Washington State publishes Paper why Data Center companies head to other States

Microsoft kicked off the public attention of Washington State as a place to build data centers. The government officials then tried to tax the data center companies as an industry assuming the low power prices were worth it. Finally after 7 years of little activity in Washington the Department of Commerce published a report stating what we all knew, Washington state taxes made it more expensive than neighboring states.

The report is here. The conclusions are here.

 Data center growth in rural Washington is at the lower end of the growth rate experienced by other major competitive markets. The competition among states for data center projects has increased dramatically and, if the state desires to attract more projects, Washington should improve its promotional strategy for this industry segment and reexamine the competitiveness of its overall incentives strategy.
 Urban Washington counties that do not have access to sales and use tax exemptions for data centers are at a competitive disadvantage to other urban data center markets such as Portland that either do not have sales tax or that offer tax incentives that abate the sales tax.

A comparison to Hillsboro is made.

All of Hillsboro’s data centers are located in its “enterprise zone,” which was earmarked by the city to provide property tax abatements to firms that locate there. In addition, Oregon has no sales tax at either the state or local level, and the property tax rate in Hillsboro is currently $16.75 per $1,000 of assessed value. Locating in the enterprise zone caps taxing the property to the pre-development assessed value for nearly five years. These tax benefits draw in big players. Last year, DuPont Fabros bought up 47 acres in Hillsboro for what will be Oregon’s largest urban server farm, a 500,000 ft2 facility that will require 50 MW of power, half of which will be for Microsoft and Facebook’s cloud storage.143
We interviewed Valerie Okada, a Business Development Coordinator at the City of Hillsboro’s Economic Development Department. In pitching Hillsboro to us, she cited the quality of its fiber network, noting there are nine providers and four cable land stations that terminate in Hillsboro. Okada also mentioned the high reliability of its electric substations that do not have the dips and outages other cities have because their infrastructure is up to semiconductor industry standards due to Intel’s long presence since they days when they were just a small town. But it is doubtful these features are significantly better than Seattle.
It is the enterprise zones that really incentivize datacenters to locate to Oregon. Oregon’s largest urban server farm in operation today, an 11.9 MW, 180,000 ft2 facility run by Infomart saves $769,000 a year
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