Good News for Rural Oregon

A series of announcements to build or enlarge data centers has brightened the economic prospects for big chunks of rural Oregon.Interesting news lately about data center investments in rural Oregon. Interesting because, for once, rural Oregon is getting the benefit of economic development instead of just urban Oregon.

There are still "two Oregons" when it comes to spurring economic activity in the state. All you have to do is look at rural county unemployment rates, which are all higher than those in urban areas. But several rural investments made news last week, according to details provided in The Oregonian:

         *  Facebook is building a second, 330,000-square-foot data center in Prineville next door to a facility that opened last year.  Upgrades in the region's power network made room for the company's expanded footprint.

         *  Apple is starting small with a new data center in Prineville. 

         *  Amazon is going big. It just started work on a second large data center in Morrow County. 

         *  Officials at the Port of Morrow are optimistic that data-hosting specialist, Rackspace, will exercise an option to buy 99 acres for a new facility near Boardman by its March 31 deadline. 

Further, from The Oregonian:  "Oregon's data center industry is flourishing this spring, with government assistance. The Bonneville Power Administration has accelerated plans to upgrade Central Oregon's power supply, while the state legislature voted last month to guarantee the industry's lucrative tax breaks. Data centers arrived in Oregon in 2006, when Google built its first major data facility in The Dalles. Activity took off last year, when Facebook opened its first company-owned data center, and Amazon opened a long-awaited data center near Boardman."

For those who have been involved in economic development over the years (I was deputy director at the Economic Development Department from 1985-87), these investments stand as good news. It has been difficult to pave the way for private economic investments in rural parts of the state, if only because it can be difficult to get goods to market.  With data and call centers, there are at least three benefits that draw companies to rural parts of the state — cheap power, a favorable tax structure and, in a case such as Redmond with some population within an easy drive, a willing work force.

On the tax front, the lack of a sales tax means that data center companies save substantially when they buy new computers. State law also gives cities and counties the ability to establish rural "enterprise zones" that exempt data center equipment from property taxes that other businesses pay. Those exemptions can save big data centers millions of dollars annually. In the recent session, legislators enshrined the tax benefit in state law by exempting data centers from centralized taxation at the request of Facebook. Legislators also agreed to create 10 new enterprise zones at the request of House Republicans.

All of this good news last week was offset, at least to a degree, when T-Mobile announced it was closing its call center in Redmond, a facility that opened about 15 years ago to plaudits as a state-of-the-art center. Perhaps T-Mobile's call center in Salem helped to prompt the consolidation.

Still, it appears that data center location decisions are just starting, and that should to put smiles on the faces of local officials such as Port of Morrrow General Manager Gary Neal and Central Oregon Economic Development Director Roger Lee. They and their colleagues have worked for years to stimulate economic activity and they deserve to crow about the new achievements.