New Construction Utility Cost The Dalles Oregon

The Dalles, a small city of about 15,000 people, straddles the dividing line between the soggy forests of western Oregon and the dry fields on the eastern part of the state.

Water has always been central to The Dalles' vitality. The city's unusual name references a place where water flows through a narrow, rocky channel, according to the Oregon Historical Society.

Water is again a focus of public discourse in The Dalles, with the city council due to vote Monday night on a contentious deal with Google to supply more water to the tech company for two new data centers.

The deal appears to have the council's backing, but it has generated skepticism among some residents, nearby farmers and environmentalists.

Here's a look at the factors at play ahead of Monday's vote:

Why does Google need water?

Google built its first data center in The Dalles back in 2005. It was the company's first big corporate data center anywhere and Oregon's first, too. Since then, Facebook, Apple and Amazon have all built large data centers in rural parts of the state, and Google has expanded.

Data centers are very resource intensive, typically using as much electricity as a small town to power their computers and substantial volumes of water to keep those computers cool.

Google says it may build two more data centers in The Dalles, but it needs more water. The company won't say just how much more, but the city is near its maximum capacity of 10 million gallons a day.

So Google has offered to pay $28.5 million to upgrade the city's water system, increasing capacity by about 50%. Google and the city say that would be enough to meet the company's needs with additional water left over for other users.

How would the Google deal produce more water?

The city would develop some of its unused groundwater rights, which total about 5 million gallons a day of capacity from abandoned wells (including one in the City Hall basement). Google would provide 3.9 million gallons a day of groundwater rights from its property.

And the city would pump treated water from its water treatment plant and additional groundwater to which the city has rights, into an aquifer for withdrawal during the dry summers. State regulations allow the city to use just 90% of the water that goes into the aquifer, so the plan envisions steadily adding water to the aquifer rather than drawing it down.

What's the concern?

No organized opposition has emerged to the city's agreement with Google, but rural property owners, farms and environmentalists have all expressed concern about committing water to an industrial customer during a prolonged drought.

Plans call for adding more water to the city's main aquifer than would be withdrawn. But some rural residents and farms worry that drawing from that water source could affect their own water supplies, either directly or indirectly. (The city says it doesn't envision a scenario where anyone has less water available under this deal than they would have otherwise.)

Residents have complained that Google and the city won't disclose how much water the company uses or how much more it wants. Others have argued that The Dalles should have hired an attorney specializing in corporate negotiations to guide talks over the water deal, as well as new tax breaks approved last month.

Why is Google's water use a secret? Why is The Dalles suing over it?

In September, as Google's water deal neared a vote before the city council, The Oregonian/OregonLive asked how much water Google uses. Other Oregon cities routinely disclose industrial customers' water use.

The Dalles, though, says that Google's water use is a "trade secret" exempt from disclosure under Oregon's public records law. It also says the nondisclosure agreements signed with the company prevent the city from disclosing water use.

So The Dalles refused to release the information.

Under Oregon law, people and organizations whose public records requests are denied can appeal to the county district attorney. The Oregonian/OregonLive did that in this case, arguing that there is a strong public interest in disclosing Google's water use and that it doesn't constitute a trade secret as defined by Oregon law.

Wasco County District Attorney Matthew Ellis ruled in the news organization's favor on Oct. 15 and ordered The Dalles to release the records.

Oregon law allows government agencies to challenge such orders in court by suing the organization requesting the records. The Dalles filed its suit Oct. 29.

It's likely to be weeks or months before the courts rule on the city's challenge. So even if the city loses in court, the public won't have details of Google's water use before the City Council votes on the agreement Monday night.

Members of the City Council, though, do have access to that information.

Are taxpayers paying for the lawsuit? Will the city be on the hook for legal fees if it loses?

Mayor Rich Mays declined to say whether Google has agreed to pay any portion of the city's costs or cover any of its liability in this case. The Oregonian/OregonLive filed a public records request seeking any such agreement this past week but the city hasn't responded.

Is The Dalles running out of water?

The Dalles' main aquifer was severely depleted by the 1950s due to agricultural irrigation and a former aluminum smelter on Google's site. Oregon designated The Dalles a "critical groundwater area" in 1959, though, and began diverting water from the Columbia River to the nearby farms through a new irrigation district.

The city says that stabilized the aquifer, which began a robust recovery after the smelter shut down in the 1980s.

However, The Dalles says that if its urban growth area were fully built out, daily water demand could rise to 17.5 million gallons a day – well above the 10 million gallons a day available now. So the city has been looking for ways to increase its capacity.

Does the deal create any incentive for Google to conserve water?

"The biggest incentive we've got is they're paying for every gallon they use," Dave Anderson, the city's public works director, said at a city council meeting in September.

Google will pay the same rates as other commercial and industrial customers. Anderson said that is $3.61 per every 1,000 gallons they use after 5,000 gallons a month.

Google's data centers are right by the Columbia River. Why can't the company just get its water out of the river?

Federal law strictly governs water use from rivers. Anderson says withdrawals from the Columbia generally aren't permitted.

There are exceptions in cases where waters users can provide a "bucket for bucket replacement" of any water they pull out, Anderson told a city council meeting in September. In such a case, though, a water user would have to find water to put into the Columbia someplace else to compensate for water being pulled out by the city, or by Google.

After the water cools Google's computers, will it dump hot water into the Columbia? Will the water be clean?

The city says Google's water goes into the city sewer and mixes with the rest of The Dalles' wastewater before being discharged into the river. That water must meet cleanliness and temperature standards to comply with the city's discharge permit.

The property Google wants to develop used to be an aluminum smelter. Is it a Superfund site?

Parts of the old smelter property are a Superfund site — land federally recognized as contaminated with toxic waste — which makes development very difficult until a cleanup process is complete. But the land Google owns is not part of the Superfund site.

How big are Google's tax breaks? How much will it save under its new tax deal?

Google has saved more than $240 million in local property taxes since it opened its first data center in The Dalles 15 years ago. That includes $34 million in savings last year alone.

Oregon has some of the nation's most generous industrial tax breaks. The state allows local governments to offer unlimited property tax exemptions. It's a policy designed in the 1980s in hopes of luring large manufacturers.

In the 21st Century, though, Silicon Valley companies have exploited those breaks to pit small Oregon towns against one another, with the ones offering the biggest tax breaks getting the data centers.

Data centers aren't major employers – Google has just about 200 employees in The Dalles. But they do make modest offsetting payments to compensate for their tax breaks, money welcomed by small towns whose industrial land would otherwise sit empty. And their electricity use generates franchise fees that can make a substantial contribution to local tax coffers.

Google's new tax package, approved last month by the city and Wasco County, will be much more lucrative for The Dalles than three prior deals. It exempts just half of the property taxes on the first new data center and only 40% of the second instead of offering a complete exemption.

How much Google saves will depend on how much it spends, but two new data centers that cost $600 million apiece (which is roughly what Google says it spent on three prior projects) would provide about $6 million in new revenue annually to the city, county and other local agencies.

Google's new tax deal

Duration: 15-year tax exemption for each new data center

Savings: Half off the property taxes associated with the first new data center, and 40% off a second. However, Google would also pay $3 million, up-front, when it begins construction of each new project. On a $600 million data center, The Dalles expects Google would pay $3.3 million annually.

By comparison: Google's first three deals had up-front payments of $280,000, $1.2 million and $1.7 million, respectively. It also paid $800,000 annually afterward in the first two deals, and at least $1 million annually in the third deal.

Additionally: Google would transfer 35 acres of property to Wasco County and give The Dalles and the county an option to buy the new data centers' land from the company if it ceases operations.

How much water does the city use overall?

The Dalles' total water consumption has grown from 630.9 million gallons in 2002 to 1.1 billion gallons last year – a 79% increase. Google opened three data centers during that time but it's not clear how much of the increase is because of that one company.

The Dalles' water use did increase by 20% in 2007, the first full year after the company opened its first data center in The Dalles. But subsequent data centers weren't associated with similar increases in water consumption and citywide water use fluctuated considerably in 2019 and 2020.

Anderson, the public works director, referred questions about water use in The Dalles to the city's attorney, who did not respond.

-- Mike Rogoway | mrogoway@oregonian.com | Twitter: @rogoway |

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Source: https://www.oregonlive.com/silicon-forest/2021/11/why-does-google-need-so-much-water-in-the-dalles-and-wheres-coming-from-qa.html