New Amazon data centers are headed to Morrow County. Officials there recently approved a deal worth about $1 billion in tax breaks, The Oregonian/OregonLive reported. David Sykes is the chair of the Morrow County Commission. He says that Amazon helps diversify the region’s economy. Sykes joins us with details of the deal.
This transcript was created by a computer and edited by a volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Amazon is going to greatly expand its presence in Morrow County. The tech giant already has four huge data centers there. With the recent approval from the Port of Morrow, they will now be able to build six more data centers. They’ll get an estimated $1 billion in tax breaks. The recent port vote was just the final approval for these data centers. They had already secured the backing of the city of Boardman and the Morrow County Commission. David Sykes is the chairman of that commission and he joins us now. Welcome to Think Out Loud.
David Sykes: Thank you. Thank you for having me.
Miller: There’s a lot to get to here, but in the biggest picture, why did you vote to approve these deals with Amazon that will let them build six more data centers?
Sykes: Well, I’ve lived in Morrow County since 1980. Back then, we were totally dependent on natural resources. Then things started to fall apart on us. In 1998, the sawmill shut down in Heppner, and we lost 138 jobs. In the mid 80s, the Conservation Reserve Program was instituted by the federal government, and 25% of the dryland wheat went out of production. Then in 2020, of course, the Boardman coal-fired plant, which a lot of people are familiar with, it shut down with the loss of 143 jobs. So we knew we had to diversify this economy because it was scary when you start losing that kind of economic engine.
We actually have a three-tiered economy right now: We have agriculture. We have renewables – we have lots of renewables here, wind and solar, about 693 megawatts with another big solar plant coming in – and then the industry, which includes the tech, the Amazon. So, if we wanted to have strong communities, vibrant communities, have our young people move back here, we knew that we had to have places for them to work, so they could raise their families and have their kids here. Amazon is one of the pieces there.
Miller: I guess I’m really curious about this question of diversification because you can call it one of the pieces – and obviously it is, you’re talking about other sectors – but it’s a huge piece. It already accounts for something like a third of the county’s property taxes. How do you feel about potentially increasing that reliance on just one company and being, I guess, more tied to one company?
Sykes: It’s not the first time that’s happened. Like I said, in the south part of the county, in Heppner, we were tied to Kinzua. It was just like every other mill town around Oregon. They got hit really hard, and we lost it all. All the jobs, all the good paying jobs. So, you know, it’s not something that’s out of the ordinary, in certain communities, to be tied up with… But it’s not a single entity. I mean, like I said, we have three different legs to our economy now. Much more stable, which makes me feel better. We’re not dependent on just one. We’re not totally dependent on Amazon for our economic well-being. We have three things going here.
Miller: What were the negotiations with Amazon like?
Sykes: Well, they bring in a proposal and then we counterproposal and they take it back to their people, and it kind of goes back and forth like that until we reach an agreement, just like probably most any other negotiations people do.
Miller: I guess, in particular, I’m wondering how you think about what you’re giving up and what you’re gaining. A billion dollars in tax breaks is a lot of money that’s not going to be coming in. So that’s on the negative side of the ledger. And then there are jobs or the money that Amazon will pay in taxes or in fees. How do you think about both sides of that ledger?
Sykes: I’m not sure how the billion was calculated. I think it was from real market value. Like I said, the other two projects: wind and solar, they don’t pay real market value; and agriculture doesn’t pay full market value on their property. They both get tax reductions. Other businesses, food processing that has expanded in the county, they receive tax reductions. I don’t know what baseline they used because none of those three will pay from the real market value as they call it. Homes, small businesses, they pay real market value.
Miller: So that’s the reasonable question about sort of the potential negative side of the ledger. What about on the other side? How do you think about what you’re gaining?
Sykes: Well, like I said, if you want to have people move to your county, if you want your young people to come back, you want to have kids here in your schools; you have to give them jobs. If they don’t have jobs, they’re not gonna be here. When you watch things move away and you start losing your jobs and your businesses, you wonder what’s gonna happen to your community. So, the Amazon jobs, they pay good. The windmills and so forth: not a lot of jobs, but they pay okay. You have to have that if you’re gonna have a vibrant community. Otherwise, you don’t have young people here, you don’t have people moving into the county.
Miller: Once the construction of these centers is done, how many jobs – how many permanent jobs – are you expecting?
Sykes: They haven’t actually said yet. I don’t have that figure. But I know they’re more than the renewables, so that’s nice. But, I don’t know exactly how many jobs they are going to… they weren’t sure either. The construction jobs aren’t really what we’re talking about. Those are ephemeral jobs. They’re here and they’re gone. Just like when they build – we have six wind farms here. When they come in, the construction people, those aren’t the jobs that we’re looking for. It’s the permanent jobs at Amazon. And they pay 130% overall of the average wage in the county, so they’re good jobs.
Miller: But do you have even a ballpark figure for how many we’re talking about?
Sykes: I don’t wanna say that without knowing for sure. I wouldn’t want to quote that because I asked if they know exactly. They don’t know. So, you know, I can’t quote that.
Miller: At this point, do you think it would be possible to land any big, new business to come in – to expand or to come in for the first time – without giving them some version of tax breaks, some incentive to build in your county as opposed to a neighboring one or any other state there is?
Sykes: I think when the Oregon state legislature passed the enterprise zones – there’s 26 of them, I believe, in the state of Oregon – the goal was to attract businesses to your enterprise zone. So, it was founded with the purpose of offering tax reduction in exchange for economic activity. So there’s a lot… They will build in other counties. They built some in Umatilla County right next to us. So, I don’t know, but I don’t think so.
Miller: It does seem like this ends up being a kind of arms race, where local governments, for very understandable, very rational reasons end up leaving potential money on the table. I can’t help but think that if everybody around the country stopped offering these tax breaks, then companies couldn’t pit you against one another – whether it’s Umatilla County, just to the east, or anybody. It also doesn’t seem like anybody… It doesn’t make economic sense, I guess, to be the first one to give up a potential advantage. I’m just curious how you think about being pitted against other localities?
Sykes: I don’t feel like we’re being pitted against them at all because I believe this came down from the state legislature. They have put down all these economic development zones all over the state. So, we’re just dealing with what has been given in the state…
Miller: I mean, Amazon could say, ‘If you can’t give us a great deal, we’ll go elsewhere.’ That’s what I mean by being pitted against them. You’re taking advantage of something that lawmakers have created. I’m wondering, I guess just about the bigger picture where, if none of this existed, then companies wouldn’t use these kinds of tax breaks as leverage.
Sykes: Yeah, I suppose the businesses run their business the way they run it. So I would have to suppose… They never, Amazon, in all the talks with me – I’ve done not a lot but some – they’ve never said that to us. That, ‘We’re gonna go somewhere else.’ So, I don’t really know what their thoughts would be on that.
Miller: How much did you talk, if at all, about water use with Amazon?
Sykes: We did talk water use with them because, especially here in Eastern Oregon, water is very important. There’s industries that use a lot more water than they will. They use it for cooling in the summer. A lot of it’s being recycled through, and a lot of it is recycled water. So, they’re pretty good and judicious with their water use, we feel.
Miller: Before I say goodbye, I just want to ask you briefly just for an update on another, in some ways bigger, water issue of contamination in local wells. Something that we’ve talked about a couple of times but not for a little while. Where does that stand now? And what have you heard from state or federal leaders?
Sykes: We’re actively engaged in this at the county and state and federal level. We’ve talked to state representatives. The governor came out here and visited. Senators Wyden and Merkley have both talked to us. They have $1.7 million available to tackle this issue, and they’ve assured us that there would be more to come. The thing about this is, this is a two prong problem really: There’s a short term. That’s where the county is most involved right now because we have a health department, and our job is to take care of the health of our citizens. So we’re making sure water gets delivered to them and that water gets tested. That’s the short term.
The long term is, what are you gonna do about it? You know, how do you solve it? Turns out that it’s more of a one solution doesn’t fit all, the whole area. There’s 4,500 wells in this area with potential contamination – 20% in Morrow County, 80% in Umatilla – so it’s a two-county thing. We’ve met multiple times with the state. They have put their resources behind us. They assigned a project manager. So I feel like they’re engaged and we’re just trying to get our arms around the long-term solution right now.
Miller: David Sykes, thanks for your time.
Sykes: Thank you very much.
Miller: David Sykes is the chairman of the Morrow County Commission. I should note that there are currently two state investigations into possible conflicts of interest among Port of Morrow commissioners and a former county commissioner. It’s connected to a fiber-optic company that they own, a company that’s been providing services to Amazon and stands to benefit from Amazon’s expansion. You can check out Mike Rogoway’s reporting in the Oregonian about this.
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