I am going to disagree with you Jack.

There are times when it makes sense to provide a property tax break for a company that is coming into an area where they might become the largest taxpayer.

Oregon buffers some of the property burden as a result of Measure 50, but voters can increase the tax rate by voting for bond measures outside of Measure 50’s restraint. It can become easy for voters to vote for measures that won’t cost them much when the addition tax burden falls heavily upon the largest taxpayer. We all remember Senator Russell Long’s quote, "Don't tax you, don't tax me, tax that fellow behind the tree!"

Allowing property tax breaks for very large investments helps insure that companies won’t be obligated to gold plate schools or other worthy endeavors.

I wish I could state this more eloquently. I hope I have conveyed the meaning.

The cheap hydro-power and perfect climate isn't enough?

I would prefer we save those rare resources for manufacturing business that employ more people.

The problem with the property tax is that it really hammers certain businesses which are very capital intensive. Intel has fabs that cost over $1B each but from the outside they look just like any other office building. Data centers are in the same boat. They are just modest sized buildings, but the value of the equipment is huge. So a flat tax on property value really adds up for those operations.

I think it is fair to use an approach where the tax rate is adjusted to roughly meet the cost of the services provided. So the county should figure out what the cost of the fire, police, schools, etc services are consumed and try to balance out the taxes. Charging Intel a percentage of their $1B fab plant is kind of crazy when it doesn't consume anymore resources than a $100M shopping center.

I have to disagree too. These breaks are the cost to get these companies to invest in the state. They provide good paying jobs.

Abe, FB doesn't use as much hydro power as you may think. They rely on the cooler air temps in prineville to help cool their servers. FB also implements the newest low power electronics to minimize. That's also good for Oregon because they use Intel chips.

https://www.datacenterknowledge.com/archives/2011/04/19/video-facebooks-penthouse-cooling-system/

This situation and the development that occurs because of tax breaks (Pearl, SoWhat) shows just how destructive property taxes are.

Getting rid of property taxes would cause huge amounts of new development and jobs. At least that is the classic PDC argument, slightly generalized.

Thanks
JK

I'm not a tax expert in any way but I must be missing something because it seems that there's some basic information missing from the O articles.

1) Both real estate and personal property are assessed and taxed in Oregon. Generally businesses are most affected by the personal property tax which is on a whole slew of items with some limited exemptions.

2) Industrial properties valued over $1M and utilities are centrally assessed by the state Dept of Revenue. All other properties are assessed by the local county accessor. Tax rates and taxability are the same regardless of which one is doing the assessing.

3) Enterprise zones are a state program administered by local entities. Tax breaks under enterprise zone rules apply to all businesses, regardless if they are assessed by DOR or county assessor. DOR handles the tax credit paperwork for enterprise zones.

It looks to me like DOR gave Facebook a wrong tax amount which was restated. Facebook is now (incorrectly) stating that the larger tax bill is a) due to DOR doing the assessment and b) because DOR is defining the Prineville site as a communications facility (to be more accurate they are defining Facebook as a communications company). Facebook is also incorrectly stating that their enterprise zone agreement is some sort of "local tax deal" when it is a state program locally sponsored by Prineville and Crook County.

So now that DOR has restated the amount down to what it should be, why is Facebook pushing for special legislation?

Incidentally, nearby Redmond's enterprise zone is also an e-commerce zone that would have given Facebook additional income tax breaks and greater property tax abatements.

Andrew: I admit I have not taken the time to find out exactly why Facebook wants special treatment in this matter. So the following is only speculation.

On August 19, 2011, the Oregon Tax Court issued a decision in Comcast Corporation v. Oregon Department of Revenue. In the decision, Judge Breithaupt writes, “At the outset it is quite important to discuss what it means to be subject to central assessment. From time to time some have suggested that central, as opposed to local, assessment is simply a matter of which level of government does the assessing. That is by no means the most important distinction. Rather, central assessment results in consideration and assessment of value attributable to intangible personal property whereas local assessment does not expose such property to assessment. See ORS 307.030(2). As demonstrated in this case, the difference can be extremely significant in terms of the value of property and the total tax bill”.

It is my belief that Facebook is looking for certainty as to how their property will be valued.

Ah, thank you John. Explains it all.

Typical property tax schemes are very arbitrary and unfair.

Taxing the land and the land only regardless of building value assessment (e.g., Land Value Taxation or LVT)is the most fair scenario.

http://en.wikipedia.org/wiki/Land_value_tax

Exemptions or reduced rates could be made on large land consuming ventures like logging and farmland.

The basic concept we have in most states and cities is:

Improve your land, but get taxed more in doing so.