Amazon is preparing to expand its data center operations significantly in eastern Oregon on 400 acres it is purchasing in Arlington, a small city on the Columbia River.
The Seattle-based business already operates a number of massive data centers in the nearby counties of Umatilla and Morrow. As it looks for licenses, electricity, and tax benefits for the location, Amazon stated that it may be years before it opens for business in Arlington. However, the corporation and the town are preparing for the significant changes that will come with the project.
Over the past few years, data centers have expanded quickly to become one of Oregon’s biggest enterprises. Even though the massive installations are putting a burden on the state’s electrical grid and energy supplies, they are having a significant influence in tiny towns and counties around Oregon.
The entrance of Amazon is the largest economic opportunity for Gilliam County in decades, a county of about 2,000 people across more than 1,200 square miles.
According to Arlington Mayor Jeffrey Bufton, “it’s going to be an enhanced growth spurt for us and we’re actually quite excited about it.” We won’t become nothing more than a highway truck stop.
Arlington is located along Interstate 84 and the Columbia River, approximately 140 miles east of Portland. When the U.S. Army Corps of Engineers constructed the John Day Dam in the 1960s, the river level rose, flooding much of the ancient city. Situated atop hills that border the Columbia, the new settlement is situated on higher ground.
In addition to being wheat country, Gilliam County has recently seen some of the biggest wind and solar installations in the state. The majority of the trash generated by residents of Portland and Seattle ends up in Arlington. To a waste landfill south of town, the trash is delivered by train or truck.
Amazon is currently spending $3 million to purchase a further 30 acres from the Port of Arlington after spending $10 million last summer on 376 acres on a mesa above the city. Twelve years ago, the city and port started preparing the lands for development in the hopes of luring new business to the area.
According to Kevin Miller, the company’s vice president of data centers in Seattle, the location makes sense for Amazon’s expansion because it is close to the company’s other data centers in Oregon.
Numerous corporate customers of Amazon use sophisticated software programs that access numerous databases and servers. According to Miller, Amazon’s customers require their data to be kept in data centers that are geographically adjacent to one another so that information may flow between different computers almost instantly, even though light takes time to travel between locations.
We all believe that light moves really quickly, Miller added. Actually, though, the further away the data centers are from one another, the more milliseconds you start to accumulate.
According to Miller, Amazon considers 13 years in advance when choosing locations for its upcoming data centers. Although Miller declined to speculate on when it would begin construction there, he said that a site purchase like the most recent one in Arlington is the first stage in a lengthy process.
However, he did state that Amazon anticipates having a presence in Arlington that is comparable to its sizable operations in Morrow and Umatilla counties.
“I think it could be equivalent to what we would have in nearby locations for the size of parcel that we’re getting in Arlington,” Miller said.
According to Miller, Amazon considers land availability, power availability, and the ability to obtain building permits when selecting locations for its data centers.
Because Amazon has pledged to purchase all of its energy from renewable sources and because its Arlington location will be governed by Oregon’s clean-energy regulations, clean electricity is also a top priority.
PacifiCorp, a Portland-based utility owned by Warren Buffett’s investment fund, provides service to the Arlington location. While investor-owned utilities like PacifiCorp are not subject to Oregon’s renewable energy rules, the energy cooperative that supplies Amazon in Morrow and Umatilla counties is.
Amazon contracted last year to purchase over 200,000 megawatt-hours of electricity per year from a Gilliam County Avangrid wind farm. The operations in Arlington will require far more power than that, and locating additional power may prove challenging given the Northwest’s limited transmission grid and the region’s rising electricity consumption.
Although the amount varies greatly depending on the technique used to cool the servers, some data centers also utilize large amounts of water.
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Compared to other heavy sectors, data centers employ a much smaller workforce, and Amazon does not reveal the number of employees at its server farms in Oregon. However, according to employment data for Morrow and Umatilla counties, the corporation has likely created a several thousand local jobs, if not more. During construction, a lot more contractors visit the sites.
The 2,000 citizens of Gilliam County may therefore experience a significant change in their quality of life in the years to come. Judge Cris Patnode of Gilliam County, the county administrator, stated that her constituents are only beginning to comprehend the impending events.
We must make sure that we take advantage of this chance because it will have a significant impact on the community, Patnode stated.
The amount of tax benefits that Amazon obtains and the taxes it pays will determine a lot.
The amount of tax breaks that local governments can provide to large corporations is uncapped in Oregon. Because of this, Amazon earns tax discounts on its Oregon data centers totaling around $100 million year, which is far more than the $50 million it pays in local taxes and levies. In the upcoming years, the corporation will save well over $1 billion thanks to Oregon’s incentives.
According to Patnode, Arlington and Gilliam County have not yet started negotiating incentives with Amazon. According to her, local officials are examining the lessons learned by neighboring counties when they terminated their agreements with Amazon and have expertise negotiating tax breaks for regional sustainable energy projects.
According to Patnode, Gilliam County will engage an attorney to help steer its negotiations with Amazon, in contrast to some Oregon communities that have depended on volunteers and local authorities to negotiate with multinational tech giants.
The enterprise zone program in Oregon, which offers the majority of the state’s data center tax benefits, is not available to the county. Because of its high per capita income and low unemployment rate, Gilliam County is not eligible to take part in the troubled areas incentive program.
In order to provide local governments more flexibility in constructing an agreement, Patnode stated that authorities will negotiate a deal under the parameters of the Strategic Investment Program.
Amazon’s entrance might generate millions of dollars for the city and county each year, even with tax breaks.
According to Bufton and Patnode, they intend to use some of those resources to promote housing construction so that Arlington’s workforce can also call the city home. They demand increased funding for city services like parks, childcare centers, and schools.
Despite being one of the state’s smallest counties, we will be performing well per capita, Bufton stated. We lack many of the city’s facilities, and I would like to see that improve.
According to Patnode, officials are already debating whether to start clearing land for new construction in preparation for the expansion that will come with Amazon’s arrival.
Patnode remarked, “What a fantastic opportunity we have for Arlington to make it beautiful and wonderful and ensure that this is not just a town with a few gas stations or a freeway.”
–Mike Rogoway writes on the business and technology in Oregon. His email address is [email protected].
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