Data Centers & More: Your Questions Answered

To provide accurate information for Hillsboro community members, the City of Hillsboro is working to answer timely questions on important community topics, including data centers, water, community planning, livability, and more.

What is a data center?

A data center is a facility containing the physical infrastructure that supports our digital lives. Typically, a data center is a building that houses computers and servers that provide a wide variety of functions including support for advanced manufacturing, cloud-based software like shopping and social media apps, medical imaging and healthcare records, music and video streaming, banking and payment processing, artificial intelligence, and more.

Are all data centers the same?

No. There are different types of data centers depending on the primary function(s), size, and systems operated in the facility. Three commons models include:

• Enterprise: These are usually small, private data centers often built, owned, and operated by a single entity for its exclusive use.
• Colocation: Multi-tenant facilities provide space, power, cooling, and physical security for customer equipment. These facilities are usually small to medium size. There can be one or more tenants within a colocation data center conducting different types of data storage and processing. Colocation data centers are the most common types of data centers found in Hillsboro.
• Hyperscale: Facilities very large in size, designed for rapid scaling and meeting the growing demand for enormous computing, storage, and networking workloads.

Why do we need data centers?

In the next five years, it's estimated that consumers and businesses will generate twice as much data as all the data created over the past 10 years, according to Jones Lang LaSalle (2024).

Approximately 6 billion people, 74% of the global population, are online today. This represents an increase of 46% since 2010. 2.2 billion people are not yet connected to the internet, according to the International Telecommunication Union (2026).

On average, U.S. households have a total of 22 internet connected devices, according to Deloitte's Connectivity and Mobility Trends Survey (2023).

The average monthly home internet use has increased from 150 GB in 2018 to more than 750 GB per household in 2025, according to Open Vault Broadband Insights Report (2025).

Many industries, including advanced manufacturing, computer electronics, biotechnology and others, increasingly rely on data processing and support from nearby data centers.

Data centers also serve as critical infrastructure for industries in Hillsboro like advanced manufacturing, biotechnology, healthcare, transportation, fintech, and education. A 2025 study by Jones Lang LaSalle found that 80% of the data centers in Hillsboro are supporting technology industries and development, with the remaining 20% supporting cloud-based computing (15%) and telecommunications (5%). Proximity to supporting data centers can also be very important.

How many data centers are in Hillsboro?

As of March 2026, there are 18 data center sites that are either constructed or under construction in Hillsboro, totaling approximately 429 gross acres, equal to about 8% of Hillsboro's North Industrial Area. These data centers often have tenants who may lease space and services from and have their own equipment located within the data centers. A data center site may contain one or multiple buildings depending on the design and function of the facility.

What is the process for reviewing and approving proposals for data centers in Hillsboro?

Some of Hillsboro's land use zones allow data centers. Other zones limit or prohibit them like the most recent industrially designated areas of the Jackson East and Meek Sub-Areas of North Hillsboro.

In most industrial zones, where data centers are allowed uses, this type of development would require a Type II land use application consisting of a public notice, an administrative decision, and the opportunity to appeal. In addition to land use review, new or retrofitted facilities would also require building permits and applicable utility permits.

Do data centers pay property taxes?

Yes. Data centers pay property taxes like many other entities in the City of Hillsboro. Data centers are often very expensive facilities to build and equip resulting in extremely high property values. In addition to paying taxes on land and buildings, businesses in Washington County also pay property tax based on the value of equipment, fixtures, and furniture. How taxes are calculated and charged depends on where the data center is located and the specific details of the facility.

In some areas of Hillsboro, data centers may be eligible for property tax incentives also known as abatements, if they meet the requirements of state and local tax abatement programs. The most common program is called the Enterprise Zone. Eligible businesses within Hillsboro's Enterprise Zone may qualify for a temporary property tax abatement on new investments for a 3 to 5-year period. After this period, regular property taxes apply.

Not all data centers in Hillsboro receive tax incentives. In 2026, currently 12 entities are either data center operators as or tenants within the data centers and are receiving tax abatements. Those entities have a combined employment of 590 employees, an assessed value of $6.1 billion, and those entities pay more than $17 million in property taxes with $88 million in property taxes abated in 2025.

There are nine entities operating as or within data centers that are not currently receiving an exemption either because they are not within the Enterprise Zone boundary, did not apply, did not apply during the eligibility window, or previously had an exemption and reached the end of the agreement period. These data centers and their tenants currently pay more than $16 million in property taxes.

What is an Enterprise Zone and why abate taxes there?

Enterprise Zones are a program created by the State of Oregon and administered by cities, ports, counties, or tribal governments, known as Zone Sponsors. These zones incentivize business investments by abating all local property tax for a certain number of years.

An enterprise zone serves as a critical tool for local economic development efforts aimed at encouraging investment in traded sectors like advanced manufacturing, information technology, and food processing, while promoting job creation and strengthening the local economy.

Currently, there are 73 enterprise zones in Oregon: 55 rural and 18 urban. Local zone sponsors are responsible for applying for state designation, as well as creating, amending, managing, and seeking redesignation to maintain eligibility. All of the Zones must periodically renew their state eligibility. The statewide enterprise zone program is set to expire on June 30, 2032, while Hillsboro's enterprise zone is currently scheduled to expire on June 30, 2028.

Where is the Enterprise Zone in Hillsboro and when was it established?

Hillsboro established its Enterprise Zone program in 2006 and has two approved areas: North Industrial and Downtown & South Industrial.

• View a map of Hillsboro's Enterprise Zone Areas

The North Industrial Area was most recently amended in 2025 to include additional parts of the Jackson East Area which was planned for industrial development in 2020.

The program requirements for applicants of Hillsboro's Enterprise Zone, were last updated in 2017. Read the summary guidelines.

Do data centers that receive tax incentives pay other fees?

Yes. Data centers that receive tax incentives through the City of Hillsboro Enterprise Zone program pay additional fees including:

• A one-time Enterprise Zone Application Fee equal to 0.1% of the total estimated value of investment and capped at $50,000.
  
  
• An annual Community Service Fee based on the annual abated taxes relative to employment (jobs) created and retained at the site. Entities that provide more employment relative to the amount of tax abatement qualify for a lower or no Community Service Fee in that year. The maximum Community Service Fees are 33% of the abated property tax amount in years 1- 3 and 50% in years 4 - 5.
  
  
• A School Support Fee applied in years four and five of the exemption period in the amount of 15% of the abated tax. This fee is separate from the Enterprise Zone Community Service Fee and funding goes to the local school districts and the State School Fund.

All data centers, whether they are receiving tax abatements or not, also pay development application and permit fees, system development charges to support new infrastructure, and franchise utility fees for use of utility infrastructure.

Do data centers bring jobs & benefits to the community?

Data centers bring economic activity to the community and support a variety of short-term and long-term living-wage jobs including software engineers, computer scientists, cyber security professionals, electricians, and construction trades including builders, plumbers, electricians, and maintenance professionals.

In 2023, data centers in Oregon created 9,310 direct jobs and 38,380 indirect and induced jobs with more than $4.1 billion in labor income, according to PwC (2025).

Additionally, Community Service Fees paid by Enterprise Zone recipients help fund local workforce development and small business development activities, including:

• Financial support for approximately 4,648 first-generation and low-income college students through the Portland Community College Future Connect Program.
• Funding for more than 850 students in the Portland Community College Quick Start Program.
• Support for the Westside Pitch Fest, which provides dozens of early-stage entrepreneurs and emerging companies a platform for visibility, resources, and support.
• Development of the Hillsboro School District Youth Apprenticeship Program which supports numerous high school students.
• Creation of the Advanced Manufacturing Training and Education Collaborative of Hillsboro (AM-TECH) which is a workforce partnership between educators, workforce trainers, industry, and community organizations.
• Support for Centro de Prosperidad with Centro Cultural which provides hundreds of local businesses support and resources to grow in Hillsboro.
• Funding for Adelante Mujeres' Cocinemos program provides a small business training course focused on the food industry.

These investments provide community members, especially those with greater economic prosperity needs, with resources, training, and career access support.

How much power do data centers use and who pays for upgrades and expansion of capacity?

In Hillsboro, power for data centers is primarily provided and monitored by Portland General Electric (PGE). The Bonneville Power Administration, PGE, and the City of Hillsboro coordinate closely to plan for new development in Hillsboro to prepare for future energy demands and infrastructure needs.

In 2025, the Oregon Legislature passed the "POWER Act" (HB 3546) that ensures big energy users, like data centers, pay for the additional demand they place on Oregon's electric grid. The POWER Act established a special rate category for large users of electricity to ensure they cover their own costs, instead of shifting those costs onto households and small businesses. The Oregon Public Utility Commission is responsible for implementing and enforcing those requirements.

Are Data Centers Using Most of Hillsboro's Water?

No, based on 2025 data, data centers receive about 1.76% of Hillsboro's total water demand. Hillsboro used about 6.3 Billion Gallons (BG) in 2025, with 3.2 BG used in total industrial processes. About 111 million gallons (MG) were used at data centers, or about 3.4% of total industrial demand.

For reference, the combined 2025 water usage of all Hillsboro data centers (~14 sites*) does not even exceed the water usage for a solar panel producing company that operated in Hillsboro during the 2000/2010's and has since gone out of business. That one industrial site used about 150 MG per year, compared to the 111 MG used by the 14 data center sites referenced above. Hillsboro currently has a treatment capacity of 41.7 Million Gallons per Day (MGD) but only peaks (highest usage day in a year) at around 30 MGD, so there is room for growth in all customer classes.

*A section of Hillsboro receives its water service through Tualatin Valley Water District. The Hillsboro Water Department does not have water demand numbers for those locations.

Do Data Centers Pay Less for Water than Residential Customers?

No, data centers are classed as either commercial or industrial, which both pay higher base (fixed) and usage rates than typical residential customers.

Would More Data Centers in Hillsboro Increase Residential Water Rates?

No, water rates are designed so that all customers, including residential, commercial, and industrial users, pay their fair share based on how they use the City's water system and how much water they use.

Cost-of-Service studies are conducted about every five to six years to ensure that each of the customer classes are paying their fair share, so residential rates will not rise due to an increase of data centers.

Residential meters (5/8") pay a $21.94 monthly fixed charge and most customers' water use falls in first-tier rate of $3.99 per ccf (748 gallons) up to 4 ccf, or the second-tier rate of $4.58 per ccf up to 8 ccf. Industrial users like data centers pay a $512.16/month fixed charge for a 2" meter and pay $5.17 per ccf (748 gallons) for usage.

• Read more questions about data center water use in Hillsboro