Facebook tax exemption approved

Published 12:00 am Thursday, August 27, 2015

Crook County commissioners and the Prineville City Council approved an agreement Wednesday that grants Facebook a 15-year tax exemption on a possible third data center in the city.

The agreement, approved in separate special meetings, holds the company to several conditions in exchange for paying no tax on its buildings and equipment. The company will continue to pay property tax on its 126-acre site in Prineville. The tax exemptions are a standard part of rural enterprise zones created in Oregon to help counties burdened with low employment.

“We’re looking forward to them increasing their footprint in the city,” said Prineville Mayor Betty Roppe.

The city and county officials were prepared to approve the agreement a week ago but had not received the final version of the agreement from Facebook. The social media giant based in California has not directly commented on its plans.

“Facebook very much appreciates today’s decisions by the Prineville City Council and Crook County Commission,” company spokesman Lee Weinstein stated in an email Wednesday. “We expect to make a final decision about a third building in Prineville by the end of the month.”

County Commissioner Seth Crawford said the three-member board unanimously agreed on the tax breaks.

“We’re ecstatic to be continuing our relationship with Facebook,” he said Wednesday. “They’ve been an amazing company to work with and great community partners.”

Crawford said legislative action this year probably rekindled Facebook’s plans for a third data center. Gov. Kate Brown in April signed Senate Bill 611 into law, removing an unusual provision in a 1973 Oregon tax law called central assessment that was applied in 2009 to Internet providers and data centers. Tech companies feared the measure would cost them tens of millions of dollars in property taxes.

“I think it was pretty big,” Crawford said. He said Facebook officials talked about a third data center, but as soon as central assessment became an issue, those conversations “really went away.”

The agreement approved Wednesday takes effect in the first tax year in which Facebook’s new data center is certified ready for occupancy, or on Dec. 31, 2017, whichever comes first.

According to the agreement, which is similar to the first two, Facebook must create at least 10 new, full-time jobs after the new data center comes into service. Those 10 jobs must pay an amount equal to or greater than 150 percent of the annual average wage in Crook County as determined by the Employment Department. The company has five years after the center comes on line to meet the pay requirement.

Crawford said the company indicated it would employ many more than 10 people at a new center.

The company must also pay the city and county an annual project fee of $190,000 during the life of the agreement. If Facebook builds a data center, the project must cost at least $200 million, from planning to fixtures and essential equipment.

Facebook in 2013 reported 113 jobs associated directly with its Prineville operations, according to an economic impact study by ECONorthwest that Facebook commissioned. The Prineville Facebook campus includes two, 334,000-square-foot data centers and a 64,000-square-foot cold-storage facility.

In 2014, the company, under existing agreements, saved $12.7 million in taxes on building improvements and equipment, said County Assessor Brian Huber. In 2012, the exemptions saved the company $12.2 million. Facebook first entered into an enterprise zone agreement with the county and city in December 2009 and again in October 2011.

— Reporter: 541-617-7815, jditzler@bendbulletin.com