The city gave away $4 billion in tax base and built its budget around the company it gave it to.
Intel has shielded over $4 billion in assessed value from property taxes since 2005. The city is now so dependent on Intel's fee payments that it uses them just to keep the lights on.
Oregon's Strategic Investment Program lets cities trade property tax exemptions for corporate investment. In 2005, Hillsboro gave Intel a 20-year deal that shielded over $4 billion in assessed value from the tax rolls. That value would otherwise have funded schools, roads, and services for every resident in the city.
In exchange, Intel paid a negotiated community service fee, a fraction of what full property taxes would have been. That money went into a dedicated SIP Fund, meant for one-time capital projects and kept separate from day-to-day operations.
But Hillsboro's operating costs grew faster than its property tax base could keep up with, because Oregon's Measure 50 caps property tax growth at 3% per year regardless of inflation or rising costs. So the city started raiding the SIP Fund just to balance the budget: $12M transferred into general operations last biennium, $8.5M more this one. The city's own budget now explicitly states that General Fund capital needs will "rely solely on SIP Funds into the foreseeable future."
The city built its financial architecture around Intel staying.
The city's response
As the Intel and Genentech SIP agreements finally expire in FY 2025–26, the city is projecting a 15% assessed value increase, though it expects that figure to depreciate rapidly since most of the value is machinery. There is no plan in this budget for what happens when that revenue stream ends.
Data centers are the city's answer to its own budget problem. You pay for it twice.
The city subsidizes data centers to plug budget gaps. Data centers drive up your electric bill. The city then collects a cut of what you're now paying. You just paid the city for the privilege of paying more to the city.
Facing a structural budget shortfall partly of its own making, the city has been approving data center development in North Hillsboro. Data centers are fast, easy industrial revenue: they consume enormous amounts of electricity, generate franchise fees, and require less infrastructure investment than housing or schools.
Here's how the loop works. Franchise fees are what utility companies like PGE pay the city for the right to operate in public rights-of-way, running lines under streets and using city infrastructure. The fee is calculated as a percentage of PGE's gross revenue in Hillsboro. In 2018, the city doubled that rate from 3.5% to 7%. As data centers multiply in North Hillsboro, electricity consumption and PGE's gross revenue go up. So does the city's franchise fee income.
PGE has shareholders to answer to. The most direct way to recover higher franchise fee obligations is to raise residential rates. Industrial customers negotiate; residential customers don't. Electricity rates go up, driven partly by data center load and partly by the city's own rate increase. The city's budget confirms franchise fees are increasing $14.7 million this biennium, a 32% jump, driven significantly by data center electricity usage in North Hillsboro.
The city subsidized the development that created the demand. That demand raised your utility bill. Your utility company now pays the city a cut of your higher bill. The city used your tax dollars to build the machine that reaches into your wallet on the back end.
The city's response
The city points to franchise fee growth as a budget success story. For residents paying higher electric bills to generate it, the picture is different.
While corporations pay less, residents pay more on water, sewer, roads, and electricity.
Utility rates are up across the board this biennium. Road fees up 11–17%. Water up 5.7%. Sewer up 8%. These are the predictable costs of a city that has capped its own ability to tax corporations fairly.
Oregon's Measure 50 caps property tax growth at 3% annually, so the city's largest revenue source can't keep up with inflation, rising personnel costs, or growing service demands. The city has two options: cut services or raise fees. It has chosen fees, and the fees fall on residents.
This biennium: Transportation Utility Fees went up 11% for residential customers in January 2025, with another 6% in January 2026. Water rates went up 5.7% in January 2025, another 5.7% in January 2026. Sewer rates went up 8% in January 2025, another 8% in January 2026. All of this is on top of electricity rate increases driven partly by data center load.
Meanwhile, Intel received an air quality permit making it the second largest greenhouse gas emitter in Oregon. Oregon DEQ separately cited the company for failing to monitor unsafe emissions for nine weeks. Working people are required to pay hundreds of dollars to fix their cars or lose their registration. The second largest GHG emitter in the state gets a citation from a state agency. The city's financial relationship with that polluter gives it no incentive to push harder.
The city's response
The budget includes a Sustainability Revolving Fund and fleet electrification goals for city vehicles. These are internal operational targets with no bearing on industrial polluters. There is no environmental compliance condition in any SIP or enterprise zone agreement.
When the consequences of pro-corporate policy show up as housing crisis and homelessness, the city builds a shelter. Four years later.
Hillsboro's first year-round homeless shelter opens this year, four years after the city bought the land. One affordable housing project, breaking ground in 2027. 110 units. That's the housing policy of a city of 100,000.
When the city caps its tax base by shielding billions in corporate assessed value, the knock-on effects are predictable: underfunded schools, inadequate transit, and a housing market that prices out the people who keep the city running. The city's response to those effects, when they become impossible to ignore, is reactive and slow.
The city acquired land for a homeless shelter in FY 2021–22. The shelter is expected to open in FY 2025–26. Four years. It cost over $17 million total, cobbled together from five funding sources: ARPA pandemic relief, state grants, Metro Supportive Housing funds, Washington County administration, and an $850,000 federal earmark. The city did not fund it from its own General Fund.
The city's entire affordable housing investment this biennium is the Willow Creek project: 110 units, $15.9 million in Metro bond funds, construction starting early 2027. This is the city's third affordable housing project from the Metro bond. There is no mandatory notice before rent increases in this budget, no right to counsel in eviction proceedings, and no anti-displacement fund.
The Hillsboro School District faces a $20 million shortfall this year. When $4 billion in assessed value sits off the tax rolls, that missing value affects every overlapping taxing jurisdiction, including the schools that educate the workforce the corporations here depend on.
The city's response
A shelter is what you build when prevention has already failed. 110 affordable units starting in 2027 is an acknowledgment that the city has run out of room to pretend the problem isn't there.
These are a consistent set of choices about who the city works for.
Every part of this story follows the same logic: benefits flow to corporations, costs land on residents, and the city spends whatever's left over managing the damage.
The city gave Intel a 20-year tax deal and built its budget around the relationship. When that deal created a structural shortfall, it fast-tracked data center approvals to generate franchise fee revenue, driving up electricity costs for residents in the process. When residents couldn't keep up with rising housing costs, it built a shelter. Four years later. With other people's money.
Meanwhile, an $80–90 million police headquarters is under construction, funded by bonds the city will be paying interest on for decades, justified in the city's own budget document in two sentences: it will consolidate the east and west precincts. The homeless shelter took four years and $17 million from five sources. The police headquarters gets $70 million in bond proceeds in this biennium alone, with no detailed public justification.
A city government that works for its residents raises your water bill when it has no other choice, after exhausting every alternative. It doesn't give billion-dollar companies 20-year tax deals, approve industrial development that drives up your electric bill, and then collect a cut of what you pay. It doesn't take four years to open a shelter. It makes the hard choices upfront, about who pays, who benefits, and who gets protected when things go wrong, rather than making residents absorb the cost of decisions they had no say in.