Data centers in Grant County create jobs, demonstrate value of smart tax incentives

Data center growth in Central Washington accelerated after passage of a state sales tax exemption in 2010. That incentive was allowed to expire in 2011, shifting data center construction to other states that have competitively priced land and power. The tax exemption was restored in 2012, temporarily returning Washington’s competitiveness for data center location. The incentive was not extended in 2014 and is scheduled to expire in 2015. The Puget Sound Business Journal reports the Grant County Public Utility District has plans to guarantee reliable energy for the county’s data centers. 

Now, the public utilities district in the county, which is just on the other side of the Cascade mountain range, is making a $24 million investment to deliver that power reliably and keep companies including Microsoft (Nasdaq: MSFT), Yahoo (Nasdaq: YHOO) and Dell in the region. Grant County PUD announced this week plans to build two new electric power substations to serve industrial customers.

The story by Ashley Stewart points out the economic benefits the data centers have brought to the region.

In total, Grant County has more than 1.5 million square feet of data center operations, according to the county’s economic development council.Microsoft, CenturyLink and Sabey all announced plans to expand or build more data centers in Grant County this year.

Eight data centers could bring as many as 300 badly needed new jobs to the Central Washington county by 2017. Grant County boasts eight facilities. Six of those are in the small town of Quincy, which has fewer than 7,000 residents.

It’s not accidental. Tax policy played a key role.

Quincy, about 160 miles east of Seattle, made a bet on data centers when the town built out a superfast fiber-optic system to connect potential data centers to facilities on the other side of the Cascades. The Port of Quincy successfully lobbied the Washington state Legislature to extend tax credits for companies looking to build in the city through 2024.

In our foundation report, we wrote,

For years, Texas was among the majority of states that offered an R&D tax incentive, but ended it in 2007. In 2014, Texas lawmakers restored the incentive. Each year the state did not offer the incentive it lost an estimated $3 billion in economic activity and more than 20,000 jobs.

Similar results can be seen in our state’s experience with rural data centers. Data center growth in Central Washington accelerated after passage of a state sales tax exemption in 2010. That incentive was allowed to expire in 2011, shifting data center construction to other states that have competitively priced land and power. The tax exemption was restored in 2012, temporarily returning Washington’s competitiveness for data center location. The incentive was not extended in 2014 and is scheduled to expire in 2015.

The region and our state is better off because lawmakers acted in 2015 to extend the incentives.