Internet Explorer 11 is not supported

For optimal browsing, we recommend Chrome, Firefox or Safari browsers.

Oregon County Officials Benefited Personally from Amazon Deal

Three former public officials in Morrow County, who own a small telecommunications company, which provides fiber-optic service to Amazon data centers, failed to acknowledge that they stood to profit when they gave tax breaks and arranged land sales.

spools of fiber optic cable
Spools of fiber optic cable outside of Windwave Communications in Boardman, OR on Tues., July 12, 2022, An Amazon data center can be seen behind them. When Amazon and its data centers arrived in Boardman, it brought big economic upside to the rural community, but not without a cost. (Dave Killen/The Oregonian)
Three former public officials in Morrow County, Ore., could be hit with thousands of dollars in penalties for failing to acknowledge that they stood to profit when they gave tax breaks to Amazon data centers and arranged land sales to make way for the huge installations.

Staff with the Oregon Government Ethics Commission have proposed settling ethics charges against the three officials. Two would pay $5,000 penalties and another would pay $2,500. Their attorney is contesting the charges and wants the ethics commission to waive all penalties and issue a “letter of education” instead.

The three officials own a small telecommunications company called Windwave Communications, which provides fiber-optic service to Amazon data centers in Morrow County. The ethics commission is examining whether they broke Oregon law by failing to consistently disclose that they could benefit personally from deals with the tech giant.

The officials and ethics commission are working to negotiate a settlement, perhaps as soon as the commission’s Oct. 6 meeting. If they cannot find a compromise, the matter will go before the full commission, which could levy bigger penalties than those described in the proposed deal or side with the three officials and issue no penalties.

Meanwhile, the Oregon Department of Justice continues to investigate how the three officials and the Port of Morrow’s former director acquired Windwave. The telecom company used to be owned by a nonprofit on whose board the two port commissioners sat.

Both investigations follow reporting last year by The Oregonian/OregonLive, which showed how the officials stood to profit from their dealings with Amazon.

Two of the people under investigation, former Morrow County Commissioner Don Russell and former Port of Morrow Commissioner Marv Padberg, didn’t respond to a request for comment.

A third, former port Commissioner Jerry Healy, accused the ethics commission staff of errors in determining whether Windwave’s owners were at various public meetings, or whether Amazon or Windwave business came up at meetings they participated in.

“The Windwave team has been disproving such inaccuracies and factual errors, as well as questioning OGEC staff’s ultra-aggressive interpretation of its own rules,” Healy wrote in an email.

Morrow County, home to about 13,000 people, sits along the Columbia River about 160 miles east of Portland. Local officials capitalized on a program of Oregon incentives from the 1980s to lure Amazon with enormous tax breaks.

The company saved $52 million in property taxes on its Morrow County data centers last year alone, through deals approved by the public officials now facing sanction because of their potential conflict of interest.

The data centers made Amazon a major local employer and, despite the tax breaks, the county’s biggest taxpayer.

But despite the additional revenue, residents across the county are at odds over Amazon’s tax deals, how to fund emergency services in the county and who is responsible for allowing nitrates from agricultural businesses served by the port to pollute local groundwater. The port has agreed to pay $200 million to improve wastewater treatment.

“We’re a divided community. I can tell you that,” said newly elected port Commissioner Kelly Doherty. Doherty defeated Padberg in a May election in which Amazon and transparency about port operations were among the major issues.

Her husband, Jim Doherty, was a former county commissioner critical of the Windwave owners who was recalled during a special election last fall. He is now running for the Republican nomination for an open state Senate seat.

All three of the Windwave owners under investigation have left office in the last year. Healy resigned in August and former county Commissioner Russell didn’t seek reelection when his term ended at the end of 2022.

Kelly Doherty said she ran for the port commission because she wants to see more accountability by public officials in Morrow County.

“I just don’t like the way things have been done in the past. I’m really concerned about what’s going to happen in the next few months,” Doherty said. She said she’s concerned the ethics commission will do little more than give Windwave’s owners a mild reprimand for their conduct.

“If they would start handing out $5,000 fines people would wise up,” Doherty said.

In July, the ethics commission overruled its staff and dismissed a case against Gary Neal, who negotiated land sales and tax deals with Amazon as the port’s former director. Neal is another Windwave owner but retired as port director in 2018, when his son took over.

Though Neal remained a port employee through December of that year, nearly all of his interactions with Amazon came before the four-year window subject to ethics commission review. The ethics commission didn’t receive any complaints about the Windwave owners until after The Oregonian/OregonLive articles last September.

The three Windwave cases now before the ethics commission cover a broader window of time, because all three officials remained in office at least through the end of 2022.

Ethics commission staff say the three Windwave owners under investigation participated in many meetings where they had conflicts of interest, or potential conflicts of interest, that they didn’t disclose at the time as required by Oregon law. Those included meetings on Amazon tax breaks, sales of port land to Amazon, permitting for Windwave fiber projects or leases of port land to Windwave.

Sometimes the officials disclosed their conflicts of interest, ethics commission staff say, but the staff alleges there were dozens of occasions where they did not.

Their lawyer, Portland attorney Danny Newman, declined to comment on the pending investigation.

In a letter to ethics commission staff, though, Newman said his clients sought guidance from the commission multiple times, often declared conflicts of interest and made their best effort to comply with Oregon law as they understood it. And Newman said some of their actions had little if any benefit to Windwave.

“We ask that your office consider recommending the lesser penalty of a letter of education in each of their cases as stipulated final resolutions,” Newman wrote.

Healy, the former port commissioner who resigned last month, said the ethics commission should not have released the information about its investigation when The Oregonian/OregonLive requested it under the state’s public records law.

“The premature release of this kind of information should never have happened and unfairly maligns Healy, Russell and Padberg,” Healy wrote in an email. He did not respond when asked to cite a statutory exemption that would have allowed the ethics commission to refuse the news organization’s request for the public documents.

In his email, though, Healy insisted that he and the other three Windwave owners have been cooperating with the ethics investigation and that they frequently sought ethics guidance while in public office.

Susan Myers, compliance and education coordinator for the ethics commission, rejected the owners’ proposal for a letter of education in lieu of a financial penalty. She acknowledged that Russell had usually – but not always – declared conflicts of interest after consulting with the ethics commission, but noted that Padberg and Healy often did not.

“They continued to participate in meetings, primarily executive sessions, without making any public conflict of interest disclosures,” Myers wrote. “In so doing, they were not following commission advice.”

In the proposed settlement agreement, commission staff contend that without the tax breaks and land sales, Amazon would not have built its data centers in Morrow County. And without those data centers, “Windwave would not have the opportunities to contract with Amazon to install fiber-optic conduits and/or fiber-optic lines those data centers.”

The Department of Justice’s parallel investigation has been underway for at least nine months. It is examining how Neal, Russell, Padberg and Healy acquired Windwave in 2018.

Padberg and Healy sat on the board of Inland Development Corp., the nonprofit that sold Windwave to them. Inland said they recused themselves from voting on the sale. One of Inland’s other three board members has said he didn’t vote on the deal, either, so it’s not clear that the nonprofit had the necessary three votes to approve the deal.

Inland set the price for Windwave at $2.6 million, based on a valuation conducted by a Portland firm called Cogence Group. Last year’s reporting by The Oregonian/OregonLive showed Inland and Cogence determined the price without using updated sales figures, which showed Windwave’s business was much larger than originally estimated.

Additionally, Inland loaned Windwave money to finance its sale at an annual interest rate of 2.75 percent, far below market rates. And Cogence’s valuation did not account for the possibility that Windwave’s fiber-optic business might benefit from Amazon’s rapidly growing operations in Morrow County.

Ethics commission records show Windwave had 20 contracts with Amazon through the end of 2022. The records do not show the value of those contracts and neither Windwave nor Amazon responded to requests for details.

Amazon didn’t respond to questions about whether it knew Windwave was owned by some of the same public officials it was dealing with in its quest for tax breaks, or whether it took any steps to address that potential conflict of interest.

In a statement, though, Amazon said its contracts with Windwave and negotiations with Morrow County officials complied with the company’s code of ethics. And the company noted it has spent $15.6 billion in eastern Oregon since 2011, contributing to thousands of local jobs as it built and operated its data centers.

“We set a high bar for ourselves and our suppliers,” Amazon said.

The Department of Justice declined to comment on its ongoing investigation, and Inland’s board did not respond to questions about whether it is cooperating with the state investigation.

In May, Amazon won an additional set of tax breaks, valued at $1 billion over 15 years, from Morrow County, the port and city of Boardman. Padberg and Healy were still on the port commission at the time and voted in favor of the incentives, though they acknowledged a “potential” conflict of interest and recused themselves from voting on one set of tax breaks.

Padberg lost his reelection bid less than a week afterward, and Healy quit the port commission three months later. Healy’s resignation letter, which came from his Windwave email account, didn’t explain why he was leaving other than to say it was a “difficult decision” and that he would be spending more time with his grandchildren.

Healy didn’t respond to subsequent questions about why he decided to resign, the value of Windwave’s contracts with Amazon, how Inland came to the decision to sell Windwave to him and his colleagues, or about how they determined the appropriate price for selling the business.

Port Commission President Joe Taylor said that the ethics investigation has been weighing on Healy and contributed to his decision to quit.

“I know he’s under a tremendous amount of pressure, and those are always difficult decisions,” Taylor said.

While Taylor said he isn’t privy to the details of the ethics commission’s investigation, Taylor said he doesn’t believe Padberg or Healy violated any ethics standards in their dealings with Amazon.

“I know those guys. I trust their good intentions,” Taylor said. “I just don’t see them doing anything unethical. If they thought they were doing the right thing then I believe them.”

But another port commissioner, John Murray, said that Morrow County voters showed in the May port election that they are tired of “business as usual” and conflicts of interest among those running the port.

“They should have stepped away and trusted others to take care of business as it should have been done,” said Murray, who was reelected in May. He said other former port commissioners should have called out Windwave’s owners for their conflicts of interest.

The port was far too slow to address the nitrates pollution, Murray said. He said former commissioners were concentrating on Amazon’s data centers and their own business opportunities and weren’t attentive to major issues facing the community.

“I think they were focused on their retirement more than they were on keeping their eye on taking care of things,” Murray said.

©2023 Advance Local Media LLC. Distributed by Tribune Content Agency, LLC.
TNS delivers daily news service and syndicated premium content to more than 2,000 media and digital information publishers.
Special Projects