Kotek data center advisors say no moratoriums, call for more state-local partnership, transparency

“That was not our charge,” she said. “The charge really was — how should we do this kind of economic development in Oregon while being good stewards of our natural resources. It did not ask us to consider whether or not to implement a moratorium.”

Hoffmann and committee members — a mix that includes a pro-data center county commissioner from eastern Oregon, energy-industry veterans, an environmental law professor and at least two people associated with conservation groups — instead indicated they’d recommend more state and local partnerships and transparency from industry.

The group has convened subject-matter experts and met since February to discuss issues related to Oregon data centers’ water, land and energy use, among other issues, and will produce a list of regulatory and policy recommendations for the state Legislature to consider during the 2027 session that begins in January.

A lack of sales tax, generous property tax incentives for industrial development and relatively cheap electricity over the years has made Oregon a hot spot for data centers, and today among the top 10 states for housing them. The largest are located in Umatilla and Morrow counties in eastern Oregon, followed by Washington County and Crook County.

The first draft of the committee’s report is slated to be ready by mid-September, ahead of its final public meeting on Sept. 23, where advisers will take public comments before issuing a final report in October.

The task comes at a time of profound backlash against data centers in the state and across the U.S. Pauses and moratoriums are being floated and passed at the local and state level in Oregon and nationwide, and Kotek recently intervened to stop a data center company in Salem from buying state property.

A poll from Portland firm DHM Research found two-thirds of Oregon voters support a pause on new data centers used for artificial intelligence. Nearly three-quarters of voters oppose property tax incentives for all data centers.

The issues

These issues — tax incentives worth billions, data centers’ enormous energy and water needs, the AI industry’s ability to create temporary construction jobs on data centers, and some long-term jobs at the facilities, while on a quest to “probably replace most of the jobs people do today,” according to Open AI CEO Sam Altman — are among those the governor’s advisory committee spent months discussing.

The group seemed fairly convinced by officials from Prineville, and committee member Dan Dorran, a Umatilla County Commissioner, that the data centers are creating jobs and boosting local economies in rural Oregon. Prineville City Manager Steve Forrester told them the city went from a 20% unemployment rate after timber mills closed in the 1990s to a 6% unemployment rate following the arrival of Facebook, now Meta, data centers that began in 2010.

And Dorran and Blue Mountain Community College officials said tech companies in need of skilled tradeworkers are hiring students out of certificate, degree and apprenticeship programs before they’ve even graduated.

The advisers at the Tuesday meeting dismissed data centers’ water demands as a non-issue because many use closed systems where the water is recycled over and over, and average demand is significantly less than that of most large, irrigated farms.

But members did not discuss ongoing issues in northeast Oregon with groundwater pollution made worse by heating contaminated water through Amazon data centers, and a recent push by Google in The Dalles — where the company’s data centers consume nearly 40% of the city’s water — for access to more water from the Mt. Hood National Forest.

The group seemed most concerned with data centers’ energy demands and keeping up with regional grid capacity, meeting climate goals and addressing the rising costs of electricity. Overall consensus was that the state should leverage the data center boom to increase private investment in energy infrastructure that can benefit all, and members discussed requiring data center developers to build large-scale battery storage projects or clean energy generation projects to serve theirs and locals needs.

The issue of whether Oregon’s decades-old property tax incentives meant for industrial developers who create jobs are being taken advantage of by data centers lead to broader discussion about the lack of transparency from local governments and industry about deals and resources.

Most deals for 5-, 10- and 15-year property tax abatements for data centers are made at the local level, and it’s difficult to get tax-savings data or details about employment numbers and wages. Data centers in Oregon will get nearly $500 million in property tax breaks this year alone, according to reporting from The Oregonian.

Committee members largely agreed that those numbers, along with details on data centers’ water and energy use, should be far easier to find, and that the state should require more transparency from data center companies and local governments.

“You can’t manage what you can’t measure,” Hoffmann said. “So having some sort of disclosure database and transparency and reporting feels really important to us to even have a foundational set of information to understand what’s happening and then where do we go from here.”

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