The language would cap property valuation when it comes to a thorny element of Oregon's tax code, "central assessment," which makes telecom companies liable for the worth of their brand and other intangible assets.
Google Fiber announced last month that it has delayed a decision on serving Portland until later this year. Google hasn't commented on the reasons behind the delay, but public officials say the company has indicated central assessment is one issue standing in the way of a decision.
Senate Bill 611 would exempt data centers from central assessment altogether and cap the valuation of cable TV and telecom companies based on a formula of historical value. The bill won unanimous approval Thursday from a state Senate committee.
In a novel provision committee members added, the bill effectively exempts Internet service providers from central assessment provided they offer superfast "gigabit" Internet service. Gigabit speeds are 1,000 megabits per second, 25 times faster than the new federal definition of broadband service.
"If we can attract technology with these kinds of speeds all kinds of good things happen to our economy," said Sen. Mark Hass, D-Beaverton, who shepherded the bill as chairman of the Senate Committee on Finance and Revenue.
The gigabit program was created with awareness of Google's interest in Oregon, he said, but was included on the committee's own initiative -- not at the company's request. Google Fiber never came up by name at committee hearings on central assessment this month.
Lawmakers modeled these "gigabit" tax limits on Oregon's Strategic Investment Program, which exempts specified projects from property taxes on their equipment provided they meed a certain scale. Intel is the chief beneficiary of SIP tax breaks.
Here's how the gigabit program works:
- It effectively exempts qualifying companies from central assessment. They would still pay regular taxes on their real property.
- To qualify, the company must offer Internet speeds at 1 gigabit per second or above. And the service must be "symmetrical," which means it offers the same speeds for downloads and uploads. (That conforms to Google Fiber's service.)
- The service must be available to "50 percent or more of the customer base in the service territory in which the communication infrastructure is constructed or installed." Google Fiber picks neighborhoods to serve based on residents' commitments to sign up for the service. This provision would require a broader rollout than Google Fiber has committed to previously.
- Prices must be no higher that 150 percent of the U.S. average for comparable service. The Oregon Public Utility Commission will make that determination.
- The company must pay a $50,000 application fee, distributed between the PUC and the state Department of Revenue.
- The speed threshold isn't fixed. The bill says the PUC "may update the standards for speed, type and price of service as the commission considers appropriate."
The League of Oregon Cities said Thursday that it supports the tax breaks for data centers and gigabit service. However, the League said the tax ceiling for Comcast and other telecom companies that already serve Oregon would cost local governments too much revenue.
On Friday, Hass said the cities are getting a great deal from the pending law because it removes legal uncertainty that has blocked them from collecting central assessment money for several years.
"They could have ended up with nothing," Hass said. "What we tried to do was something that was balanced."
The bill now heads to the full Senate and, if it wins approval there, on to the House and the governor. Hass predicted it will win easy approval, given the unanimous support in his committee.
"I think this is pretty well put to bed," Hass said. "It was a bipartisan vote."
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