Tax incentives proposed to attract large data centers

Companies looking to build large data centers could receive tax incentives to locate in Nebraska under a bill advanced from general file Feb. 9.

Under LB1118, introduced by Bellevue Sen. Abbie Cornett, a company investing at least $300 million in qualified property for the purpose of building a data center would qualify for the incentives. The company must also create 30 or more new jobs.

The bill defines data centers as facilities that are designed to centralize the storage, management or dissemination of data and information.

Cornett said she introduced the bill to help make Nebraska a more attractive location for new development. She said the state has an obligation to focus resources where they’ll have the most benefit.

“Neighboring states have incentives that are more attractive,” Cornett said. “This bill is essential to building Nebraska and creating new jobs.”

Businesses qualifying for the incentives would be eligible for an exemption of tangible personal property taxes. Exemptions for sales and use taxes, as well as real property taxes, also would be provided under the proposal.

A “callback” provision would authorize the state to reclaim property taxes, plus interest, if a company fails to meet established benchmarks.

Kearney Sen. Galen Hadley, who made LB1118 his priority bill, said that nearly every aspect of our daily lives requires data storage. He cited the need to remain competitive with surrounding states for new development as the data storage industry grows.

“These incentives put us in a position to attract and incent hundreds of high technology jobs,” Hadley said.

Fullerton Sen. Annette Dubas said a lack of resources makes it difficult to bring traditional manufacturing plants to many rural areas, so the ability to attract large data centers could have a significant impact.

“Many people want to settle in small, safe communities with good schools,” Dubas said. “These data centers are ideally suited to rural Nebraska.”

Schuyler Sen. Chris Langemeier said he initially questioned the impact of large data centers on the state’s water supply, especially in fully-appropriated areas. He said water is the chief cooling method used in the data centers, which require unusually large amounts of power to operate.

“Due to our climate, water would most likely only be needed in the summer months,” Langemeier said. “The method used would pump water for cooling and then inject the water directly back into the ground.”

Cornett said the bill could dramatically improve the state’s economic development in the future.

“This is a bill that can take Nebraska forward to the next level,” she said.

Senators advanced the bill from general file on a 41-0 vote.