The Seattle-based company already has several enormous data centers in neighboring Morrow and Umatilla counties. Amazon said it could be many years before it’s operating in Arlington as it pursues permits, electricity and tax breaks for the site, but the company and community are planning for the major changes that will accompany the project.
Data centers have grown rapidly into one of Oregon’s largest industries over the past several years. The huge installations are having a profound impact in small cities and counties across Oregon, even as they strain the state’s energy supply and electrical grid.
For Gilliam County, which has just about 2,000 residents spread over more than 1,200 square miles, Amazon’s arrival represents the city’s biggest economic opportunity in decades.
“It’s going to be an enhanced growth spurt for us and we’re actually quite excited about it,” said Arlington Mayor Jeffery Bufton. “We won’t end up being just a truck stop on the highway.”
Arlington sits about 140 miles east of Portland, along Interstate 84 and the Columbia River. Much of the original city was flooded in the 1960s when the U.S. Army Corps of Engineers built the John Day Dam, raising the river level. The new town, on higher ground, is nestled against hills abutting the Columbia.
Gilliam County is wheat country and, more recently, it’s also home to some of the state’s largest wind and solar projects. Arlington is the destination for most of the garbage produced by people living in Portland and Seattle. The trash comes by truckor by train to a garbage dump south of town.
Amazon paid $10 million last summer for 376 acres on a mesa above the city and is in the process of buying another 30 acres from the Port of Arlington for $3 million. The city and port began readying the properties for development a dozen years ago, hoping it would eventually attract new industry to the region.
The site makes sense for Amazon’s expansion because of its proximity to the company’s other Oregon data centers, according to Kevin Miller, the company’s vice president of data centers in Seattle.
Many of Amazon’s corporate clients run complex software applications that draw from many databases and servers. Even light takes time to travel from place to place, so Miller said Amazon’s clients need their data to be stored in data centers that are close to one another geographically so that information can move among various computers almost instantaneously.
“We all think light is very, very fast,” Miller said. “But when you start to do the math, actually, the milliseconds start to add up the farther away the data centers are.”
Amazon plans 13 years ahead when deciding where it will build its next data centers, according to Miller. He said a land purchase like the recent one in Arlington is the first step in a process that takes “many years,” though Miller declined to speculate on just when it might start building there.
But he did say that Amazon expects its footprint in Arlington could be as large as its big operations in Morrow and Umatilla counties.
“For the size of parcel that we’re getting in Arlington,” Miller said, “I think it could be equivalent to what we would have in nearby locations.”
When choosing sites for its data centers, Miller said Amazon looks for access to power, land and the ability to secure permits to build.
Clean power is a priority, too, because Amazon has committed to buy all its energy from renewable sources and because its Arlington site will be subject to Oregon’s clean-energy mandates.
The Arlington site is served by PacifiCorp, the Portland -based utility owned by Warren Buffett’s investment fund. The energy cooperative that serves Amazon in Morrow and Umatilla counties is exempt from Oregon’s renewable energy requirements but investor-owned utilities like PacifiCorp are not.
Last year, Amazon agreed to buy more than 200,000 megawatt-hours of electricity annually from an Avangrid wind farm in Gilliam County. It will need a lot more than that to power the operations in Arlington and finding that power could be tricky, given the Northwest’s constrained transmission grid and soaring demand for electricity throughout the region.
Some data centers also use high volumes of water but the amount varies considerably based on the technology used to cool the servers.
Data centers don’t employ nearly as many people as other heavy industries and Amazon doesn’t disclose how many people work in its Oregon server farms. Employment data for Morrow and Umatilla counties suggests the company has created at least several hundred local jobs in that area, though, and probably a few thousand. Many more contractors travel to the sites during construction.
That means life for Gilliam County’s 2,000 residents could be very different in the years ahead. Gilliam County Judge Cris Patnode, who serves as the county’s administrator, said her constituents are just starting to wrap their heads around what’s coming.
“It’s going to be a major impact on the community and we need to make it a positive impact and we need to make sure that we capitalize on this opportunity,” Patnode said.
Much will depend on the taxes Amazon pays, and the size of the tax breaks it receives.
Oregon puts no upper limit on the size of tax incentives local governments can offer to big industries. As a result, Amazon receives nearly $100 million in tax breaks every year on its Oregon data centers — far more than the $50 million it pays in local taxes and fees. Its Oregon incentives will save the company well over $1 billion in the years to come.
Arlington and Gilliam County haven’t begun negotiating incentives with Amazon yet, according to Patnode. She said local officials have experience negotiating tax breaks for local clean energy projects and are studying lessons learned by nearby counties when they cut their deals with Amazon.
And unlike some Oregon communities, which have relied on local officials and volunteers to negotiate with global tech companies, Patnode said Gilliam County will hire an attorney to help guide its talks with Amazon.
The county doesn’t qualify for Oregon’s enterprise zone program, which provides most of the state’s data center tax breaks. Gilliam County’s per capita income is too high and its unemployment rate is too low to participate in the incentive program for distressed areas.
So Patnode said officials will negotiate a deal under terms of the Strategic Investment Program, a similar arrangement that can offer local governments more flexibility in structuring an agreement.
Even with tax breaks, Amazon’s arrival could bring millions of dollars annually to the city and county.
Bufton and Patnode both say they hope to use some of those resources to encourage housing development so the people who work in Arlington can live there, too. They want more resources for schools, daycare, parks and other city services.
“We’re one of the smallest counties in the state but we’re going to be doing good, per capita,” Bufton said. “There’s a lot of city amenities that we don’t have and I would like to see that change.”
Officials are already discussing whether they should begin preparing lots for new housing, Patnode said, in anticipation of the growth that would accompany Amazon’s arrival.
“What an awesome opportunity we have for Arlington to make it beautiful and wonderful,” Patnode said, “and make sure this is not just a couple gas stations or a freeway town.”
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