Sabey Data Centers (SDC) has signed a lease with a global financial firm for 36,000 square feet at its Intergate.Columbia campus in East Wenatchee, Washington, the company said this week. The tenant, which was not identified, will be consolidating its data facilities from around the world into the Intergate.Columbia campus. Sabey is currently preparing the site for the new tenant.
Sabey executives said the new lease was a enabled by a tax incentive package approved during the last legislative session. The legislation created a 15-month window in which data centers in rural Washington counties could benefit from a sales tax exemption for computer and electrical components. Several data center providers joined with the Washington Technology Industry Association and the town of Quincy to form the Washington needs Jobs coalition, which successfully lobbied to get the incentive package passed.
Sabey: Incentives = Jobs
“The sales tax exemption is working exactly as we had hoped,“ said John Sabey, President of Sabey Data Centers. “We are competitive in the global marketplace. The new projects are bringing jobs and economic activity. They are also expanding the tax base for local government.”
“The state has gotten a great return on its investment,” said Dave Johnson, Executive Secretary of the Washington State Building & Construction Trades Council. “The data center industry is critical for the economic future of Central Washington. It creates jobs and expands the local tax base.”
Data Center Cluster Develops
Central Washington has become a magnet for data centers because of its abundant supply of cheap, “green” hydro power generated by area dams. Microsoft pays just 1.9 cents per kilowatt hour for its power in Quincy, compared to rates of 8 cents an hour in Silicon Valley and even higher in the New York market. Yahoo, Ask.com and Intuit have also built or announced data center projects in central Washington.
Intergate.Columbia is a 430,000 square foot data center campus, which includes large data centers for T-Mobile and VMware. The new tenant is located in building B, which is a LEED Gold certified building shell. With the latest lease, Intergate.Columbia is 92 percent occupied.
Sabey said that multiple prospects are considering the remaining space at Intergate.Columbia. But he also expressed concern that the expiration of the temporary tax incentives could stymie future growth in the region. Companies must commence cosntruction by July 1, 20111 to qualify.
“The development we have seen in the last few months is just the very beginning,” Sabey said. “Central Washington has the potential to become a major data center hub, but that would require extension of the partial sales tax exemption. Extending the exemption will mean jobs and tremendous opportunity for the next generation. This temporary tax exemption should be made permanent for the health of the Central Washington economy.”
Background on the Tax Issue
NOTE: In some of our past coverage of the Washington state tax issue here at DFata Center Knowledge, we’ve stated that attorney general Rob McKenna ruled that data centers were “no longer covered by a state sales tax break for manufacturing enterprises.” The state Department of Revenue says the manufacturing tax incentive was not offered and rescinded; it simply never applied to data centers.
“I cannot explain why any company may have built a data center under the assumption that it qualified for this incentive, because the Department of Revenue has consistently denied any request for a tax exemption for data servers under the rural county deferral for manufacturers, and it has communicated its position to local economic development councils,” writes Mike Gowrylow, communications director for the Washington State Department of Revenue. “Data centers still don’t qualify under the manufacturing exemption, but the 2010 Legislature did open a separate window for data centers to qualify for a sales and use tax exemption.”
Gowrylow notes that Department of Revenue supported the 2010 bill to create the temporary tax incentive for data centers in rural counties.