Umatilla considers emergency over lost revenue from Gov. Kotek data center permit pause

An eastern Oregon city that has for the last decade welcomed some of the largest data centers in the state will soon decide whether to fight Gov. Tina Kotek’s recent order meant to temporarily pause data center development, saying it could cost the city millions in direct financial losses.

The six-member Umatilla City Council will vote Tuesday night on whether to declare a state of emergency over “the threat of widespread financial loss” from Kotek’s recent order that temporarily stops the Oregon Department of Environmental Quality from issuing new air and water pollution permits to proposed or expanding data center projects until July 2027. Part of the potential emergency response includes a formal request to Kotek to withdraw or modify the directive and allow DEQ to continue processing the permits.

Umatilla City Manager Dave Stockdale, who drafted the resolution, wrote in a summary statement that city officials have “significant concerns regarding the legality of this action, particularly whether such a categorical permitting suspension exceeds DEQ’s statutory authority, violates Oregon’s Administrative Procedures Act or infringes upon municipal Home Rule authority.” The latter pertains to municipal governments’ abilities to set and manage their own policies without state permission.

Kotek and spokespersons for the Oregon Department of Environmental Quality did not immediately respond to a request for comment from the Capital Chronicle late Tuesday morning.

Kotek issued the directive, she said, to give herself time to “evaluate and digest” recommendations forthcoming from a Data Center Advisory Committee she stood up earlier this year. She is expected to propose regulatory reforms around data centers in the state during the 2027 session of the Legislature which will begin in late January.

Kotek has declined repeated requests from the Capital Chronicle for more than two months to discuss the data center industry in Oregon and emerging issues with the data centers among Oregonians.

Among the requirements under Oregon law that must be met for an emergency declaration include that the emergency be a “a human created or natural event or circumstance that causes or threatens widespread loss of life, injury to person or property, human suffering or financial loss.”

If the council approves the declaration, the city requests a comprehensive economic impact assessment of Kotek’s order, “immediate reconsideration of the governor’s directive,” and it would authorize Stockdale to coordinate with other local governments to pursue legal action against the state.

‘Extraordinary’ losses

Stockdale called the potential economic consequences for the county “extraordinary” and said it could cost the region more than $5 billion in private industrial development, cost the city $6 million in direct financial losses, and cost the city up to $12 million in anticipated water infrastructure investments and contributions from data center companies mandated via community benefit agreements.

Those agreements are meant to ameliorate the lack of tax revenue going to public services under Oregon’s three inventive tax programs that allow businesses to forgo property tax payments for five to 15 years in exchange for creating jobs.

In a statement revealing how heavily city and county officials have anchored their economies to the data center industry, Stockdale wrote, “these impacts extend far beyond individual businesses and threaten the financial stability of local governments, essential public services, infrastructure investments and the broader regional economy.”

The city of Umatilla has four data center facilities currently in operation, one under construction and two more — projects from Amazon and Sabey Data Centers — anticipated, and with tax incentive agreements already inked, according to the resolution. Most of Amazon’s data centers in Oregon are located in eastern Oregon.

Umatilla County is home to 22 of Oregon’s more than 100 data centers, according to a recent analysis from ECOnorthwest. Most are hyperscale data centers, among the largest in the industry typically encompassing 234,000 square feet or more, equal to about one-third of a Moda Center or four football fields.

During the 2023-24 tax year, Amazon properties in Umatilla county were assessed a $514,000 property tax bill and were exempted from an additional $46.1 million in property taxes under an Enterprise Zone tax incentive agreement with the county, according to data collected by the state’s economic development authority Business Oregon. The company during that tax year contributed $7.5 million in required community service and other fees.