The Real Story – A Column With Opinions Based On My Experiences -The Hundred-Million-Dollar Tax Shield (Part 1 of 4)
Something is wrong in our community, and many of us know it. Across Washington County, we see City Council and neighborhood meetings packed with residents demanding answers. Families living along Evergreen Road and other corridors, as well as in edge-of-town subdivisions, are watching multi-story data centers and AI compute warehouses rise up next to residential fences. And almost everywhere we see massive power substations and lines rising to power the hum that drones through the night. All of that is happening as our farmland, power, and millions of gallons of municipal water get gobbled up to cool server racks.
In this 4-part series, you will learn why the Hillsboro Herald is making specific Endorsements for Washington County Commissioners and Hillsboro City Council.
Power Substations. Batteries and Data Centers – Hillsboro, Oregon – A 2026 and Future Reality is being powered by “The Machine”
These developments are not happening by chance, though residents often feel locked out of the decisions shaping them. Our eyes are open now, and for those who see what is happening here, it all adds up; it all makes total sense. When residents show up to testify at City Hall, they are met with polite smiles from councilors, smooth bureaucracy, and assurances from planning staff. The message is often the same:
- Our hands are tied,
- Our code allows this, and
- Economic development is the priority!
Even after all the meetings and hard work on Data Center and AI Computing codes, we now see the new planned code revisions to include “Accessory Use and Transfer of Development Rights,” potentially gutting the change so many had hoped for.
Following The Paper Trail:
To those following local planning dockets, the pattern is familiar. For those seeking clarity on how we arrived here, these outcomes were not an accident of random market forces. A coordinated policy and economic development framework took shape over two decades, centered on the Washington County Chamber of Commerce and the Westside Economic Alliance (WEA)—supported by regional tech and commercial real estate interests, underwritten by municipal agreements, and anchored inside City Hall. This is an extensive analysis drawing directly from public records, resolutions, and committee budgets. It examines how long-term policy priorities have shifted, why data center expansion has accelerated across Hillsboro, and what this means for residents whose daily lives and tax bills are affected.
The Civic Blueprint: When Hillsboro Built for Working People
To understand where Hillsboro lost its footing, look back to Tom Hughes, who served as Mayor from 2001 to 2009 before leading Metro. Hughes was a hometown kid who graduated from Hillsboro High and spent decades teaching history and government at Aloha High. He approached economic development not as a corporate lobbyist or tax-abatement architect, but as a civic duty: if Hillsboro was going to grow, that growth had to provide real, family-wage jobs for the people who lived here.
Under Hughes, economic policy centered on tangible employment. He fought for advanced manufacturing, renewable energy employers, and research operations that put thousands of local residents onto living-wage payrolls, supported local trade unions, and generated broad prosperity across the community. He championed the coming of SolarWorld and Genentech as well as expansions at Intel. When he helped break ground on the Hillsboro Civic Center at 150 East Main Street, it was designed as an open, accessible civic heart for residents, not a corporate annex.
Mayor Hughes understood the delicate balance between high-tech recruitment and community livability. He insisted on accountability, balanced growth, and ensuring the City retained its civic independence. He was also among the first to insist on equitable and inclusive policies for everyone in our community.
KEY POINT: The stark contrast between Hughes’s philosophy and the leaders who followed him defines Hillsboro’s current crisis. Where Hughes measured success by how many local workers clocked in each morning, his successors shifted the city’s economic engine to serve capital-intensive data centers and automated compute halls—massive industrial fortresses that consume colossal amounts of power and water while creating almost zero permanent jobs for Hillsboro residents. When Hughes termed out in 2009, the focus on genuine community employment was diminished, and regional corporate advocacy took the wheel, prioritizing capital-intensive infrastructure over neighborhood job creation.
The 16-Year Assembly Line: Willey, Callaway, and Pace
In 2009, former Chamber President and Board Chair Jerry Willey stepped straight from leading the Greater Hillsboro Area Chamber of Commerce into the Mayor’s office. Partnering with longtime Chamber President and CEO Deanna Palm, Willey spent two terms actively aligning municipal policies directly with the Sunset Corridor’s heavy industrial players. When Willey termed out in 2017, he moved on to the Washington County Board of Commissioners (District 4).
Next up was Steve Callaway. Callaway took over the mayoralty in 2017 and held a dual role: Mayor of Hillsboro and a seated member of the Board of the Westside Economic Alliance (WEA), sitting alongside corporate government-affairs directors, land-use attorneys, and industrial property developers.
By 2025, the succession machine was perfected. Callaway handed the mayoral gavel to Beach Pace, who also took his seat on the WEA Public Sector Board. Now, with Willey retiring from the County Commission District 4, Callaway has filed to take Willey’s county seat—stumped for by Deanna Palm and armed with $5,000 in fresh contributions from the Chamber PAC. That race has Callaway running against respected community leader and Hillsboro City Councilor Kipperlyn Sinclair. She was the first politician in Oregon to call for a temporary moratorium on Data Centers and AI computing facilities, which was passed after a long and open struggle. Sinclair and Callaway offer two ends of a spectrum when it comes to the economic engine and who will drive it, giving voters a real choice.
It can be said that both Willey and Callaway have accomplished many very positive things for Hillsboro and Washington County. But there is no doubt that the power and machine they have helped build both protects and promotes big business in our County. Willey and Callaway have been vocal about limiting restrictions, avoiding moratoriums, and putting economic development at the top of our priorities. And to be clear, I want that too, as do most people in Hillsboro. But the Data Center AI value proposition is not something many on our side of the fence in Oregon trust, nor do we see enough net value in it.
The Architects of the Abatement: Resolution No. 2558 and the Hundred-Million-Dollar Tax Shield
To understand why multi-billion-dollar Corporate data centers and AI Compute facilities pay virtually zero property taxes to the Hillsboro School District or its School bonds, Washington County, METRO, PCC, and local fire agencies today, you have to look at the exact moment Jerry Willey passed the baton to Steve Callaway in the spring of 2017.
Willey was a 33-year partner and highly respected CPA at Jones & Roth, with deep expertise in tax structuring, corporate balance sheets, and industrial recruitment. Jerry was my accountant and my father’s too—I knew firsthand the sharp financial acumen he brought to public service.
Callaway, a career elementary school principal, took the oath as Mayor in January 2017. Just three months later, on April 18, 2017, Steve Callaway signed the document that would define their shared legacy and reshape Washington County’s tax rolls forever: City of Hillsboro Resolution No. 2558. The policy continuity between Willey’s fiscal background and Callaway’s signature is written directly into the resolution’s mechanics: a sophisticated accounting framework adopted by aligned civic leadership.
Under the banner of “encouraging economic diversity,” Resolution No. 2558 re-authorized the Hillsboro Enterprise Zone (E-Zone) across 7.6 square miles of industrial land for a statutory ten-year term under ORS 285C.250:
- Sweeping Administrative Power to Staff: Section 7 of the resolution resolved that “Without any further action of the City Council,” the City Manager and his designee (the Economic Development Director) were granted sole authority to review, approve, and execute abatement agreements with the County Assessor without returning to the elected Council dais. The Council handed the checkbook to staff and stepped aside.
- The “Community Service Fee” Clawback: Because capital-intensive data centers invest billions in equipment but hire very few workers, normal enterprise zone metrics would have collapsed. Resolution No. 2558 solved that corporate problem through Exhibit B, Section V: The Two-Tier Community Service Fee (CSF).
- The Tier 2 Data Center Rate: Because the exemption values reach hundreds of millions while job totals remain minuscule, data centers land in Tier 2 (exceeding $20,000 abatement per job). In exchange for near-100% property tax relief on buildings and personal property, the company pays a fee equal to 33% of the abated tax in Years 1–3 and 50% in Years 4–5.
- Bypassing Public Tax Rolls: Under standard ad valorem property taxes, revenues flow to the Hillsboro School District (funding operations and bonds), Washington County general revenues and libraries, emergency services, and more. Under Resolution No. 2558, those taxing districts are bypassed. Instead, the negotiated Community Service Fees flow internally into City-controlled accounts—specifically the Workforce Development Fund (WDF) and the Economic Development Fund (EDF)—to be allocated under the administration of the Economic Development Director.
Under Resolution No. 2558 (Exhibit B), the designated Enterprise Zone Manager (the Economic Development Director) administers the resulting Community Service Fee revenues internally through the City’s Workforce and Economic Development funds, outside the normal budgetary oversight of independent school and county boards. The very same administrative office that oversees Chamber contracts and co-founded the Silicon Forest Partnership, a private 501(c)(6) business league inside City Hall, exercises authority over millions in Enterprise Zone fee revenue.
Yesterday, Steve Callaway posted his speech at the Washington County Chamber to his Facebook page. Please review this to hear Steve speak about his 2026 Campaign economic positions.
KEY POINT TO UNDERSTAND: Resolution No. 2558 terminates after ten years. It comes up for renewal in 2027. The strategic alignment of local campaigns and regional endorsements across 2024–2026 positions the same policy coalition to oversee the renewal of these tax abatement frameworks when they come up for renewal.
This institutional alignment is a coordinated network of public officials, business associations, industry advocates, and municipal administrators working in concert to prioritize rapid industrial expansion. Under this framework, economic growth itself has become the primary mandate—even when permanent living-wage jobs and neighborhood livability take a back seat.
Coming Tomorrow in Part 2: The Inside Operation
A hundred-million-dollar tax shield cannot survive in a political vacuum. To protect these abatements and prepare for the 2027 renewal, the apparatus needed institutional armor, public subsidies, and regional legal cover.
In Part 2, we follow the paper trail: the 2021 transition of the local Chamber, $520,000 in public agreements, and the private technology association operating out of Hillsboro City Hall.
The Real Story is an investigative commentary and analysis column published by Dirk Knudsen. While all contractual records, corporate filings, budget allocations, and meeting minutes cited are drawn directly from verified public records, the interpretations and civic conclusions reflect the author’s editorial perspective.
The Hillsboro Herald is committed to fairness and factual accuracy. If you identify a documented factual error, please contact HillsboroHerald@gmail.com for immediate review and correction.
