Central Oregonian

Franchise fee collections prove the benefit of data centers

January 15, 2013

Last week, during her State of the City address, Prineville Mayor Betty Roppe provided an optimistic assessment of City of finances.

She noted that fund balances improved city-wide and the general fund maintained its beginning balance despite an ongoing slide in property tax income.

Of course, the picture wasn’t perfect as the City of Prineville still faces challenges with its railroad and Meadow Lakes Golf Course. Nevertheless, we want to commend the City for doing such a good job – particularly as we still struggle with the effects of the recession.

We applaud the leadership of the Prineville City Council as well as City Manager Steve Forrester and the staff he manages. Maintaining a positive financial outlook during difficult times will likely help the City recover from the recession quicker, and help keep City services more stable.

Part of that strong economic outlook is linked to recruitment of the Facebook and Apple data centers. Much has been made of the construction jobs and other permanent employment the facilities have brought to the community as well as the residual economic impact to local businesses. These types of benefits are not easy to quantify with a concrete dollar amount, leaving the City little proof of the economic gains that data centers provide.

That has changed, now that the City has begun collecting franchise fees. In 2012, they brought in more than $230,000 in franchise fees from Facebook for their electricity consumption. That more than offset the $121,000 decrease in property tax revenue the City endured from 2011 to 2012.

Citizens and candidates for local government offices have regularly questioned whether or not the City and should have offered a 15-year tax exemption to lure Facebook and Apple to Prineville. They have suggested that the facilities do not provide any direct benefits to offset the tax break.

We think the franchise fees concretely illustrate what the data centers can provide. The City has yet to receive such franchise fees from Apple, and they intend to build a facility comparable in size to the Facebook data center. Data center critics should take this into consideration before they say that local leaders made a mistake in recruiting them.

We commend the City and Crook?County for exercising the foresight to see the long-term benefits of recruiting Facebook and Apple. These data centers are a good thing for the City, and the franchise fees show tangible proof. If the City can continue to help utilize tax breaks to attract more businesses, including data centers, in the future, they could even further improve their financial standing.