A group including local politicians and Oregon’s largest teachers union are suing Hillsboro and Washington County, alleging the local governments hastily and unjustly approved more than a dozen new applications for data center property tax easements ahead of a statewide moratorium on the incentive for data centers.
The suit names Washington County and its county assessor, the city of Hillsboro and its economic director and city manager, as well as seven tech companies. The companies, which include software company Adobe, chip-maker Nvidia and data storage company DropBox, hope to build the data centers and receive, in some cases, decades of waived property taxes worth hundreds of millions of dollars.
The plaintiffs, who include the Oregon Education Association, conservation group 1000 Friends of Oregon, Hillsboro City Councilor Kipperlyn Sinclair and Tammy Carpenter, the Beaverton-based Democratic nominee for Oregon House District 27, filed the suit in Washington County Circuit Court on Tuesday.
They allege that the city and county approved 17 Standard Enterprise Zone applications in a flurry in March and April, offering in some cases 25 years of back-to-back waivers from paying property taxes that would otherwise fund parks, schools and other public services.
They allege the officials operated outside the legal intention of the statewide tax program — five years of no property taxes for new or expanded industrial development in exchange for community investment and jobs in urban and suburban areas — and did not follow proper public notice procedures. They said the officials even offered the tax breaks to the tech companies for years after the tax laws that created the program are set to expire.
Jody Wiser, founder and president at the nonprofit government watchdog group Tax Fairness Oregon, is among the plaintiffs, as is Tax Fairness. She said the lawsuit aims to block the latest approvals, made between the end of the short legislative session in March and June 6, when a new state law suspending such tax breaks took effect.
Moratorium
That’s because earlier this year, the Oregon Legislature approved a one-year pause on the Standard Enterprise Zone program due to backlash over the rapid expansion of data centers, which require enormous amounts of water and energy to operate, and concerns about tax incentives spurring their development.
The Standard Enterprise Zone program is one of three statewide tax incentive programs for industrial development. Since 1985, it has allowed companies to save hundreds of millions of dollars in property taxes. The programs have collectively been a boon for data centers in recent years, especially in Washington County and in Hillsboro, which has one of the highest concentrations of data centers in the state due in large part to low-cost power, proximity to fiber-optic cables that traverse the Pacific Ocean and the tax incentives.
Tech companies received nearly $90 million in Standard Enterprise Zone tax breaks in Washington County in 2025 and will save roughly the same this year, as well as hundreds of millions in the years to come, according to reporting from The Oregonian/OregonLive. In some cases, companies are receiving tax incentives for very few hires.
‘You can’t go back’
Spokespersons for Nvidia, Adobe and NTT did not immediately respond to requests for comment on Wednesday. Tim Rathschmidt, a spokesperson for DropBox said company officials could not comment.
Sarah Cagann, a spokesperson for Washington County, said in an email that officials review the applications consistent with state law, and “as this matter involves active litigation, we cannot provide any additional information at this time.”
Wiser, who lives in unincorporated Washington County, disagrees.
“They owe my county a bunch of money,” she said. “They’re never going to repay my county the money they owe. So the idea is to block the agreements going forward. You can’t go back.”
Hillsboro officials also say they were following state law when it came to issuing the Standard Enterprise Zone property tax abatements, applications for which mounted after the moratorium passed but before it was fully enacted, and that it’s the state that needs to provide local governments with the power to say ‘no.’
“It would not have been legal for City staff to reject Enterprise Zone applications that met the requirements of state law prior to the state moratorium,” Patrick Preston, a spokesperson for Hillsboro’s city manager, said in an email. “While the legislature could have provided local governments with the authority to reject applications during this period, it didn’t do so. As such, City staff had to operate under the existing terms of state law.”
Tax breaks through 2051
In one case, the plaintiffs allege, local officials approved five new data center tax incentives for tech company NTT in a single application. Each incentive offers a five-year property tax reprieve tied to the company’s promise to build new or add onto existing infrastructure in the next two decades, but without much detail about when they’ll build, to what size and to what degree it will spur job creation. Taken together, the company wouldn’t need to pay any property taxes on parts of its expansion until 2051, the suit details.
This was not the intention of the tax incentive program when it was created, Wiser said, and is particularly problematic because the state’s Standard Enterprise Zone program is set to expire and would need to be renewed, and potentially renegotiated, in 2032. Hillsboro’s statutes around executing the program sunset, and would need to be reestablished, in 2027.
“That’s not far away, and yet they signed contracts beyond that,” Wiser said.
The Standard Enterprise Zone is the smallest of the three industrial development tax incentives the state offers. The other two — the Strategic Investment Program and the Long-Term Rural Enterprise Zone program — have saved tech companies hundreds of millions of dollars in property taxes per year on their data centers. They are not part of the statewide moratorium, and the latter is only available in rural Oregon. It allows companies to avoid 15 years of property tax payments.
The Oregon Education Association has the strongest standing in the case, Wiser said, because the tax incentives for the data centers leave the State School Fund for public education with hundreds of millions of dollars less in revenue each year than it would otherwise have. A recent report by Good Jobs First, a Washington D.C.-based nonprofit economic subsidy watchdog group, found 191 school districts and education service districts in Oregon collectively lost $275 million to property tax abatements in 2024 alone.
Oregon Capital Chronicle
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