Go Go Google Dollars: Leaders grappling with Future $77 million in payments

The Dalles City Council and Wasco County Commissioners held a joint meeting on July 23 to discuss the use of Google fees paid instead of property taxes. Local leaders are still mulling their options. Locals will have a second chance to discuss ideas for best use of the $77 million at a meeting slated for Sept. 16. Commissioner Steve Kramer asked people to reach out to him via email at stevek@co.wasco.or.us

By Tom Peterson

The Dalles, Ore., Aug. 6, 2024 — City and County leaders continue to grapple with ideas on how to spend an estimated $77 million in Guaranteed Annual Payments from Google over 15 years once two new data centers are operational in the Port of The Dalles.

Both data centers are currently under construction, and Google payments will be split equally to the city and county within two years after the centers are operational.

Construction began on the first data center in Fall 2022. The second one gained approvals for construction in January. Based on previous builds, data centers can take 3 to 4 years to complete.

About The Money

A community survey asking for ideas on how to use the money received 345 responses and they generally fell into seven categories - schools, tax relief, infrastructure, public safety, economic development, housing and homelessness.

But no clear answers on how to spend or save the money were readily apparent at a joint meeting between Wasco County Commissioners and The Dalles City Council on July 23.

The discussion bent toward the idea of using a portion of the money for city, county, community and school projects while putting some portion toward market investments that could be withdrawn at a later date.

Several community members offered ideas on how the money could be spent.

New High School?

Northern Wasco County School Superintendent Carolyn Bernal told the group that the district’s elementary and high school were all in need of upgrades or replacement and the district intended to seek a bond to construct a new High School in 2025.

The last bond for $140 million failed in November 2023.

“I implore you to ponder the future of our schools…” Bernal said. “They should be the center of our community.”

A new high school has been a top priority identified by locals in both the recent Google funds survey as well as during the information gathering for The Dalles 2040 vision completed by the city in 2022.

It was pointed out during the meeting that the school district receives $240,000 annually from a Google Enterprise agreement for the second phase of the data center on Steelhead Way. The district is also projected to receive an estimated $750,000 annually once Google starts making community service fee payments after the first data center on River Road becomes operational.

That number will double to $1.5 million after the second data center on River Road goes online.

The school district will be asking for a $6 million state grant toward construction after completing its facilities assessment that ranked the school high for replacement several years ago, Bernal said.

Ultimately, some combination of dedicated school Google funds, county and city Google funds could be used to buy down the cost of the high school for taxpayers. However, the details of such an agreement that might convince voters to approve the bond are purely theoretical at this time- Tom Peterson.

Commissioner Hege said he wanted “to see the high school get done. I wish we could find a way to get that project done and move on to other projects to make this community better.”

Commissioner Phil Brady said the community had become habituated to a substandard high school. He also said a new high school could bring economic benefits by attracting new teachers and business to the community, that wouldn’t move here based on the school’s condition.

Dufur, Maupin, Pine Grove improvements

Brady also pointed out other immediate needs. He recognized that Dufur would benefit from an improved wastewater system and Maupin and Pine Grove from an upgraded potable water system.

TD Water

The Dog River Pipeline is part of the system that delivers water to The Dalles Water Treatment Plant on Mill Creek Road in The Dalles. City Councilors forged ahead on a major pipeline upgrade to stop huge water losses and are now eyeing improvements at the water treatment center and at Crow Creek reservoir.

Mayor Rich Mays stated that The Dalles has major potable water infrastructure needs as the city’s 75-year-old water treatment plant and the Crow Reservoir dam need improvements.

More details and estimated costs are expected at a city council work meeting slated for Aug. 19.

It became clear during the discussion that city council is concerned with the price tag of the upgrades and Google money could help defray costs, limiting increases to water ratepayers. Councilors Richardson and Long both said that the situation needed to be sorted before they could make decisions on how to use Google payments.

CGCC Investments

File Photo - Students in the Columbia Gorge Community College Skills Center were hard at it developing this display that was located downtown The Dalles. Little Art City strikes again.

Sue Davis with the Columbia Gorge Community College Foundation told leaders that investment in college programs that train locals and are responsive to the local economy was a solid use of the money. She pointed out that past Google Enterprise Zone dollars had gone to the college’s new skill center and dormitory, which places students into employment directly. She said a 2-year associate degree averages a $7,000 annual pay bump.

Libraries

Karl Anderson charms a snake for kids during a visit to the The Dalles Library in July. Programs are getting quite popular.

Wasco County Library District Board Chair Corliss Marsh said she was in favor of the city and county saving the money for a common good that would benefit everyone. She added that the library district should “be in the mix of where the money goes in the future.” Programs at the library are drawing big crowds as they have increased offerings and she forecasted that additional space will be needed, she said.

To provide perspective on Goolge payments to individual tax districts Commissioner Scott Hege said the Library District will get 3.9 percent of the annual Community Service Fees from Google. At maximum that would dump $200,000 annually into the library district when both data centers on River Road are in operation.

Working Together

Hege also posed the general question of whether the city and county should pool their money on equally beneficial projects.

“I like the idea of this,” he said. “Sometimes better decisions are made when we have differing opinions.”

The City and County will hold another joint meeting to discuss use of the Google Payments for a meeting to happen in September and the public is invited to attend and speak.

Mayor Mays, Commissioner Steve Kramer, County Tax Assessor Jill Amery and Councilor Dan Richardson make up the Strategic Investment Team and will take recommendations from the joint meeting and devise a strategy on how the money will be used. That decision is likely to come in late fall or winter.

Commissioners and City Council would then have to make a final decision on the plan.

File Photo - Drilling basalt for a power pole to energize new data centers on River Road near PowderPure in The Dalles in November 2022.

About The New Data Center Money

This meeting only dealt with one portion of the Google Fees from the two new data centers currently being constructed on River Road. That money will not be paid until the tax year following the year Google is given a certificate of occupancy for each data center. Those fees, called a Guaranteed Annual Payment (GAP) is projected to be $78 million over the 15 years of the agreement.

Community Service Fee

In addition to the GAP, Google also agreed to pay a Community Service Fee which is split amongst 11 taxing districts according to the following percentages and dollar amounts estimated at the $5 million annual maximum:

Wasco County……………………………..24.4% or $1.22 million  

City of The Dalles……………………….. 17.3% or $865,000 

Mid-Columbia Fire and Rescue……12.1% or $605,000 

Wasco County Library District……. .3.9% or $195,000 

North Wasco Parks & Recreation… 3.9% or $195,000

Wasco County 4H and Extension…..1.4% or $70,000

WC Soil and Water District……………1.4% or $70,000

Port of The  Dalles………………………….1.2% or $60,000 

North Wasco C.School District……..30.1% or $1.5 million 

Wasco County ESD…………………….……2.7% or $135,000 

Columbia Gorge Comm. College………1.6% or $80,000

Dollar estimates above are based on total build-out of Data Centers and Google Community Service Fees of $5 million annually during the 15-year agreement period.

Property Taxes 

Google is also estimated to pay $1.8 million in annual property tax payments on the new data centers until the tax abatement runs out around 2043.

Signing Bonus

And last but not least, Google agreed to pay $6 million in initial payments for the data centers.  

Old Data Center Money

Property Tax and Enterprise Zone Payments in play

Google’s  First Data Center on Steelhead Way began paying its full share in property taxes in October 2022, adding $5 million to the property tax base.  

In addition, Google is still making enterprise zone payments for the second phase on Steelhead Way and for the third data center at Taylor Lake. 

The Steelhead Way Data Center currently pays $280,000  annually to both the City and the County and $240,000 to the Northern Wasco County School District. That data center is estimated to pay around $6.4 million in total enterprise zone payments before hitting the property tax roll in the 2031-32 tax year.

The Taylor Lake data center currently pays both the county and city $900,000, annually. That data center is estimated to pay around $9.9 million in total enterprise zone payments before hitting the property tax roll in the 2034-35 tax year.

Steelheed Way and Taylor Lake data centers are expected to bring more than $10 million each annually in new property taxes for the local community when the abatements end.

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