Proposed data center incentives stall

Columbia is trying to add one more carrot to help lure a data center or high-tech employer to its Certified Site in Ewing Industrial Park — this time at the state level.
Legislation in the General Assembly would qualify industries for state tax credits if they locate in state-recognized Certified Industrial Zones such as Ewing. The site in northeast Columbia was the first to meet Missouri’s criteria for certification, and the city has been using it to aggressively court companies looking to build new data centers.
“We have a company that’s giving consideration to the site, and passage of this legislation would enhance Columbia’s attractiveness,” said Columbia Economic Development Director Mike Brooks, who is also president of Regional Economic Development Incorporated.
But with less than two weeks remaining in the session, the prospects of passage are dimming. Brooks and other local advocates met with lawmakers Wednesday to promote the legislation.
In addition to allowing Certified Industrial Site users to receive tax credits, the version of the bill pending in the House would require that $10 million of the $24 million allocated for the bill be given to data processing tenants locating in such sites. With only three Certified Industrial Zones in the state, that would carve out a hefty chunk of the money for Columbia.
The legislation, sponsored in the House by Rep. Steve Hobbs, R-Mexico, and in the Senate by Sen. Kurt Schaefer, R-Columbia, has received positive votes in committees. However, Gov. Jay Nixon and some lawmakers have been pushing for the state to reign in its tax credit programs in order to balance the budget. The fiscal impact projected for the House bill is about $200,000 over three years.
Schaefer said in an e-mail he thinks passing the bill will be an uphill battle.
“It’s going to take strong economic growth to get us past the current financial downturn,” he said in the e-mail. “Eating our seed corn by eliminating Missouri’s ability to compete in attracting economic opportunities like data centers, which increase incomes and local property taxes, is the wrong policy for Missouri.”
But why all the incentives for what’s basically a digital warehouse? Yes, relative to the investment, data centers are light on actual jobs, usually employing 50 to 100 people, Brooks said. But the centers attract other businesses specializing in computer and server maintenance and repair, Brooks said. In addition, landing a big data center would mean a substantial increase in local government revenue, even with economic incentives and tax credits, he added.
Columbia is already in a good market position because the Ewing site lists the utility and infrastructure capabilities large data centers require, Brooks said.
Brooks said from everything he has heard and read, the state understands it’s important to attract out-of state investments, and this tax credit is one that would encourage investment in Missouri. Attracting these types of businesses can mean competing with municipalities around the world, he said.
“Over the next five years, there is going to be substantial investment in data centers,” Brooks said. “The question is: Do we want to compete?”
Hobbs said even though Columbia already has a certified site, the legislation would be a “huge opportunity” for the whole state and hopefully encourage more certified site development.
“We’re very much trying to tailor this to benefit the whole state,” he said.
Ewing Industrial Park has been a State Certified Zone since early 2009, and the City Council sweetened the deal in early March by approving two provisions to ease power costs for energy intensive businesses, such as data centers.
Because the cost of electricity from the region’s power grid fluctuates daily, one of the measures would allow a business to negotiate a fixed electricity rate from the city, giving them predictability in their costs. The other would allow the city to reinvest up to half of the electric utility taxes generated from a large power user back into infrastructure such companies need.