House passes bill giving tax breaks for data centers

April 21, 2009

House passes bill giving tax breaks for data centers

By TONY LEYS
tleys@dmreg.com

Owners of relatively small, high-tech companies could qualify for state tax breaks under a bill passed in the Iowa House Monday.

The bill would give sales-tax refunds for equipment and electricity used by "data centers" that locate in Iowa.

The bill, House File 824, follows up on tax incentives offered earlier to Microsoft and Google. The richest incentives, including permanent sales-tax exemptions on equipment and electricity, would go to companies that invest at least $200 million over six years. The lowest exemptions would go to companies spending at least $1 million over three years. Those companies would receive 50 percent refunds on sales tax for five years' worth of electricity.

"Data centers" use banks of computers to store large amounts of information for insurance companies, banks or other industries.

The bill also would provide property-tax breaks for equipment of Web-search companies.

Economic development officials said the incentives would more than pay for themselves by attracting new businesses.

Supporters of the bill said it would help small and medium-sized companies that could add quality jobs to the state.

"This is what I call progressive legislation," said Rep. Doris Kelley, a Waterloo Democrat who said several companies are "in the pipeline." The bill passed 90-1 and was sent to the Senate.

Google has pledged to spend $300 million on a data center in Council Bluffs. Microsoft has postponed its plan to build a $550 million project in West Des Moines.