Oregon Gov. Tina Kotek on Thursday directed the Department of Administrative Services to terminate the state’s contract for the sale of about 32 acres at the Mill Creek Corporate Center campus in southeast Salem for a proposed data center, putting the controversial project’s future in jeopardy.

The land accounts for half of the 75-acre plot where tech company Verrus hopes to build the $5.1 billion Oakline at Mill Creek project.

Kotek’s announcement comes days after hundreds of people turned up on July 27 to rally against the proposed data center.

Salem City Council is slated to hold a special meeting on Aug. 3 to consider initiating a moratorium on AI data centers and amending zoning codes to regulate such developments.

Salem City Manager Krishna Namburi stressed previously that the project is “not a done deal” and city leaders want residents to voice their concerns and be included in the public process.

Kotek said she made the decision regarding the sale upon learning of the proposed development. Her office said it reflects her commitment to ensuring state assets are managed in a manner that advances Oregon’s long-term interests, supports local communities, and aligns with the state’s priorities around affordability, responsible economic development and stewardship of public resources.

“This decision is about my responsibility to make sure state actions reflect Oregon’s values and serve the public interest,” Kotek said. “I believe in growing Oregon’s economy and welcoming new investment, including in the technology sector. But growth has to make sense for the community, for our infrastructure, and for our natural resources. Oregonians have made it clear they expect thoughtful, responsible decisions about projects of this scale, and I agree.”

Her office said the governor supports economic development that creates family-wage jobs, strengthens regional economies, and helps Oregon compete for future investment while balancing impacts on housing, energy, water, transportation, and quality of life.

The state will continue working with local governments, businesses and communities to advance these economic development opportunities, Kotek said.

Kotek, in January, formed a Statewide Data Center Advisory Committee to develop policy recommendations. Committee members are scheduled to meet July 31 and on Aug. 4 will discuss and deliberate a draft report.

Editor’s note: This article first appeared in The Statesman Journal and then was distributed on the USA TODAY Network via Reuters Connect.

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News that a tech company wants to build a $5.1 billion data center on 75 acres of industrial land in southeast Salem drew immediate community outrage and support.

Salem leaders are stressing that the Oakline at Mill Creek project by Verrus is still in its infancy and they want residents to voice their concerns and be included in the public development process.

“There is a misconception that the negotiations have already been done,” City Manager Krishna Namburi told the Statesman Journal.

Verrus has not submitted a land use application for the spot on the Mill Creek Corporate Center campus at Turner Road and Deer Park Drive.

“It’s not a done deal,” Namburi said.

Tentative timelines for the project show the land use process taking up the bulk of 2026. A public input period would take place before plan review and permitting in 2027. Construction would last into 2029.

Supporters said the project would bring in high-paying, yearslong construction, carpentry and electrician jobs. Also, expectations are that the development would add $9 million per year to Salem’s General Fund and $1.5 million to the city’s livability levy that funds the library, parks and senior center.

City officials confirmed that Verrus received approval for a standard three-year state Enterprise Zone property tax exemption from Marion County. Council approval was not required.

After that exemption expires, taxing districts would begin receiving property-tax revenue from the development.

Project opponents spoke out against the data center’s potential water and electricity use as well as the environmental impact.

A team collected 8,636 signatures within a week for a Change.org petition to stop the development of the center. Calls for action spread among local organizations, encouraging residents to protest before the July 27 Salem City Council meeting and testify in opposition.

Verrus CEO Nelson Abramson said he understands that Salem residents have questions about the project’s water use, noise and environmental impacts, and his team welcomes that scrutiny.

“While Oakline is still early in the process and we have not yet submitted a formal application with detailed building schematics or drawings, our next-generation data center is designed from the ground up to minimize water use, maximize energy efficiency and support power grid reliability,” he said.

Namburi said the city is committed to keeping community members as informed and engaged as possible throughout the process. Some opponents criticized the city for entering into a nondisclosure agreement with Verrus for over a year.

Namburi said the city entered into that agreement through the Salem economic development group SEDCOR in March 2025 when potential project locations in the city were floated. Such agreements are very common when companies are exploring the possibility of developing or expanding into new cities, she said.

The nondisclosure agreement was lifted in early July.

Verrus chose to begin this public conversation before the design is final because it wants to work directly with the city and community to help shape the project, Abramson said.

“We are going public earlier than most others would to demonstrate what makes Verrus different,” he said. “The Salem community should expect developers like Verrus to be accountable to what we say at each stage of the process. Know that our core beliefs start with building a new kind of data center that’s better for the grid and a far more efficient user of our natural resources like water.”

Namburi and Community Planning and Development Director Kristin Retherford stressed that the city’s role is to follow the legally required land-use and permitting processes, which require an application, reviews and public input, rather than advocate for or against the project.

The proposed site is zoned for industrial use and a data center is one of the permitted uses, Namburi said.

Preliminary renderings for the project show a substation and two-story buildings that could have a footprint of up to 1.8 million square feet.

The location is near Corban University, the Dollar General Distribution Center, the Genesco warehouse and the former Mill Creek Correctional Facility.

The Mill Creek Corporate Center and zoning framework were established in 2005 to prepare the land for industrial development, Retherford said. Salem’s code was updated in 2014 to allow data centers in employment center zones.

State, federal and city law requires Salem to evaluate projects according to established guidelines.

“We’re not at a point where we can say no data centers in Mill Creek,” Retherford said.

Council could make a motion to rezone properties to not allow data centers going forward.

But the city and public can voice concerns about the environmental and water impact through the lengthy land use and development process.

If a formal application is filed, a public notice would be sent to neighboring property owners and the Southeast Mill Creek Association. A 14-day public comment period would occur, and any appeal would trigger a public hearing.

“We will be evaluating a very long list of community impacts,” Retherford said.

Jeff Bladen, head of energy and policy at Silicon Valley-based Verrus, said the company specifically seeks communities that already have land designated for industrial use. He also cited Salem’s skilled workforce, apprenticeship programs and potential partnerships with local colleges as additional factors drawing Verrus to the city.

“Data centers need to do better,” he said. “Verrus was really the first company coming along to try and build a truly new and better kind of data center.”

Company officials said the development’s water consumption would be low, and Namburi said staff would carefully evaluate water consumption projections to ensure the city’s long-term water needs would not be put at risk.

Retherford said measures are in place with the city and agencies like the Oregon Department of Environmental Quality to hold companies accountable if they do not follow through on their water consumption and environmental impact promises.

Verrus leaders said that the data center in Salem will be different. Unlike legacy data centers, it is designed to support the local power grid, conserve water with a closed-loop cooling system, minimize noise with large-scale batteries instead of diesel generators, and contribute meaningfully to the community and economy over the long term, Bladen said.

Company officials claim the water use will be significantly less than that of an 18-hole golf course.

“I think it’s important to recognize that people’s concerns are valid,” Bladen said.

The proposed Salem facility, which would take multiple years to permit and build, would be one of Verrus’ first. The company’s quest to build a data center in Lyon Township, Michigan, has received substantial community pushback but is nearing final approval.

Verrus leadership said community engagement will be a key part of the process going forward. Already, the company’s conversations with city leaders led them to commit to preserving a grove of heritage oak trees on the property.

“We look forward to customizing our approach for Salem addressing common concerns raised and showing how community input is influencing the final design,” Abramson said.

Editor’s note: This article first appeared in The Statesman Journal and then was distributed on the USA TODAY Network via Reuters Connect.

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Hillsboro’s data center market ended 2025 with a 0.2 percent vacancy rate, according to a recent report, underscoring insatiable demand in the sector and constrained supply.

At year end the market had 475.4 megawatts of inventory and approximately 1 megawatt of available capacity, CBRE found. Asking rents ranged from $175 to $225 per kilowatt per month.

“Hillsboro‘s exceptionally low vacancy underscores how critical the market has become for West Coast deployments,” Haakon Weinstein, a Portland-based CBRE vice president, stated in a news release.

“Even with limited new supply last year, demand remained steady, driven by the area’s network density and access to renewable power,” Weinstein added. “With development constrained in part by the region’s urban growth boundary and power transmission limitations, availability will remain scarce, influencing both rate and land price trends.”

Hillsboro remained the seventh-largest North American data center market, led by Northern Virginia, Atlanta, Dallas-Fort Worth, Chicago, Phoenix and Silicon Valley.

Locally and nationally, data center developers perhaps have run out of easy locations to build. Data center capacity under construction fell to 5,994.4 megawatts at the end of 2025, compared to 6,350.1 megawatts a year earlier.

CBRE’s report blamed “longer timelines tied to permitting, zoning approvals and securing adequate power” for the first drop in data center construction since 2020.

Weinstein said he expects to see more construction near major cities, where operators prize speed.

“As data centers progress, you’re going to see more data centers on the edge of population centers that have very low latency,” Weinstein added in an interview.

Despite demand, Hillsboro isn’t where growth is occurring nationally. Dallas, Austin, Atlanta, Raleigh, North Carolina and Denver-Boulder, Colorado, are all seeing strong growth, Weinstein said.

Oregon is prized for relatively cheap electricity, and a mix high in renewable energy. Undersea data cables come ashore at Pacific City, and the state is sandwiched by tech clusters in Seattle and Northern California.

More growth is expected in Eastern Oregon, where Amazon has bought up “huge swaths of land,” Weinstein said. Hillsboro could see more growth if an effort to expand its urban growth boundary is successful, he said.

Meanwhile, data centers face political opposition from some critics who blame the industry for sharp rises in utility bills and water usage. The Oregon Legislature this month approved a one-year moratorium on property tax incentives for new data centers.

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By ANDREW SELSKY
Associated Press

SALEM, Ore. (AP) — The council of a small Oregon city has approved a deal with Google that will enable the technology giant to build two more water-guzzling data centers there, though some residents worry about drought and secrecy.

A single data center can churn through millions of gallons of water per day to keep hot-running equipment cool, and the placement of these facilities in drought-prone areas is an increasing concern around the globe, even as reliance on them is growing. Data centers form the “cloud” that helps people stream movies, conduct research at the touch of a button, buy things and store photos and videos.

Members of the Dalles City Council unanimously approved the $28.5 million deal Monday night. The new data centers would be in addition to the three cavernous facilities Google already has in the town. Google built its first-ever industrial-scale data center in The Dalles in 2006.

Google spokeswoman Kate Franko, in a statement issued after the vote, underscored the public’s need for data centers.

“Google’s data centers in The Dalles in Wasco County help millions of people find directions, send emails, and search for information every day,” said Franko, regional head of data center public affairs.

The new data centers would go on the site of a former aluminum smelter, shuttered in 1987, that emitted so much pollution it became a Superfund cleanup site. Along with Google’s purchase of the property several years ago, the company also acquired the locale’s rights to 3.9 million gallons of water per day.

“We are proud to expand our commitment to the region and continue the cleanup of the former Superfund site,” Franko said.

Under the deal, Google will transfer its water rights to the city and will build up The Dalles’ water capacity, including drilling wells, building water mains and developing an aquifer to store water and increase supply during drier periods.

How much water the new data centers would use, and how much the existing ones in The Dalles have been using, remains confidential, known only to some city officials and the city council — making some residents uneasy. The city says Google considers it a trade secret, and is fighting, via a lawsuit, a public records request for the information filed by The Oregonian/OregonLive, a Portland newspaper.

Dave Anderson, public works director for The Dalles, said that while he cannot disclose how much water Google needs for the new data centers, he said it would be less than 3.9 million gallons per day.

“The city comes out ahead,” he said in an interview last month.

Some of the council members said they had been disparaged and insulted as they weighed whether to approve the deal. There was some opposition voiced in council meetings and on social media, but no concerted effort was launched in the city of 15,000 to obstruct the deal.

“When we receive emails and phone calls that call us names and use profanity, that’s just not appreciated,” Councilor Tim McGlothlin said right before the vote. “We’re doing our best to represent you.”

The Dalles is adjacent to the the mighty Columbia River, but the new data centers wouldn’t be able to use that water and instead would take water from rivers and groundwater that has gone through the city’s water treatment plant.

Dawn Rasmussen, who lives on the outskirts of The Dalles and has seen the level of her well-water drop, said during public comments just before the vote that she worries Google would elbow aside residents if water becomes so scarce, because of climate change, that there’s not enough for everyone.

Anderson assured her that the tech giant would not have priority.

“I think we’ve identified that the highest priority is the public health and safety needs of the community. After that, there is shared curtailment,” he said.

The concerns are understandable in The Dalles, the seat of Wasco County, which is suffering extreme and exceptional drought, according to the U.S. Drought Monitor. The region last summer endured its hottest days on record, reaching 118 degrees Fahrenheit in The Dalles.

Three studies related to proposal — on water supply and capacity; on needed infrastructure; and on water quality — were paid for by Google, Anderson acknowledged. He said the city had a long relationship with two of the companies that did the studies and that the third was a well-established firm.

“The city … raised many questions as all three of these studies were being developed, and challenged some initial findings to be sure that our interests were met,” he insisted.

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By Andrew Selsky and Manuel Valdes

The Associated Press

THE DALLES – Conflicts over water are as old as history itself, but the massive Google data centers on the edge of this Oregon town on the Columbia River represent an emerging 21st century concern.

Now a critical part of modern computing, data centers help people stream movies on Netflix, conduct transactions on PayPal, post updates on Facebook, store trillions of photos and more. But a single facility can also churn through millions of gallons of water per day to keep hot-running equipment cool.

Google wants to build at least two more data centers in The Dalles, causing some residents to fear there eventually won’t be enough water for everyone – including area farms and fruit orchards, which are by far the biggest users.

Across the United States, there has been some mild pushback as tech companies build and expand data centers. Those conflicts are likely to grow as water becomes a more precious resource amid the threat of climate change and the increasing demand for cloud computing. Some tech giants have been using cutting-edge research and development to find less impactful cooling methods, but critics say the companies can still do more to be environmentally sustainable.

The concerns are understandable in The Dalles, the seat of Wasco County, which is suffering , according to the U.S. Drought Monitor. The region last summer endured its hottest days on record, reaching 118 degrees Fahrenheit in The Dalles.

The Dalles is adjacent to the mighty Columbia River, but the new data centers wouldn’t be able to use that water and instead would have to take water from rivers and groundwater that has gone through the city’s water treatment plant.

However, the snowpack in the nearby Cascade Range that feeds the aquifers varies wildly year to year and glaciers are melting. Most aquifers in north-central Oregon are declining, according to the U.S. Geological Survey Groundwater Resources Program.

Another contributor to residents’ unease is that they don’t know how much water the proposed data centers will use, because Google calls it a trade secret. Even the town councilors, who are scheduled to vote on the proposal on Nov. 8, had to wait until last week to find out.

Dave Anderson, public works director for The Dalles, said Google obtained the rights to 3.9 million gallons of water per day when it purchased land formerly home to an aluminum smelter. Google is requesting less water than that for the new data centers and would transfer those rights to the city, Anderson said.

“The city comes out ahead,” he said.

Google, for its part, stated it’s “committed to the long-term health of the county’s economy and natural resources.”

“We’re excited that we’re continuing conversations with local officials on an agreement that allows us to keep growing while also supporting the community,” Google stated, adding that the expansion proposal includes a potential aquifer program to store water and increase supply during drier periods.

The U.S. hosts 30 percent of the world’s data centers – more than any other country. Some data centers are trying to become more efficient in water consumption, for example by recycling the same water several times through a center before discharging it. Google even uses treated sewage water, instead of using drinking water as many data centers do, to cool its facility in Douglas County, Georgia.

Facebook takes advantage of the cold, high-desert air in Prineville to chill the servers in its first data center, and went a step further when it built a center in Lulea, Sweden, near the Arctic Circle.

Microsoft even placed a small data center, enclosed in what looks like a giant cigar, on the seafloor off of Scotland. After retrieving the barnacle-encrusted container last year after two years, company employees saw improvement in overall reliability because the servers weren’t subjected to temperature fluctuations and corrosion from oxygen and humidity. Team leader Ben Cutler said the experiment shows data centers can be kept cool without tapping freshwater resources.

A study published in May by researchers at Virginia Tech and Lawrence Berkeley National Laboratory showed one-fifth of data centers rely on water from moderately to highly stressed watersheds.

Tech companies typically consider tax breaks and availability of cheap electricity and land when placing data centers, said study co-author Landon Marston, assistant professor of civil and environmental engineering at Virginia Tech.

Companies need to consider water impacts more seriously, and put the facilities in regions where they can be better sustained, both for the good of the environment and their own bottom line, Marston said.

“It’s also a risk and resilience issue that data centers and their operators need to face, because the drought that we’re seeing in the West is expected to get worse,” he said.

About an hour’s drive east of The Dalles, Amazon is giving back some of the water its massive data centers use. Amazon’s sprawling campuses, spread between Boardman and Umatilla, butt up against farmland, a cheese factory and neighborhoods. Like many data centers, they use water primarily in summer, with the servers being air-cooled the rest of the year.

About two-thirds of the water used by Amazon evaporates. The rest is treated and sent to irrigation canals that feed crops and pastures.

Umatilla City Manager Dave Stockdale appreciates that farms and ranches are getting that water, since the main issue the city had as Amazon’s facilities grew was that the city water treatment plant couldn’t handle the data centers’ discharge.

John DeVoe, executive director of WaterWatch of Oregon, which seeks reform of water laws to protect and restore rivers, criticized it as a “corporate feel-good tactic.”

“Does it actually mitigate for any harm of the server farm’s actual use of water on other interests who may also be using the same source water, like the environment, fish and wildlife?” DeVoe said.

Adam Selipsky, CEO of Amazon Web Services, insists that Amazon feels a sense of responsibility for its impacts.

“We have intentionally been very conscious about water usage in any of these projects,” he said, adding that the centers brought economic activity and jobs to the region.

Dawn Rasmussen, who lives on the outskirts of The Dalles, worries that her town is making a mistake in negotiating with Google, likening it to David versus Goliath.

She’s seen the level of her well-water drop year after year and worries sooner or later there won’t be enough for everyone.

“At the end of the day, if there’s not enough water, who’s going to win?” she asked.

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