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To compete in the data center game, Idaho should offer tax incentives

Hundreds of servers on racks are kept in an ideal-performance environment at Fiberpipe Data Centers.
Hundreds of servers on racks are kept in an ideal-performance environment at Fiberpipe Data Centers. doswald@idahostatesman.com

Not far from the Ochoco National Forest, Prineville, Oregon, is like any number of cities in Idaho. With about 10,000 residents, it’s roughly the size of Burley. Move it 300 miles east, and Prineville would fit in just fine as another charming Idaho town.

There is one difference. In 2010, Facebook decided to build a data center in Prineville, and Apple followed suit two years later. Today, the former logging city boasts six data centers. There are similar stories elsewhere in Oregon. In Washington, Wyoming, Montana and Nevada the industry is booming, Except in Idaho.

Data center companies look for certain attributes when selecting a site. They look for locations where earthquakes, floods, fires, storms and other natural disasters aren’t much of a threat.

They look for inexpensive real estate, and reliable, affordable power. They look for clean, cool air to keep their sensitive electronic equipment from overheating. Idaho qualifies on all counts, but there is one important box the state doesn’t check.

All of those other states offer tax incentives to data center companies, and those incentives make all the difference.

For the second year in a row, the Idaho Legislature is not moving forward with a bill to empower the state to offer similar incentives. Consider the impact in Oregon:As of 2013, Facebook had stimulated some $573 million in capital spending statewide – and that was before the completion of its second Prineville data center. Construction from 2009 to 2013 generated enough personal income to raise more than $6.5 million in state income taxes.

The bill includes tax breaks on large purchases of data center equipment, and that’s critical to the growth of new and existing data centers in Idaho. Colocation providers lease data center space to companies that need IT resources. The colos provide the infrastructure, but the companies pay for the servers and racks.

Idaho taxes those purchases and drives computing resources — and the companies that own them — out of the state. In 2019, we will revise the bill to encompass more Idaho companies looking to promote colocation facilities.

The bottom line is this: Idaho is well positioned to become a significant global player in the data center industry, boosting the state’s economy and adding to its reputation as a burgeoning high-tech hot spot.

To take that step, however, will require vision at the governmental level.

Matt Klinger
Matt Klinger is the president of Fiberpipe Data Centers

Jeff mug
Jeff Leonnig is a regional director at Involta.

Both serve on the executive committee of the Idaho Technology Council.

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