Data Centers In the News
The boost in taxable retail sales was due largely to a 17 percent uptick in construction and the sale of building materials. Taxes gleaned from retail sales include sales by retailers, the construction industry, manufacturing, and other sectors.
“Data centers boost construction employment. But they are highly automated, and thus don’t direct create a large number of full-time jobs. The tradeoff is that they generate large amounts of tax revenue and don’t create strain on local schools and traffic.”
“This year in Loudoun County we will have a quarter billion dollars of tax revenue from data centers,” said Buddy Rizer, Executive Director of Economic Development. “Data centers are the engine of innovation. They enable a lot of other businesses.”
Oregon provides three advantageous economic incentives that have continued to attract enterprise-class data center development to the state. First, it doesn’t have a sales tax, which impacts the costs of development significantly. Second, it offers a 100% property tax abatement for up to five years. These abatements are provided in designated Enterprise Zones throughout the state and are concentrated in the Hillsboro market…
Data center projects have been welcomed in Northern Virginia due to their positive impact on the economy, which was documented in a 2014 study from Mangum Economics. The study showed that the data center industry employed 12,533 workers in Virginia in 2014, with an average annual income of $105,942. The study also found that Virginia has seen a strong return on its investment. Every dollar invested in data center incentives provides $9.50 in tax revenue to Loudoun County, and $4.30 to Prince William County, the study concluded.
In a world gravitating toward distributed IT and multi-cloud strategizes, it’s highly unlikely that an organization would deploy every application in a single execution venue in one location. But, that doesn’t mean the placement of each point of presence isn’t critically important.
“And incentives are about getting to do things they wouldn’t otherwise do. Once they start doing it, often those incentives go away. How do you feel about incentives today? Arizona lost business for about three years and they had to re-institute those incentives.”
The Dallas Fort Worth region data center market is one of the largest and most active data center markets in the United States. It is currently experiencing a data center building boom, with hundreds of megawatts of potential capacity in the pipeline. The Dallas market is benefiting from excellent power and fiber infrastructure, competitive economic incentives and robust competition among service providers.
"The data centers provide high-paying jobs in the area, but most of the data centers in the region are also under some sort of incentive program, abating some of their property taxes."
"Tax incentives are second only to cost of power in determining where to site data centers, said Ken Kremer, chief operations officer for Involta LLC, a Cedar Rapids, Iowa-based company with 14 data centers across the U.S. The company recently expanded its Boise data center, which it first built in 2014. (See box.) Several of the company’s other data center sites, including Minnesota and Ohio, have such exemptions, he said, noting that his Boise facility had lost some deals because Idaho didn’t have that exemption. “When you’re talking about tens of millions of dollars in equipment, it makes a big difference,” he said."
Opinion: Matthew Hepner and Robin Toth: Statewide Data Center Incentives Needed to Preserve Washington's Edge
"Legislation proposed in Olympia will extend Washington’s existing data center investment incentives statewide. Expansion will make Washington’s metro areas more attractive for data center location, but everyone, regardless of where you live, should support passage."
"To maintain Washington’s position in the global technology marketplace, we can’t afford to remain uncompetitive for investments in critically important internet infrastructure. We must support data center infrastructure with a new state policy to stem the loss of these investments, and the substantial benefits they bring. Lawmakers should act in 2018 to extend Washington’s existing incentives to include metro-area locations and allow the state to compete for all types of data centers."
"As Virginia has emerged as a top global market for data centers, tax breaks to attract some of the world’s richest companies to the state have exploded, new records show."
"According to the new report, the total statewide economic impact attributable to the data center industry in 2016 was approximately 43,275 jobs, $3.2 billion in labor income, and $10.2 billion in economic output."
"Data centers are, by their nature, almost entirely computer equipment. Millions of dollars worth of it. Virginia gives data center owners an exemption from the sales and use taxes for computer equipment and software bought or leased..."
One of the key factors making the D.C. area attractive to companies like Amazon is their robust data center infrastructure.
To date, Facebook has invested more than $1 billion to build out its Prineville campus, which currently consists of two full-fledged data centers and a cold storage facility, which is essentially a stripped down version of a data center, designed to house storage systems that hold rarely accessed user data. The three existing buildings total 1.25 million square feet.
“We are seeing great demand for connectivity-enabled colocation and highly-reliable hybrid IT solutions across the country, and especially in the greater Portland area. Our Brookwood data center is a highly sought after location due to its impressive high-density capacity and impending carrier-neutral, low-latency connectivity to Asia and the South Pacific. Our customers—and the industry—will continue to see us add new capacity and capabilities to our data centers to address this demand,” said Chris Downie, CEO of Peak 10 + ViaWest, in a prepared statement.
Google said it chose Loudoun for its new data center sites mainly due to the county’s available space to build such facilities and for the opportunity to expand its footprint close to its nearby offices in Reston. They also said they were impressed by Loudoun’s “Data Center Alley” and how the county has embraced the area and the tech companies that operate within current data center sites.
As part of locating in Virginia, Google said it plans to participate in the state’s data center sales and use tax exemption, but declined to provide further details on any other potential incentives it received.
"Buddy Rizer, Loudoun County’s economic development director, said the county’s data center boom might be a direct result of the state abatement."
“The data center sales tax exemption is a state incentive which has universally been considered one of the most smart and important incentives driving today’s economy,” Rizer said in an email. “Over the past decade, Virginia has become one of the most important technology locations in the world, and I don’t think it would have happened without the sales tax incentive.”
A report released in June 2017 by the U.S. Chamber Technology Engagement Center shows the average data center adds $32.5 million in economic activity to its local community each year. The report, Data Centers – Jobs and Opportunities in Communities Nationwide, also reveals that during construction, a typical data center generates an additional $9.9 million in revenue for state and local governments.
"Although they do not create as many permanent jobs as other types of projects, capital investment in data centers can be quite substantial, justifying large incentives offerings."
"Because of a multiplier effect, each new high-tech job in the U.S. creates five additional jobs in the service economy, says economist Enrico Moretti."
There is no question that data centers have become a hot property, from the perspective of states looking for the economic development they bring. Large data center projects, with investments ranging into the multi-billion dollar range, have enough clout to change the way that prospective locations do business, motivating local government to pass tax laws advantageous specifically to the data center business.
"It’s no accident that the Pacific Northwest is seeing an explosion of data center activity and development. Thanks to a “perfect storm” of business elements, that’s not going to slow down anytime soon...“The challenge is that we have to be diligent and cognizant that any political changes, such as a removal of tax incentives, might immediately drag down the current acceleration we are experiencing,” says Stuart Tubman.
“This is a validation of our goal to own and manage premier locations for IT operations. Data centers are essential for modern economies. Mature IT operations move substantial amounts of IT equipment and information, both securely and with precision. These processes require more than raised floor, they require people,” says John Sheputis, President of Infomart Data Centers.
This makes the ring a vital cross-connection point for Oregon’s growing data center market, as well as for a strategically critical submarine cable landing station.
"Our data center, which may top out at 25 SecureData 365 employees, has a job multiplier effect as our data center’s capabilities and rich fiber background is bringing jobs home and creating opportunities that previously didn’t exist in Cleveland. That sounds like an economic developer’s dream – and perhaps a big reason the Cleveland Technology Center received tax incentives that include no sales tax on equipment purchased infrastructure in Cleveland."
"Idaho Department of Commerce officials are backing the measure, which would render the state more attractive to companies considering new data center projects. They are also planning to offer rebates for existing data centers when they renew equipment, which typically occurs every three to five years."
Countries worldwide are recognizing the centrality of cloud computing in their national economies. This report outlines the economic impact data centers have and the huge role they will continue to play in the future.
Facebook’s data center construction over five years has created about 650 jobs in Central Oregon and nearly 3,600 jobs in the State of Oregon overall. Construction of one of the social network’s most important nerve centers has also lead to $573 million in capital spending statewide.
"Although the data centers are but one element of a collaborative organization that includes research & development, marketing, sales, service, and support, those couple of thousand on-site positions help such a company to employ tens of thousands more on a full-time basis offering the services delivered from those data centers, even after adjusting for employees in non-services divisions. Eliminate the data centers and there goes the service delivery; no services, no revenue; no revenue, no jobs. To put it another way, data centers are the physical embodiment of a digital services business that employs many more people than the on-site staff."
."Texas has become one of the country’s leading destinations for data centers, propelled by robust economic growth in recent years, a business-friendly tax climate, abundant sources of water and dependable electricity.