Microsoft to add 185 acres to its 102-acre Malaga portfolio, pays $1.25M in Douglas County taxes

WENATCHEE — Microsoft is closing in on more land in Malaga, and adding to the tax base in Chelan and Douglas counties.

The tech firm already owns 102.5 acres in Malaga, but expects to eventually buy 185.29 acres next to its land along Malaga Alcoa Highway, from the Chelan Douglas Regional Port Authority, for $15,905,858. The company plans to close on a chunk of the property by the end of May.

“We continue to have really good momentum with them down in Malaga, and we’re at a point now where our phase two properties have been rezoned… It’s basically a done deal,” said Jim Kuntz, Chelan Douglas Regional Port Authority CEO. “What they want to do is relatively soon.”

A few of the properties have people living in trailers on 1-acre lots, which the port will remove once the residents leave, Kuntz said. That’ll likely be by the end of May, he added.

The Firing Range Association relocated from its old 10.75-acre plot at 5243 Malaga Alcoa Highway, which is not part of the sale. But plans are underway to create a new range, with the port buying the old lot to sell to Microsoft.

This year, Microsoft was billed $49,962 in 2024 in property taxes for the 102.5 acres it owns in Malaga, according to the Chelan County Treasurer’s Office website. In 2024, $164,399,665 was billed countywide, according to Michelle Feil, the office’s administrative coordinator.

The company “is not receiving any exemptions or reductions on the assessed value for property taxes,” wrote Erin Fonville, Chelan County Assessor’s Office chief deputy, in an email.

The tech firm’s taxes likely will rise, as a permit for a “new commercial structure” was issued Nov. 1, 2023, according to the county’s online portal.

The permit for 5375 Malaga Alcoa Highway includes a one-story, 244,440-square-foot, rectangular data center building initially valued at $56,794,849. It will have a 27-foot maximum height. At “peak shift” 72 employees will be on site, the permit states, and 174 parking spaces are proposed, with nine ADA-compliant spaces. Other permits are expected for the parcel, according to Cindy Wright, Chelan County Community Development office manager.

This permit was tagged onto a stormwater drainage plan and report review for individual lots, which was issued on Oct. 18, 2023.

Speaking of water, the port recently amended an agreement with Microsoft to temporarily provide water for the first data center building using a 12-inch diameter test well and pump, said Stacie de Mestre, port economic development and capital projects director.

De Mestre said the port will drill two new wells by the end of the year, which are likely in the same aquifer, and will be “high producing wells,” resulting in smaller reservoirs, saving some money. The port previously found “contamination in the waterline that standard disinfection methods” didn’t remedy, de Mestre said. “The team (CDRPA, RH2 Engineers, Malaga Water District, and Selland Construction) worked collaboratively to outline a method to isolate variables and identify/remedy the contamination

Microsoft is reimbursing the port for its work, and all of the water improvements will become part of the Malaga Water District by the end of phase two. Phase two improvements are estimated at $55 million, and the estimate for the two wells is $708,715, she said. The port is advertising for construction bids on the two wells starting April 18.

Phase one could be around $11.5 million by the time it was done, Kuntz said previously.

Also part of Microsoft in Malaga, about 35 acres of former orchard trees must be removed, and the port received six bids for the work. Kittitas-based Advantage Dirt Contractors was awarded the $160,140 contract April 9, including $14,558 in contingencies.

Microsoft continues its growth in Douglas County.

In 2024, the tech company was billed $1,248,884.19 in taxes, according to Felisha L. Rosales, Douglas County treasurer. The entire county was billed about $74.8 million, she added. Microsoft does not receive any tax incentives, said Cathy Morris, Douglas County communications and grants specialist.

Microsoft hasn’t finished its planned six data center buildings, but owns about 335.82 acres of land along and near Urban Industrial Way. It also received a building permit for its fourth data center building in February.

The first building began operating in December 2022. The second and third buildings are under construction. The first — a 244,440-square-foot, white, rectangular building holds tens of thousands of data servers, and was valued at $409 million. It was expected to create jobs for about 50 full-time employees, said Paul Englis, Microsoft director of community development, at the tour.

The second and third buildings are both slated as one-story, 244,440 square feet, and 30 feet high, with 12 restrooms, according to records. They’re each valued at $47.1 million.