real community members with the good people of Hillsboro.

Resource- https://www.datacenterhawk.com/markets/portland-or