Like many places around the State of Oregon, Hillsboro offers up to 100% Property Tax Abatement in certain parts of town for companies located here that meet the requirements of the Enterprise Zone program. You read that right—100% of all property taxes can be abated and never paid. This can add up to Millions of dollars in savings.
The program has both State and Local requirements, and the programs offered last between 3 and 5 years. There are employment requirements, such as adding one job to the economy, and other requirements, like purchasing 10% or more of their goods and services from local companies.
The State requirements can be found here: https://www.oregon.gov/biz/programs/enterprisezones/StandardEnterpriseZone/Pages/default.aspx Business Oregon is in charge of the program overall, but locally, Hillsboro can control much of the process and how and where it is implemented.
In Hillsboro, there are specific local requirements, which include:
• Minimum Investment of $1 million is required in the North Industrial Enterprise Zone Area or a minimum
of $250,000 investment in the Downtown and South Industrial Enterprise Zone Areas.
• Procurement Plan that increases purchases from Hillsboro-based companies by 10%annually.
• Job Quality/Wages: (1) average of all hourly wages must be at least 102% of Oregon minimum wage (2023 =
$15.45/hr) for a 3 year tax abatement (2) Years 4 and 5 of the tax abatement period, the average wage for all
employees will be 125% of Oregon minimum wage; (3) benefits are provided at a value equal or greater than the
national average for all years of exemption and (4) training and advancement opportunities will be offered to all
employees.
HILLSBORO ENTERPRISE ZONE PROGRAM
March 2024
Application Fee will be paid to the City of Hillsboro in the amount equal to 0.1% of the total estimated value of
investment; fee capped at $50,000.
See the entire program here:
https://www.hillsboro-oregon.gov/home/showpublisheddocument/30411/638454240138230000
While many employers have received Enterprise Zone treatment to entice them to build in our City, we wanted to look specifically at Data Centers, which do not provide employment beyond a menial staff.
Data Centers – Were these massive facilities envisioned when the Enterprise Zone was created in 1985?
Of course not. It was tech employers, lumber mills, processing plants, and manufacturing centers- those great businesses that employ people. This economic tool and the incredible incentives it offers were designed to provide much-needed help to anyone trying to build the structures and facilities to get people to work. And it’s a great program. However, it was not designed for data centers, where jobs are almost non-existent compared to the amount of land, resources, and square footage they occupy.
The Herald has asked the City of Hillsboro for all records regarding Enterprise Zone contracts signed in North Hillsboro for the last five years. Those records should exist online for review in the public domain, but they do not. Once we get them, assuming we can afford to pay the costs of collecting them, we will publish them.
QTS As An Example-
Let’s examine the public record for one of the Data Center Facilities in Hillsboro. QTS Data Centers has five buildings on this one site. According to the company’s website, QTS is owned by Blackstone, one of the most prominent financial institutions in the world. The company had earnings last year of a reported $450,000,000 or more. So this is a bigtime player. You can learn more about this company and its Hillsboro location right here. https://qtsdatacenters.com/data-centers/hillsboro
Heading over to the Washington County GIS Intermap and clicking on the interactive map, we find this information.
Within that tax account, we find 5 R-Account numbers, which is how our county taxes properties. The Herald has called to confirm that these accounts are on the Enterprise Zone program, as seen from the screenshot below taken from the County website. So, the State of Oregon and Hillsboro city staff approved the application for a 5-year Enterprise Zone Tax Abatement. See the coding below.
The County posts all tax bills online, and they are searchable and printable. We have reviewed this bill and called the county for explanations, but of course, no one is available to talk. So we are awaiting a return call. But let me walk you through what I see here. As a broker for 44 years now, I have read a lot of these.
- The Company paid $580,631.49 on a Taxabale Value of $34,463,750 last year.
- The RMV or Real Market Value of the Property is $427,463,750.
- The Tax Rate per $1,000 in value is .0169% of the taxable value.
- A property tax account valued at $427,463,750 typically pays $7,221,000 in property taxes.
- Based on those calculations, and subject to County confirmation, annual savings appear to be $6,793,000
Thinking ahead, once the abatements under the Enterprise Zone time out, this Data Center becomes a cash cow for the City of Hillsboro and all of the other taxing entities who have their hands in the revenue stream. The annual taxes could increase 17 times once the program benefits time out. If that is the case, the Hillsboro School District and the City of Hillsboro would receive $2.6 Million apx. a year. And the list goes on.
QTS Data Centers Hillsboro Oregon – Hillsboro Herald Photo
The Bigger Picture-
There are 15 Data Centers in Hillsboro, with another 10 or so coming. This makes Hillsboro among the top five cities in the Country for growth and placement of massive facilities. We are giving away the farm if they all get that five-year tax reduction.
After many years, future revenues from these Data Centers will offset the five years of taxes we as a community go without. No, there won’t be many jobs. And that hurts us badly. The Carbon effects, climate issues, and demonstrated heat island effects have also not been addressed or honestly approached. The loss of farmland- and the massive amount of our current Industrial land base being wiped out have even more significant long-reaching impacts. And they are ugly and noisy. The horizon’s pastoral beauty is sadly gone in that part of Hillsboro. And these facilities host machines that power AI, which will put many of us out of work. That is an absolute fact. Can we survive on that extra property tax revenue? Maybe a bowl of soup for some- but that is it.
The “why” questions linger in the air. The Herald will report back on who received these tax incentives and what the numbers are if and when we obtain those records. In the meantime, keep reaching for the stars, Hillsboro!
Terminates: June 30, 2028
Features: Urban Zone
Sponsors: City of Hillsboro, Port of Portland (consent), Washington County (consent)
County of Record: Washington (https://www.washingtoncountyor.gov/at)
Local Zone Information:
Zone Manager Dan Dias, Hillsboro City Manager
Assistant Manager Val Okada, Hillsboro Economic Development (https://www.hillsboro-oregon.gov/our-city/departments/economic-development/choose-hillsboro/taxes-incentives)
I work at a small data center in the area. We have around 25 full time employees and dozens more contractors. Everyone makes at least a living wage and many of us are homeowners, paying our fair share of property tax.
I can’t speak for QTS.
I am glad to hear that. It’s not that they do not employ some people, Gray. That much land in the hands of a company that actually builds things like Chips or parts or widgets, that these Enterprise Zone programs were designed for, would emply hundreds on an acreage that big. Take Amazon for instance, right across from QTS. They have almost 500 employees and hundreds of drivers emplyed at that site which is 55 acres. The article is to show how the tax giveaways are being used for things like Data Centers that 1) don’t need them- they would have come here anyway, and 2) they do not bring the jobs that these programs are intended for. I hope they pay all of you even more in the future and that you have a great career!
Thanks for commenting!
It is not true they would have come here. They could have just as easily been outside the city limits.
Co location facilities are filled with the employees who rent space, so much so that these facilities are not built with nearly enough bathrooms.
I came here for the job, but Hillsboro housing is to over the top to be affordable.
Thank you for this very informative article. I would be very interested to read who receives the tax incentives for these types of companies.
As always, we’re screwing ourselves. The hell with homelessness, schools, and extra funds for the city/county general funds. It seems like the citizens of Hillsboro can suck hind t-!.
Agree Stephan! The Schools–which are so vital are really loosing here. How can we even prepare our children well for future careers–let’s say for some of the high paying Intel jobs? Requiring excellent math skills. I have seen the updates on Hillsboro’s math test scores. So dismal–at the best (before the pandemic, which I do excuse the drop in scores after that)–was only in the low 30% range of students that could pass. Having a child who graduated in 2018, and helping frequently, especially with math, my favorite in grade school–I saw first hand how poor the skills were. Multiplication tables on the desks in 5th grade. And in High School the teacher told me, students are just moved on to higher levels–whether they could pass the lower ones or not. OK, I digress–but excellent article, thanks for the research and reporting once again Dirk!
And this is why the federal government wants to tax corporations because they’re not paying taxes at the state level, either. This is a fool’s errand. Why are they getting tax breaks when I’m paying way more for just working I don’t even work in hillsboro. Our taxes are way too high here. And this is why.
If the tax incentives were not offered these data centers would go to another state that is smart enough to make a short term investment for long term gain. The idea that we can tax corporations without considering their mobility is uninformed. The choice is not more or less taxes, it is some taxes or nothing.
In this case, you are the uninformed one. The’ are here for power, cheap land, cheap water, and primarily because the lands they are taking are specifically right on 4 major Fiber cables that cross the Pacific. The tax savings are insignificant to them. In fact on manager laughed about how they could.pay 2 Million dollars an acre and get no tax breaks and still make a fortune. I am not some hack who speculates…those are the facts. Keep swinging though!
One thing is for sure, the local government in Hillsboro cares NOTHING about the average resident.
I know they care. But the machine that is running here is not coming from the people. We are being told this is what we asked for amd wanted, and it is not. But I want to tell you that the Councilors nor Mayor are really behind this either. They are not capable of coming up with the codes and plans and initiatives that are happening. That is coming from the City Manager, Staff, and other influences. Get involved!!
If, as you claim, QTS would have come to Hillsboro with or without these massive tax breaks, why wouldn’t we negotiate a more equitable abatement. As it stands, we seem to rolled over with our paws in the air. Say it ain’t so.
Well… after 5 years these facilities are cash cows forever. I have had personal discussions with top decision makers. This was never about jobs… none of it. Not from Hillsboro’s perspective. Data Centers employ no one therefore no stress on schools, parks, roads. And no pressure on housing. After the 5 year freebie, each building could pay 7 million a year or more. 20 buildings in Hillsboro is a reality. A 200 million annual cash machine is the outcome. And a tax on their power usage may be in the works. Can you say ChaChing???