Idaho One Step Closer to Passing Data Center Tax Breaks

Idaho just moved one step closer to becoming the 21^st state to offer tax incentives for existing data centers that want to expand and newcomers looking to build from scratch.

House members approved the Idaho Department of Commerce-backed measure 35-34 today, so it’s now headed to the Idaho Senate for final approval.

Known as the Technology Equipment Tax Rebate Bill, it would provide rebates on equipment for new builds and refurbishments. What might be even more enticing for companies considering Idaho is that incentives can also be applied to the replacement of old equipment as it nears the end of its lifecycle—generally every three to four years.

In order to qualify for the data center tax breaks, companies would have to adhere to strict criteria set by the Department of Commerce to ensure that Idaho benefits economically as well. For example, new data centers must make at least a $25 million capital investment, and create 20 jobs that pay above the county’s average pay within two years of operation. After these requirements are met, they’ll be considered an existing data center.

Existing data centers looking to replace old equipment or expand a facility must invest $5 million in eligible server equipment in a year to qualify for 100 percent sales tax rebate on it.

State officials estimate that the bill would take $531,000 per year out of the state’s general fund, but if data centers comply with the addition of jobs and increased spending, that "loss" would pale in comparison to the "wins."

According to an article in Greenbelt Magazine, one independent contractor recently estimated that the development of a data center in Idaho could generate up to 1,100 jobs, half a million labor hours, and nearly $16 million in payroll.

Idaho will have to stick to its guns, though, and avoid what happened to Oregon back in 2015. With similar qualifications for rebates in the booming Hillsboro area, some data centers fell far short of expectations. According to the Oregon Department of Revenue, Infomart Portland saved $775,000 on property taxes in 2013 and 2014, but only employed one full-time person. Other data centers taking advantage of the incentives were reported to be employing fewer than two.

With just seven existing data centers, Idaho is hardly a mecca like North Virginia and North Texas have become. That also means that unlike those areas where land is being plucked left and right by the Googles and Microsofts, there’s plenty left in the Gem State. Service providers already calling Idaho home include DataSite, Involta and the FBI.

Given the state’s pending legislation, and the fact that Idaho is ranked by Sperling's as one of the safest locations in the country for weather and other disasters (when was the last time you heard about tornadoes, hurricanes or earthquakes striking Boise?) companies are likely to take a long look at locating there.

If passed, the bill wouldn’t expire until 2024.