Q&A: Enterprise Zone Agreements with Data Centers in Hillsboro

To provide accurate information for Hillsboro community members, the City of Hillsboro has established a dedicated webpage to provide information on data centers and related questions.

• The City's webpage on data centers answers community questions and will be updated to provide the most current information available, including the application of tax abatement programs like the Enterprise Zone Program to data centers.
  
  
• The Hillsboro City Council will hold a work session on June 2, 2026, to discuss data centers and policy options for a pause on data center development, as well as review policy options on the local Enterprise Zone.

What is the Enterprise Zone Program?

The Enterprise Zone Program was created by the State of Oregon to encourage recruitment and retention of businesses and jobs across the state.

This program is one of the few incentives the City of Hillsboro has to grow and sustain our local economy.

• It allows a 100% property tax abatement for a 3-to-5-year period for eligible businesses within the designated enterprise zone on new investments like buildings and equipment.
  
  
• After the 3-to-5-year period is over, the investment is taxed and provides revenues to local jurisdictions.
  
  
• The program also funds many local workforce development and small business support programs.

The City of Hillsboro is required to processes Enterprise Zone applications in compliance with state law and local policy.

The rules in place at the time of application are the standards that must be used to determine whether to approve or deny an application.

City staff have no discretion to deny an application that meets the standards set forth in state law and local policy. By law, City staff must approve such applications.

The Hillsboro City Council establishes the local enterprise zone and policies, in coordination with other local taxing districts, and must be ultimately approved by the State of Oregon through its Oregon Business Development Department.

The Enterprise Zone was reauthorized last by the Hillsboro City Council in 2017, and the boundary was expanded in 2024.

The 2026 Oregon Legislature approved HB 4084 modifying the state enterprise zone laws to place a moratorium on data center applications starting in June 2026.

Data centers are one of the types of businesses that can qualify for tax abatement under the Enterprise Zone Program.

Eligible businesses are primarily firms that provide goods, products, or services to businesses or other organizations through, but not limited to:

• manufacturing
• processing
• shipping
• assembly
• fabrication

More information can be found on the City's Enterprise Zone Program webpage.

Why have Enterprise Zone applications for data centers recently increased in Hillsboro?

Since state legislation (HB 4084) passed to impose a moratorium on Enterprise Zone approvals for data centers in March 2026, Hillsboro has seen 17 Enterprise Zone applications for data centers.

Because the State-imposed moratorium begins on June 6, 2026, many data centers submitted their applications recently so that they could be reviewed prior to the moratorium effective date.

• All of the 17 applications received are for sites that had either already been purchased for future data center use (10 applications) or were already in operation as data centers (7).
• The applications span 8 companies at 11 sites.
  • Four of the sites are vacant and would be constructed in the future.
  • Seven of the sites are existing data center facilities that would be reinvested in.

Each application covers a period of 3 to 5 years. That is the maximum exemption period allowed. After the exemption period ends, the exempt assets must be taxed.

Buildings would be taxed permanently moving forward, and machinery and equipment must be taxed for at least one year before it is disposed, replaced, or relocated. The investments can receive the tax abatement for one 3-to-5-year period.

If a business makes additional new investments in buildings, equipment, and/or personal property, they could be eligible to apply for additional Enterprise Zone exemptions, provided they meet the program requirements in effect at the time of application. The same assets cannot be exempted twice. The incentive benefit is only realized by a company if/when they make the investment and would otherwise be taxed on it.

Given the approval process timeline, the City of Hillsboro does not anticipate any additional data center applications could be submitted after May 7, 2026, and be able to go through the approval process prior to the June 6, 2026, moratorium date, thereby creating a pause in new data center applications.

Who reviews Enterprise Zone applications?

Oregon law (ORS 285C.105) requires that local jurisdictions or sponsors appoint a local zone manager to manage the Enterprise Zone program including the processing of applications.

• Hillsboro redesignated its Enterprise Zone in 2017 and appointed the City Manager and their designee as the local zone manager. That role is assigned to the Economic Development team at the City, with its director filling the role of zone manager.
  
  
• When the director signs an agreement, they are doing this in an administrative capacity in their role of zone manager.

State law requires that applications which meet the minimum program requirements must be approved per ORS 285C.140.

Why is some information redacted in Enterprise Zone Program applications?

Oregon law (ORS 285C.160) requires that the enterprise zone sponsor post the terms of an enterprise zone agreement on its website for 21 days prior to the agreement becoming effective.

The law also states that "The name and any confidential or proprietary information of the business firm may not be made public under this subsection." This is the reason why the business name is redacted on these notices.

As a local zone sponsor, Hillsboro can create additional Enterprise Zone requirements. The Hillsboro City Council has elected to do that.

Some of the local requirements that the City of Hillsboro has enacted include:

• minimums for wage and benefits paid to employees
• annual summaries of locally procured goods and services
• a Community Service Fee, which is utilized for:
  • small business support
  • workforce development programs
  • scholarships for first-generation college students

This funding is contributed back to the City of Hillsboro by the company to provide community benefits like supporting local and countywide economic development efforts. It does not fund general services.

Companies receiving an exemption must submit a compliance letter to the City of Hillsboro annually addressing each of the local requirements.

Will there be more discussion about data centers in Hillsboro and the Enterprise Zone?

In April 2026, the Hillsboro City Council asked City staff to schedule a work session on data centers to evaluate options to pause data center development and review policy options on the local Enterprise Zone.

The public work session will be held on Tuesday, June 2, at 6 pm, at the Hillsboro Civic Center. Community members are encouraged to observe the presentation and discussions in person or online.

The City of Hillsboro has also set up a dedicated webpage to answer questions related to data centers so that the community has access to the most accurate information.