DFT: Tax Incentives Prompted $900 Million Investment in Ashburn
October 15th, 2013 By: Jason Verge
Data center developer DuPont Fabros Technology (DFT) has invested more than $900 million in facilities in Ashburn, Virginia under the sales tax exemption program. Several providers have taken advantage of Virginia’s recent sales and use tax exemption for purchase or lease of equipment and software by data centers, as the building boom in Ashburn shows no signs of slowing.
In addition to Dupont Fabros, Microsoft, Digital Realty, Capital One and RagingWire have all announced intentions to invest and take advantage of Virginia’s program. The state’s beefed-up incentives have been a boon to development and growth in a region that was already a prime data center market.
To obtain this exemption, DFT and its tenants committed to invest at least $150 million and create at least 50 qualifying jobs from July 1, 2009 to June 30, 2016 within the Ashburn campus. So far, Dupont Fabros and its participating Ashburn campus tenants have invested over $900 million at the Ashburn Corporate Center campus since 2009. It has created the majority of the 50 jobs required as well.
Incentive Prompts Development of ACC7
Dupont Fabros’ expanding Ashburn Corporate Center is greatly benefiting from the exemption, including the ACC7 data center currently under development.
“This sales tax exemption enabled DFT to begin development of the second phase of its ACC6 data center last year,” said Hossein Fateh, President and CEO of Dupont Fabros. “Since ACC6 Phase II opened 100% leased in early 2013, we were able to commence development of the first phase of our ACC7 data center. This sales tax exemption is helping to keep Virginia as the optimal location for data centers on the east coast of the United States.”
The legislation, signed into law by Governor Bob McDonnell last year, has resulted in several announcements of investment and intent to take advantage of the exemptions.
“When we put in place smart policies at the state level we help the private-sector grow and create good jobs for our people,” said Governor Bob McDonnell. “This legislation is a perfect example. Through this bill we have helped to ensure that, when companies look for a place to start or relocate their data center, Virginia is at the top of their list. We have the highest concentration of high-tech workers in the nation and as a result of this initiative we have helped to bring more of these good jobs to our skilled workforce.”
Data Center Friendly
Virginia has earned a reputation as a very data center-friendly state. The exemptions provide further incentive to an already large market, and by all accounts it’s working based on the number of announcements seen around taking advantage of the tax breaks.
Financial incentives have been popular among states looking to build a reputation as data center destinations and compete against neighboring states. Virginia (as well as Texas) decided to fight back by raising incentives to keep very healthy data center businesses in state, which has resulted in a slew of big project announcements.
Last June, RagingWire announced it is investing $150 million to earn the tax breaks in Virginia. The following month, Digital Realty announced plans to build a 400,000 square foot data center at its Digital Loudoun campus in Ashburn, Virginia. Digital will invest at least $150 million by 2015 and create 50 new jobs to qualify. The incentives played a part in Capital One’s selection of Virginia for its $150 million project as well.
The exemption is effective from July 1, 2012 to June 30, 2020, and applies to purchases of servers and other qualified equipment that are the heart of a data center operation.