Missouri Taking Another Stab At Data Center Tax Incentives

Data center tax exemptions have passed the House and Senate, and now land on the desk of Missouri Governor Jay Nixon. Will the second time be the charm?

Jason Verge

March 20, 2015

2 Min Read
Missouri Taking Another Stab At Data Center Tax Incentives
Missouri Democratic Governor Jay Nixon at grand opening of LightEdge Solutions’ regional office in the new SubTropolis Technology Center. (Photo: Gov’s official website)

Legislators in Missouri are looking to attract data centers, reports the Kansas City Business Journal. A bill that would exempt new or expanding data centers from tax on equipment, utilities or materials passed both the House and the Senate.

While it has passed the House and Senate, it’s not quite across the finish line. The measure has been sent to Governor Jay Nixon.

Nixon was in a nixin’ mood when he vetoed a similar measure last year. The bill was one of 10 passed on the final day of session, all of which offered tax breaks to businesses. Nixon called the bills “Friday favors,” a commentary on last-minute lobbyist appeasement, and vetoed all 10.

The new measure would require $25 million investment and 10 jobs for new data centers, and investment of $5 million and five new jobs for expansions. Jobs must pay 150 percent over the county average wage to qualify. Benefits given have a ceiling based on an economic model.

The Midwest is a somewhat burgeoning data center location. Several different areas are collectively called “The Silicon Prairie.” In terms of multi-tenant data centers, St. Louis is home to data centers from 365 Data Centers, midwest-focused player Cosentry, and Ascent calls it headquarters, to name a few.

Missouri is one of several states looking to attract data center business through incentives. States are offering increasingly aggressive tax breaks to attract the business making for a competitive landscape, often tipping the scales.

Tax incentives are only a small part of provider considerations, though they certainly help. The debate on the part of the states has been on evaluating the return on these breaks.

The difficulty is assessing the benefits of data centers since most benefit comes indirectly. Often job creation is tossed out as a determining metric because data centers themselves aren't always big direct employers if an office doesn't come in tow.

The big effect and benefit is how they stimulate the area, the tech scene and local businesses, as well as their ability to potentially attract out of state business.

For multi-tenant providers, these tax breaks are often a way to extend savings to customers as well. Multiple customers in a facility means multiple businesses in the area taking that space. Big enterprise data centers provide good publicity, and can trigger a clustering effect.

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