Washington State will remain uncompetitive for valuable data center investments unless it extends its current rural data center incentives to facilities in metro locations.
Data centers provide a strong internet infrastructure that’s critical to the continuing health of Washington’s vibrant digital economy.
Data centers provide critical support for health care, finance, retailers, education, and public services. They touch our lives daily. With advances in artificial intelligence, smart cities, autonomous vehicles, and the internet of things, that impact is only going to grow in the coming years. To retain a robust technology sector – with the job and economic advantages that brings – we must provide a competitive, viable home for data center location anywhere in the state.
The lack of incentives to spur data center investments statewide puts Washington’s competitive edge at risk.
Washington is the only state that provides incentives only in specific geographic areas of the state. But some types of data centers – those offering co-location services for many tenant users – need to be in urban or suburban metro locations to meet their customers’ needs. The lack of incentives for this type of data center facility puts Washington at a disadvantage compared to other states. And when data centers locate elsewhere, Washington loses out not just on the initial investment and the resulting property taxes, but also on future rounds of investment, upgrades and equipment installations.
In a highly competitive market, costs matter.
For data centers, one of the largest costs is sales tax on construction and fit-up. Washington charges it in metro areas – many other states, including neighboring Oregon, do not. On a project that costs tens or even hundreds of millions, that is a major factor. You don’t have to look any further than Washington’s own rural data center incentive experience for a case study on the valuable returns from a strategic incentive.
Experience in rural Washington demonstrates how effective incentives are in spurring investment, job creation and economic development.
Construction of large data centers in rural communities has ebbed and flowed in direct relation to the state incentives offered. Put simply, incentives work! Rural communities like Quincy have been the beneficiaries. Data center growth has created hundreds of jobs, increased wage rates, and dramatically grown property tax collections – while reducing tax rates for local residents. Extending the incentive statewide maximizes opportunities for synergy in data center operations – enhancing rather than threatening rural economic development
A broad coalition supports legislation to extend the existing incentive programs to data centers in metro areas immediately.
The WSDC3 Coalition consists of data center operators and tenants, labor unions, contractors, suppliers and economic development organizations from around the state. These diverse stakeholders support the legislation because of the critical role data centers play in today’s economy – and because of their dramatic economic impact on our state. In addition to enabling other industries, data center employment has a 5x multiplier effect in creating other jobs. Each year that goes by without Washington being competitive is a missed opportunity to create jobs here.