The Associated Press

UMATILLA — Three data centers being constructed in the northeast part of the state for use by an Amazon data center subsidiary are creating tension between the county and the city of Umatilla.

The local governments have a disagreement on how to allocate a yearly payment that’s part of the development deal, according to a report by the East Oregonian.

The developer, VAdata, will forgo paying some property taxes for 15 years in exchange for other types of payments, including a $4 million annual payment for improvements.

Umatilla County says it will give the city $1 million of that each year, but the city of Umatilla wants $2 million because of substantial infrastructure investments and staff time spent on the development.

“The city has spent millions on these developments,” City Manager Russ Pelleberg said. “The county has done nothing.”

The county said, because all three developments won’t be of equal size and value, it has offered the city a formula based on the percentage of the three developments’ assessed value that falls within Umatilla’s city limits.

That percentage of the $4 million would then be split evenly between city and county, leaving the city with about $1 million a year, Umatilla County Counsel Doug Olsen said.

The Strategic Investment Program in question allows counties to offer a 15-year property tax break to companies as an incentive to build there.

Under state statute, the first $25 million in real market value of the project is taxed at the usual rate and distributed to taxing districts such as cities, school districts and fire districts. A flat community service fee of $500,000 per year is also assessed, to be divided between the districts.

Additional “annual improvement payments” from the company can also be negotiated as desired, which is where the $4 million comes from.

Pelleberg estimates the city has spent roughly $6 million accommodating VAdata, including a recent $300,000 bill for engineering studies for a planned extension of water infrastructure to one of the development sites.

The city recently submitted a public records request with the county for a variety of documents on the matter.

According to a recent report from the Oregon Business Development Commission, the new data center projects in Umatilla County could reach a total value of $2.75 billion at full build-out.

The package negotiated between the county and Amazon could save VAdata about $176 million in taxes over the course of the agreement.