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.

The post Kotek orders state to kill land sale for Salem data center appeared first on Daily Journal of Commerce.

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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