Legislative panel OKs tax abatements for data centers

CARSON CITY — A state Senate committee amended and passed a bill Tuesday that would authorize tax abatements for data centers that drive global cybercommerce and are viewed as a huge boon for Nevada’s economy.

Senate Bill 170 sought by the Governor’s Office of Economic Development would provide data centers that invest in the state a 75 percent break on personal property taxes and all sales and use taxes except a guaranteed 2 percent that goes to the state school account.

An amendment lowered the capital investment required to qualify for 20 years of tax abatements to $100 million from $250 million. For 10 years of abatements, investment was reduced to $50 million from $100 million. Additionally, hiring requirements of 100 employees and 50 employees, respectively, were halved to 50 and 25.

Steve Hill, executive director of the state economic development agency, said the changes would help smaller data centers compete for abatements and wouldn’t affect the big ones.

“The data centers we currently have are either substantially larger than the $250 million original limit or below the $50 million,” Hill said.

He added that the changes will make Nevada more competitive with other states such as Arizona, which excuses all taxes with a $50 million investment.

“Really more importantly … there are smaller data centers in Nevada that we fell should have the opportunity to participate in this program,” Hill said.

Switch, the state’s largest data center, announced plans in January for a $1 billion expansion at its Las Vegas facility and to build a new $1 billion center in northern Nevada outside Reno.

At a hearing earlier this session, economists said data companies that handle Internet commerce replace massive racks of servers valued at anywhere from $250,000 to $1 million each every two or three years.

Economists project the SB 170 would create thousands of jobs, generate hundreds of millions of dollars in salaries as well as hundreds of millions in tax revenue, despite the abatements.

The bill now moves to the Senate floor.

Contact Sandra Chereb at schereb@reviewjournal.com or 775-687-3901. Find her on Twitter: @SandraChereb.