Major Oregon Data Center Lawsuit Challenges Hillsboro Tax Breaks Worth Millions

A group of Oregonians has escalated the pushback against Data Center expansion from community rallies to the courtroom, filing a lawsuit on June 22 that challenges the legal approval of 17 Enterprise Zone (EZ) applications allegedly rushed right before a sweeping data center moratorium took effect.

Pushback Against Hillsboro Data Center Expansion Moves To Court

Hillsboro’s data-center page says the city had 18 data-center sites built or under construction as of March 2026, and that the City Council reviewed options after a rush of enterprise zone applications before the state moratorium.

The non-profit 1000 Friends of Oregon, alongside a coalition of local farmers, business owners, and education leaders, filed a lawsuit against the City of Hillsboro and Washington County earlier this week, challenging the legal approval of 17 Enterprise Zone applications.

At the heart of the dispute is a massive fiscal trade-off. Local estimates suggest these rolling tax exemptions cost the public between $117 million and $125 million annually by abating both real and personal property taxes.

For data center operators, these deals secure tax relief stretching as far out as 2051.

The petition and complaint allege that data center approval applications were pushed through key tax-break clearances right before a sweeping data center moratorium took hold. For residents, critics argue the math simply doesn’t add up.

The community’s concern isn’t just about energy grids and land use- it’s deeply tied to local infrastructure. School board members and residents point to the stark contrast between corporate tax handouts rolling forward while public schools face budget deficits, staff layoffs, and heavy reliance on parental fundraising.

The physical footprint of these facilities is also pushing directly into prime agricultural land. Local farmers say the typical multi-decade Enterprise Zone agreements leave unincorporated rural neighbors without an electoral voice, even as the rapid pace of development threatens local watersheds and centuries-old farming legacies.

As legal battles loom, 1000 Friends of Oregon has launched a Data Center Reform Fund to help communities navigate these complex fiscal and land-use decisions.

This lawsuit signals a distinct shift in the region’s approach to tech development, drawing a firm line where community infrastructure must take precedence over corporate incentives. Contributions can be made at friends.org/donate.