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Ore. House OKs Data Center Tax-Break Fix

Comes One Day After Apple Confirms Prineville Plans

POSTED: 4:10 pm PST February 21, 2012
UPDATED: 5:42 pm PST February 22, 2012
Tech giant Apple Inc. confirmed Tuesday to NewsChannel 21 that it plans to build a data center at a 160-acre parcel in Prineville it just bought from Crook County for $5.6 million, a stone’s throw from the huge facility built by Facebook.

A statutory warranty deed for the property off Baldwin Court was filed last week with the Crook County clerk’s office, a public document finally breaking the official silence over a long-term courtship with a company formerly known only as “Project Maverick.”

No one in Prineville or elsewhere had been able to speak on the record about the deal previously, due to non-disclosure agreements the company has had officials sign. But the Feb. 15 filing is the first public document to identify Apple Inc. as the “Project Maverick” buyer, complete with the “1 Infinite Loop” address in Cupertino, Calif.

The cat started escaping from the bag in December, when The Oregonian quoted “two people with direct knowledge” who said Apple was nearing a decision on the project.

Apple spokeswoman Kristin Huguet confirmed Tuesday that they purchased the land for a data center, but could not speak to details beyond that.

This week, Apple updated a part of its Website, www.apple.com/environment, which covers a wide variety of its “green” efforts, including LEED energy-efficiency certification for its new Maiden, North Carolina data center. The national said It will have the largest solar array and largest non-utility fuel cell in the U.S.

The deed was signed by county commissioners on Feb. 15 – the very day, and likely not a coincidence, that the Oregon Senate passed legislation to lift a property tax “cloud” over data centers such as Facebook that are lured to enterprise zones in large part due to sizable property tax breaks.

Facebook cried foul late last year when the state indicated it might assess property taxes, rather than leave it to counties. Gov. John Kitzhaber is backing legislation to make sure the county-granted tax breaks aren’t overturned.

On Wednesday, Rep. Mike McLane (R-Powell Butte) secured House passage of the legislation to provide more certainty to companies operating data storage centers in enterprise zones. He successfully carried SB 1532, which clarifies that the data centers are not a centrally assessed property under Oregon tax laws.

“SB 1532 honors enterprise zone agreements with Facebook and others who’ve built data centers and created jobs in our community,” McLane said. “By ensuring the Department of Revenue will not upend these agreements, this legislation restores certainty to Enterprise Zones as to how data centers will be taxed. This certainty is critical to bringing jobs and investment to rural communities like Prineville.”

The legislation has been in development for several months, after the Department of Revenue initially sought to assess the data centers’ property taxes based on “intangible” assets such as a company’s brand, data files and patents. Because intangible assets significantly increase the value of a company, Facebook and other companies could have faced unexpectedly large tax bills.

Though the Department of Revenue issued a temporary rule to address the issue, McLane said legislation was necessary to ensure data centers in enterprise zones are not centrally assessed, as well as to offer certainty for companies that were considering locating data centers in Oregon.

SB 1532 now moves to the governor’s desk for his signature.

Crook County Judge Mike McCabe said Tuesday he was still bound by the non-disclosure agreement, though the filing left him a bit freer to talk.

"We just don't know what their plans are," McCabe said, adding that he's "confident it will be good for Prineville and Crook County."

"These folks have been wonderful to work with," he said. "We will look forward to a long-term relationship with them."

Asked about whether Apple might plan to "out-green" Facebook, which got some flack from Greenpeace for buying coal-generated power for its Prineville data center, McCabe said that actually, "Facebook kind of helped recruit (Apple), saying, 'You've got to come up and look at this community.'"

"Our economic development folks did do the follow-up" that landed the project, he hastened to add.

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