Missouri Senate considers adding tax break for companies moving underground

Friday, February 13, 2009 | 4:43 p.m. CST

JEFFERSON CITY — Hundreds of abandoned mines are carved into Missouri's deep limestone, and some lawmakers hope a tax break will fill part of that empty space with computers.

A tax incentive aimed at companies that put data centers in old mines is included in a large economic development bill rapidly moving through the legislature.

Under a version endorsed by a Senate committee this week, companies would pay no sales tax on utilities and equipment if they move to a refurbished mine with at least 500,000 square feet of developed space. The tax breaks would expire after 20 years.

Missouri is one of the leading states in the little-known underground storage industry, largely because of its 7,000 abandoned mines and a unique geological makeup. Conditions underground are cool and dry — nearly perfect for preserving delicate records or artifacts.

"Companies are looking for places to put their most sensitive data where it's safe," said state Rep. Jay Wasson, R-Nixa.

Wasson said he's pushing the tax break because it would benefit an underground storage company near Branson, the Mountain Complex. But he said similar storage centers are scattered throughout the state.

The Mountain Complex is in talks with a Fortune 100 business that is considering building a data center in Branson. Company owner Gail Hinshaw refused to name the business because of a nondisclosure agreement, though Wasson said the company is "as easily recognized as Google," which announced plans in 2007 to build a data center outside Tulsa, Okla.

Google's proposed $600 million facility would employ about 100 people. Wasson said the company chose Oklahoma because it has more tax incentives for this kind of project. Other states, such as Nebraska and Iowa, also have tax breaks targeted at data processing.

"I'm just trying to get a little more level playing field so we can get some of those companies. Those are great jobs," Wasson said.

Dick Ringer is an assistant general manager of SubTropolis, a large underground storage center in Kansas City. He said it's difficult to quantify how much a company would benefit from the tax break. But he noted that data centers can use huge amounts of electricity.

"It's significant enough that it would be an important inducement to get them here," he said.

Missouri has about a dozen underground storage centers, the most in the country. The centers are located throughout the state, including facilities in the Ozarks, Kansas City, Columbia and the St. Louis area.

Missouri's unique geology makes it a national leader in the industry, said University of Missouri-Kansas City geology professor Syed Hasan.

Deep limestone deposits are covered with a layer of shale, which prevents runoff water from entering old mines.

"That is a unique feature about Kansas City and many parts of the state," he said.

Hasan also said the mines are naturally kept at a temperature in the 60s, which removes the need for air conditioning or heating systems.

There are roughly 7,400 abandoned mines in Missouri. Cheryl Seeger, a geologist at the state Department of Natural Resources, said only a fraction could be reused for storage. Some are simply too old or were mined out of the wrong kinds of rock.

"Some of these were actually mined out both to produce limestone or dolomite and with a plan for storage," she said. "They took that engineering into account."

Hinshaw's facility is one of those. Miners systematically removed dolomite that was used for roads in the Branson area. They left regular pillars throughout the cavernous rooms. He said the setup nearly eliminates the construction costs of building above ground.

Not everyone is on board.

Louis Griesemer is president of Springfield Underground, a company that would qualify for incentives under the bill. But Griesemer says firms like his should enjoy an economic advantage without tax incentives, which he said are "getting kind of crazy" in terms of public policy.

That line of thinking has a growing influence in the Senate, where the economic development package will be debated next. A cadre of senators is threatening to hold up the bill unless it also includes new restrictions on tax credits and a means of proving they create jobs.

Some lawmakers say tax incentives micro-targeted at specific industries, such as those for underground mines, could rob the state budget of hundreds of millions of dollars in potential revenue.

But business leaders in Branson say bringing data centers underground adds a different component to Branson's tourism-heavy economy.

"This type of job creation is vitally important to us," said Ross Summers, president of the Branson/Lakes area Chamber of Commerce. "This is the new economy, basically."

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