Dallas-based developer Compass Datacenters has qualified for state tax breaks for its data center in Shakopee, Minnesota, a Minneapolis suburb. Compass built the data center and leases the facility to CenturyLink Technology Solutions.
Tax incentives are an important instrument state and local economic development agencies use to attract data center development projects – one of the more capital-intensive types of construction.
Minnesota is one of the states with more aggressive data center tax breaks. A company that builds a data center or a network operations center in the state that’s 25,000 square feet or bigger and commits to investing at least $30 million in the first four years is exempt from sales tax on IT gear, cooling and power equipment, energy use, and software for 20 years.
Minnesota stepped up its data center tax incentive program recently to lower the threshold for qualification, Madeline Koch, director of communications for the Department of Employment and Economic Development, wrote in an email. “The program has been successful since the changes were implemented, with three data centers that have been certified, and seven additional centers completing the application process.”
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The state does not tax anyone for personal property, utilities, and Internet access, among other services.
While the Shakopee site currently has only one of Compass’ standard 21,000 square foot, 1.2 megawatt data centers, it has the capacity to support three more.