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The Dalles Chronicle  
  Reprinted by Gorge Business Journal with Permission from The Dalles Chronicle
February 16, 2005
Port deal with Google to create jobs
Internet firm expects to buy industrial parcel

of The Chronicle

     Port of The Dalles commissioners today approved a potential major land sale expected to bring 50 to 100 new jobs and millions of dollars in new investment to The Dalles.
     Google, the California-based company that helps people find information on the Internet (identified in the agreement as Design LLC) agreed to pay a total of $1.87 million for 30.19 acres of land that comprise the state-certified industrial site within the port’s Chenoweth Creek Industrial Subdivision.
     Also within the sale agreement as exhibits are separate purchase options on three additional tracts comprising the North Chenoweth area formerly occupied by Mountain Fir Chip Mill, as well as right of first refusal for some other lands on which the port considers offers.
     If initial development plans go forward, the project would create between 50 and 100 jobs over a matter of time, earning an estimated average of $60,000 annually in wages and benefits - twice the county average income, according to terms in the agreements.
     “We are pleased to be in this area,” a Google spokesperson said. “We appreciate the efforts of everyone involved.”
     Scott Hege, port executive director, offered the following statement: “We are happy to have them here.”
     City Manager Nolan Young spoke to the effect such jobs could have on the community.
     “Any time you create jobs within the community - particularly well-paying jobs - there is a turnover of dollars,” Young said. “It will have a definite impact on the community.”
     “I think it’s going to help the economy,” said Dan Ericksen, Wasco County Judge. “I think it’s going to help the attitude and the general feeling in the area that things are picking up and we’re on the right track.”
     The sale fits within a broader framework of local economic development, Ericksen said, including the location of Home Depot and development at Columbia Gorge Community College.
     “This is just one piece in a great big wheel,” Ericksen said. “Other developers seem to be looking here and a number of builders are starting to look at building houses in the area. It’s a piece of the economic upturn and I think we’re leading the state.
     ‘‘For two years, being judge has been a pretty difficult job, trying to figure out how to keep from cutting services on a fixed amount of money. All of a sudden, being judge is getting exciting.”
     Community partners
     The land transaction culminates a community-wide recruitment effort that has included key roles not only for the port and the city, but for Wasco County, the college, chamber, Northern Wasco County PUD and Q-Life broadband fiberoptics provider.
     The original lead for the business came through the Oregon Economic and Community Development Department, Young said.
     “One, they knew we had a site,” Young said. “Two, they knew we had [fiber-optics] close to the site. And, three, they knew we met the general demographics of the type of community [the company] wants to locate in.      From that point, the community began identifying their needs and ways to address those needs.
     “The biggest challenge had to do with power,” Young said. Other issues were a matter of negotiating arrangements that were desirable to the company, but did not have negative impacts on the community, he added. “The benefits need to always outweigh the impacts.”
     U.S. Rep. Greg Walden (R-Ore.) played a key role in recruitment.
     Walden said he had been able to aid the project, but that it was as much a matter of lucky timing as anything.
     Walden was able to set up a conference call between himself, Google and Bonneville Power Administration chief Stephen Wright, which Walden said greatly facilitated negotiations.
     Young says he has confidence in the organization.
     “Our dealings with them have only increased my confidence that they will be a good community partner,” he said. “Should we be successful in reaching a final deal, I think the community will be pleased with what they bring into the community.”
     In evaluating any company, a well-known company, honesty and the money to do what they plan to do are key considerations, added Ericksen.
     “For any company coming in, those are three things that really weigh heavily,” he said, “and this company ranks pretty high on all three of those. If this company does come, I believe they will be a good community partner and continue to do things for the community.”
     The facility will contain the technology infrastructure used by Google, a company that specializes in helping Internet users find information on the World Wide Web.
     Building and associated costs are estimated at $5 million to $20 million over time, with investment in equipment expected to be significantly higher.
     A Google spokesperson declined to provide additional project details, citing concerns over industry confidentiality.
     The spokesperson said Google does not yet have a specific project completion date, but said the company hopes to start construction soon.
     Addressing the confidentiality issue, Young said, “The state of Oregon has very well-developed public record and public meeting laws. In that framework, they have recognized the needs of private industries, because of competitive advantage and competition, that negotiations for locations in communities to be kept in a confidential setting.”
     Competition is also an issue for the communities themselves, he noted, because aggressive competition occurs in trying to recruit new employers.
     Young said he was not aware of any negative impacts on the environment from the planned development. However, the company will be a heavy user of power, water and wastewater services.
     “There will be some increase in water consumption and output of water that has to be treated, but I would not classify this as a heavy polluter,” Young said.
To further explain, Young said the water output will not require pretreatment. In contrast, Kerr McGee is one example of a plant required to pretreate its effluent.
     The city has adequate capacity in both its water and wastewater facilities to meet the needs of the company, Young added. However, to provide for the company’s water needs will most likely require the city to expand its water main and make improvements to the pumping station that serves the port.
     “It’s in the master plan to expand that,” Young said, “but this would just kick it up about two or three years.”
     Enterprise Zone
     Young noted that an application for a tax exemption under city and county enterprise zone incentives is pending for a property on Geiger Way in the Port Industrial Park.
     “We’re working on currently looking at the maximum property tax exemption of 15 years,” he said.
     Maximum enterprise zone credits are rarely used. The only one currently in effect is for Roseburg Forest Products in Douglas County, according to Arthur Fish of the Oregon Economic and Community Development Department.
     Most enterprise exemptions are from three to five years.
     Long-term Rural Enterprise Zone tax credits are available in limited circumstances to businesses locating within one of 40 “nonurban” enterprise zones. These zones are for counties with longstanding annual unemployment rates high enough or per capita incomes low enough to meet specific criteria, according to a state fact sheet on these zones.
     To qualify for the credits:
     • a company’s investment costs must be greater than 0.5 or 1 percent of the county’s total assessed value by the end of the year when operations begin. The floor amount varies from $1 million to $25 million depending on location. Wasco County’s 2004-05 assessed value was more than $1.3 billion, making the required investment at least $6.5 million.
     • certain minimum job levels must be maintained during the tax abatement period.
     • average annual compensation across all workers at the facility must stay at or above 150 percent of the county average annual wage, as first met and established within five years of starting operations.
     The business and the enterprise zone’s local government sponsors (City of The Dalles and Wasco County) enter into a written agreement, which determines the exemption period and may specify other requirements to be met by the firm.
     Also available from the state under this special incentive program is a credit equal to 62.5 percent of gross payroll to be used against state corporate exise/income tax liability relating to the facility over and above an annual minimum payment of state taxes.
     To grant this credit, the governor must issue a one-time approval and set the length of time the business will receive the credit.
     The governor’s incentive, if granted, also includes a 30 percent rebate to local taxing districts of corporate taxes collected by the state from the business.
     If the governor declines to approve this credit, it will not affect other credits available through local governments.
     In addition to property tax abatement, those other credits include: a 50 percent reduction of all city permit feels, expedited permit processing and aid with local, state and federal permits, help with grant and loan applications.
     While the city and county will not receive property taxes on any plant constructed or its equipment during the abatement period, it will receive taxes on the land itself.
     At present, that property is not taxed because it is owned by an exempt government entity, the Port of The Dalles.
      Other resulting revenues
     However, city government will realize some financial benefits should the business go forward. Increases in water revenues from the business, for example, are expected to pay for any capital improvements needed - and more.
     “On the volume of water we’re talking about, the revenue is greater than the cost of the expansion project,” Young said.
     The city will also receive revenues from the 3 percent franchise fee charged on sale of electricity within the city limits.
      Technology provisions
     The Q-Life fiberoptic network also plans to extend its services into the port area.
     “Q-Life is not in the industrial area yet,” Young said. The intergovernmental agency’s plans include extension of lines into that area only if a business requires them.
     Q-Life expects to proceed with construction of an extension project as soon as engineering is complete and Northern Wasco County PUD “make ready” is complete - estimated some time this month, and anticipates the jobs will be created by December of this year.
     Typically, a large Q-Life customer must sign preconstruction documents agreeing to pay fees identified in the agreement and lease fiber for a period of five years. Mid-Columbia Medical Center, then-The Dalles School District, Columbia River Bank, the city and the county all signed customer agreements, Young noted.
     A new agreement of this type was approved Jan. 4 to provide a redundant loop from existing Q-Life fiber.
     In addition to the new loop, the agreement also provides for a new redundant route from the Q-Life/NoaNet-Oregon vault at the Big Eddy Substation into the NoaNet-Net Washington hut at the same location. Cost of engineering and construction of the work will be paid by the customer.

Tom Peterson, Rodger Nichols and Dan Spatz of The Chronicle also contributed to this story.



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