HERMISTON — The Hermiston City Council agreed Monday to give Amazon a 15-year tax break on a planned new development, but they won’t be walking away empty-handed.
If the Umatilla County Board of Commissioners agrees to the same deal during their Wednesday morning meeting, Amazon is expected to pay up to $40 million over 15 years directly to the Greater Hermiston Enterprise Zone, a partnership between the city and county, in lieu of property taxes.
The two government entities have yet to finalize a memorandum of understanding on how the money would be split, but City Manager Byron Smith said they planned to channel some of the money to Umatilla County Fire District 1 and other taxing districts, and have discussed using the windfall to fund projects of mutual interest, such as paving and extending Gettman Road.
“In the course of the history of the city, very rarely do opportunities like this come along,” said Councilor John Kirwan, who was leading the meeting in the absence of Mayor David Drotzmann and City Council President Rod Hardin.
As part of the deal, Amazon has promised to invest at least $200 million into developments in the enterprise zone and pay workers there at least 130% of Umatilla County’s average wage.
Some residents present at the meeting questioned why a company valued at $1 trillion shouldn’t be asked to pay the same property taxes as everyone else. Jackie Linton said she understood the company was bringing in jobs it would likely take elsewhere if it wasn’t offered the incentive, but it was still frustrating to see a deal offered to a company with so much money.
“I think they can do with one less yacht or mansion,” she said.
Another commenter pointed out that the resolution before the council stated Amazon must pay a certain wage, but did not specify how many jobs they had to provide. Companies are becoming more automated all the time, he said, and there was no guarantee that Amazon wouldn’t soon come up with a way to automate the jobs they were supposed to bring.
Ric Sherman, chair of the UCFD fire board, said the deal was “another example of the city keeping taxes from other districts.” He said he was grateful the city and county intended to set aside some money for public safety, but the amount they were discussing was less than 2% of the fire district’s budget.
“This is a very hard pill to swallow and could hurt us very much,” he said.
Kirwan said he didn’t see the deal as the city “giving up” anything to Amazon, because companies of that size don’t build in cities where they’re not given a tax incentive.
“We’re giving away zero, because if we don’t do this, Amazon will go somewhere else and some other city will embrace that $40 million and run with it,” he said.
Councilor Roy Barron also voiced his support for the deal, which was approved unanimously 6-0.
“We’ll be able to diversify our workforce,” he said. “Right now, we’re heavily agricultural. And that’s awesome, but if something were to happen to that sector, that’s a blow to our economy.”
It was notable that Amazon was discussed by name in the meeting — area governments dealing with the company in the past have generally been bound by nondisclosure agreements that have them referring to the company as a “large developer” or by its subsidiary Vadata.
Since Amazon doesn’t share details with the media on its data centers, it can be hard to pin down how many jobs it has provided Umatilla and Morrow counties so far with its data centers in Boardman, Umatilla, and off Westland Road in Hermiston.
A September 2017 memo by Business Oregon stated Amazon was directly employing 230 people in Oregon at the time, 130 of which were in Umatilla County, but it had an approximately 1,000-job year-round workforce in the state when contractors and other indirect employees were counted. The memo stated the company planned to hire another 100 full-time employees for a new five-building project planned for outside Hermiston and Umatilla.
That project — which included buildings off of Lind Road and Beach Access Road in Umatilla and Westland Road outside Hermiston — used the Strategic Investment Program instead of an enterprise zone to gain a 15-year tax break. The company agreed to pay $4 million per year to Umatilla County in lieu of taxes. The county elected to use a formula that allotted about $1 million to the city of Umatilla, resulting in an ongoing argument between the city and county about the amount.
In this case, Umatilla County and the city of Hermiston are cosponsors of the Greater Hermiston Enterprise Zone, meaning they will have to both agree on how to split the approximately $40 million in fees paid to the zone. A memorandum of understanding had been added to Monday’s city council agenda, but Smith told the council the agreement had not been finalized yet and would be presented for their vote at a later date.