558 N. Main St., Prineville, OR 97754 | (541) 447-6205
On Thursday, the state of Oregon announced that data centers such as Prineville’s Facebook will not be centrally assessed.
The new ruling makes a distinction between companies that provide “services of connectivity” such as Crestview Cable or BendBroadband, and companies that “require third party connectivity.”
In other words, any company which pays an internet provider for access to the internet would not be centrally assessed. This makes complete sense as providing electricity, or internet connectivity is the very definition of a utility, which is the industry that central assessment was designed for in the first place.
Had the Oregon Department of Revenue made this interpretation of the central assessment law prior to sending Facebook a bill earlier this fall, that would probably have been enough to permanently address the issue. Unfortunately, the ruling is too little, too late. Not only did the Department of Revenue wait months before issuing the new ruling, it clearly states in the ruling that it is only temporary.
It is unlikely that future data centers will consider Oregon unless they are sure that the ruling is permanent. Current law says that when it comes to central assessment the state may go back up to five years to collect taxes.
What are the chances that a new data center will trust a temporary ruling? Imagine a business locating to Crook County – only to find out five years later that the Department of Revenue has issued a new ruling and they now owe five years of back taxes.
The only way to settle the issue once and for all is for legislative action. Governor Kitzhaber agrees that the current central assessment law is archaic and vague.
“I think that there are legitimate questions about the definition of who gets centrally assessed,” he said following the ruling. “The law is not clear on that.”
State Representative Mike McLane has co-sponsored a narrowly- focused bill that addresses the issue of centrally assessing businesses in enterprise zones. The bill does nothing to address larger issues, but it would provide certainty to all current Oregon data centers as well as other data centers that are considering locating to Oregon.
Kitzhaber does not support the bill, favoring instead to wait until the longer legislative session next year in order to tackle the larger picture of central assessment in one comprehensive bill.
While we agree that comprehensive reform of the law may be needed, Prineville, Crook County, and the State of Oregon cannot afford to wait that long. Legislation is needed now before other data centers that are considering Oregon get tired of waiting and go elsewhere.
It is time for the legislature to step up, pass McLane’s bill, and settle the issue. Then next year, they can tackle the larger central assessment issues. This would provide security to current data centers and send a clear message that Oregon is open for business. Anything less runs the risk of costing Oregon millions if not billions of dollars in business.
