Legislators push for data center tax incentives

Thursday, April 29, 2010 | 12:01 a.m. CDT

JEFFERSON CITY — State legislators have until May 14 to push through legislation that could attract a data center to the Ewing Business Park in Columbia.

A data center is a large warehouse of computer terminals and servers meant to store large amounts of electronic data.

At a briefing in the state Capitol's House Lounge, Daniel Mehan, Missouri Chamber of Commerce and Industry president and CEO, said Missouri has fallen a bit behind its competitors for data centers. A handful of bills, however, could make the state a top contender by providing tax incentives states such as Nebraska, Iowa, Kansas and Oklahoma offer.

"There has been a lot of talk about revenue shortfalls this session," Mehan said in a news release. "The way to narrow the revenue gap is to create jobs, and, bottom line, these proposals are jobs bills."

The actual bills — state Senate Bills 868, sponsored by Sen. Charlie Shields, R-St. Joseph, and 999, sponsored by Sen. Kurt Schaefer, R-Columbia — would establish state and local tax exemptions for data storage centers. They would also provide tax credits to new businesses in industrial zones certified as "enhanced enterprise zones" by the state Department of Economic Development, so long as the new business employs at least two new people at the new facility and invests $1 million.

House Bill 1513, sponsored by Rep. Tim Flook, R-Liberty, would exempt data storage centers and server farm facilities from sales tax "on utilities and all retail sales of certain tangible personal property and materials." House Bill 2026, sponsored by Rep. Steve Hobbs, R-Mexico, also proposes tax credits for businesses in industrial zones certified as "enhanced enterprise zones" but requires at least seven new employees.

An industrial zone is defined as at least 100 acres that has been certified by the Department of Economic Development, is blighted and located in a census tract with a poverty rate of at least 20 percent or where the median income is less than 80 percent of the statewide median income or metropolitan area.

"Decisions on where to place data center operations are happening now," Mehan said. "There is more than $10 billion in potential investment on the table in the next three years. As a state, we can either go in the direction to secure our share, or be left behind."

Missouri hasn't completely fallen behind, though. Attorney Jim Grice, a member of the Missouri Coalition for Data Centers, is a partner in the Kansas City law firm Spencer Fane Britt & Browne, which is closely involved with the Ewing Business Park development. He touted the Ewing property as having everything a business could want: affordable energy with a growing percentage of renewable sources, a central location and key infrastructure such as a large fiber-optic network.

"Missouri meets or exceeds every requirement that data center operators look for ... except one," Grice said. "Missouri lacks a supportive tax framework that recognizes the unique nature of data center operations and capital investment."

The bills come at a rough time for tax abatements. Gov. Jay Nixon has called for a complete revamping of Missouri tax credits, and calendars in both the House and Senate already are packed with other bills as legislators try to balance a shrinking budget.

State Rep. Chris Kelly, D-Columbia, supports the data center credits but karate chopped the conference table as he urged other legislators at the briefing to come together and reform Missouri's tax credit system. State Auditor Susan Montee released a report earlier this week that showed a more than 50 percent increase in tax credit redemption, well above estimated figures.

Mehan and Grice, however, said legislation for data center tax abatements is a separate issue. Both said the data center credits are different because they aren't entitlement programs such as the historic preservation tax credits that are under fire. Grice argued the new abatements put "boots on the ground," referring to new jobs, and will spur economic growth.

If the bills don't make it through the legislature by the end of the session, Grice said it could mean Missouri would lose out on a number of businesses looking at the state — and the Ewing site in particular.

While the businesses timetables could shift, Grice said failing to move this session could "have a tremendous impact, negatively."

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