Update: Lawmakers say they'll try to fix the issue in a separate bill.

Oregon lawmakers wrote a bill to lure Google Fiber to Portland.

Google says language in the bill does the opposite.

The company warned Oregon lawmakers last week that tax changes they are contemplating would make it "extremely unlikely" the company would bring hyperfast Internet service to the Portland area.

The Oregon House of Representatives apparently either overlooked a Thursday letter from Google, or ignored it, voting 52-2 Friday in favor of the legislation. The bill is now scheduled for a Senate vote Monday morning. If it passes there, it would move along to Gov. Kate Brown.

Early Monday morning, Sen. Mark Hass, chairman of the Senate Committee on Finance and Revenue, wrote that his chamber will move quickly to address Google's concerns.

"These are easy fixes and we will make them in the senate," wrote Hass, D-Beaverton, who has championed the bill and shepherded it through the Legislature.

Senate Bill 611 addresses an unusual provision in Oregon tax law, which values property owned by telecommunications companies and other tech businesses, in part, on "intangible" assets such as the value of the companies' brands.

Tech companies testifying on the bill said few if any other states value assets that way and warned that Oregon's tax methodology - which had been in flux until last October, when the state Supreme Court upheld it - would deter future telecom and data center investment in the state.

In response, Oregon lawmakers sought to ease the effect of the tax with exemptions and valuation limits in SB611. But

to Oregon legislators, Google public affairs manager Darcy Nothnagle said lawmakers did it wrong - at least in regard to high-speed telecom networks.

"The bill actually create significant uncertainty, making it extremely unlikely that any company would make (a) large investment in a new fiber network," Nothnagle wrote.

There are two problems, according to Google:

SB611 offers an exemption from the state's tax methodology to companies with the capacity to offer Internet service of "at least one gigabit." Google Fiber offers speeds "up to a gigabit" per second - that's 1,000 megabits per second, 25 times faster than the current broadband standard. So the law, as written, would make Google Fiber ineligible for the tax exemption.

The bill sets a 20-year limit on the tax exemption. Nothnagle said Google wants a longer-term exemption given the size of the company's prospective investment. Portland estimates Google Fiber would have to spend at least $300 million to bring the service to the Portland area, and a good deal more if it also serves the city's suburbs.

Public officials have been warning for weeks that Google Fiber's plans for the Portland area have been at risk because of the state's tax methodology. But Google Fiber itself had said nothing publicly until Thursday's letter, which warns "the provisions in the bill referenced above leave significant barriers to investment in place."

The letter makes it clear that Google has been campaigning hard for the legislation, behind the scenes, and that the company has been explicit to public officials that it does not intend to build in the Portland area without changes in the state's tax law.

In her letter, Nothnagle said the company had previously expressed its concerns about the bill's final language to members of legislative committee. It isn't clear whether the lawmakers chose not to make the changes Google requested or missed them in crafting the nine-page bill.

Lawmakers did not immediately explain what happened and Google declined to elaborate on the letter.

Lawmakers have spent nearly two months negotiating the bill's provisions with lawyers, accountants, telecom companies and local governments, which depend on telecom companies' property tax revenue.

At this point, even if the Legislature tries to address Google's concerns they could create a procedural issues that might complicate or derail the bill.

The Senate voted 27-3 to approve a prior version of SB 611; if it rejects the House's version Monday morning, the bill would go to a conference committee where lawmakers might introduce new provisions that could raise fresh objections from any of the parties involved.

Update, 6:50 a.m. Monday: This article has been updated with comment from Sen. Hass, who says the state Senate will address Google's concerns.

-- Mike Rogoway

mrogoway@oregonian.com

503-294-7699

@rogoway