“A data center, basically, is a warehouse for information storage,” said Tracy King, Director of Taxation and Fiscal Affairs with the Missouri Chamber of Commerce and Industry, a member of the Coalition. “You can kind of look at a data center as a manufacturer. Instead of manufacturing widgets data centers manufacture bits.”
Why is designation as a manufacturer important? The manufacturing industry can already take advantage of state-sponsored incentives.
“We’re offering those same exact incentives to the manufacturing industry right now,” said Ora Reynolds, President of Hunt Midwest Enterprises in Kansas City. “So, if you’re manufacturing widgets you get these incentives. If you’re manufacturing data you don’t. So, this is basically the same incentives that are already out there for an industry that’s been in the state for years and years and now we’re trying to bring a new industry in with similar incentives.”
The Kansas City area is already home to a number of data centers.
“Within Kansas City – and especially right after 9/11 – Liberty Mutual moved their data center off the East Coast and moved it to Kansas City,” said Jill McCarthy, Vice President of Business Development with the Kansas City Area Development Council. “MasterCard moved their data center off the East Coast and brought it to Kansas City. Bank of America has a large data center here. Cerner Health Care – which has grown by leaps and bounds – they have a fantastic data center. They’ve expanded it three times.”
Reynolds and McCarthy made their pitch for data center incentives during a recent Missouri Chamber Legislative Action Seminar in Kansas City, stressing the need for Missouri to compete with neighboring states for data center business.
“What we’re seeing is the adjacent states are competing pretty heavily with us,” said Reynolds. “What we’re looking at to compete and be on an even playing field is sales tax exemption on power and sales tax exemption on machinery and equipment that’s used to actually build the data center.”
The Chamber’s King sees this level playing field as essential.
“Tax incentives at every one of our surrounding states are already in place,” said King. “For, let’s say a 100,000 square foot data center, they’re handicapped by about $15-million to do business in Missouri. So they’re not doing business in Missouri – they’re doing business in Nebraska, Iowa, Kansas, Oklahoma – who already have both tax exemptions in place and also some personal property tax exemptions or abatements.”
In a tough economy businesses are like consumers shopping for goods and services. They look for the best deals.
“Everybody’s trying to drive their costs down,” said McCarthy. “That’s the bottom line.”
Sponsors of data center incentives legislation have been found in both the House and Senate. Supporters acknowledge the proposal might face challenges during these tough budget times, but they insist that at the end of the day the state would benefit from such legislation.