Missouri House Economic Development Committee hears omnibus tax credit bill that includes data storage center incentives

On January 28, the House Economic Development Committee heard testimony on this year’s attempt to pass a wide-ranging tax credit package.  House Bill 1498, sponsored by committee chair Rep. Anne Zerr, R-St. Charles, contains proposals to create or reform numerous tax credit programs, including data storage centers, historic preservation, low-income housing and land assemblage.

Providing incentives for data storage centers has been a priority for the Missouri Chamber and for several years, because of the potential for growth in the industry.

States surrounding Missouri, such as Iowa, Nebraska and Kansas, are currently home to data storage centers, which generate millions of dollars of revenue for those states. These states provide robust incentives.  Missouri does not currently offer any tax incentive for data storage centers to relocate to Missouri, making it more expensive for a data center to be built within the Show-me state. It currently costs around $1,500 per square foot to construct a data center compared to $50 per square foot for normal construction, making it a very expensive venture for data storage companies.

“Data centers are going to continue to grow as an industry.  Technology is increasing and data centers are a huge private investment,” Tracy King, vice president of governmental affairs for the Missouri Chamber, said.  “We have everything that we need here in Missouri to attract data centers except our tax structure.

Data centers, King explained, provide the “infrastructure” that allows the Internet to operate.  Data centers are basically the “warehouse” for processing data.  They are a crucial component of business today and are crucial for hospitals, universities, financial institutions, and utilities.

“Data centers are a way to create jobs and secure additional state revenues in Missouri,” said King during testimony. “Decisions are being made where to place data centers right now and as a state we need to secure our share in this opportunity.”

Missouri is an ideal location for data centers because it is situated in a geographically low-risk location from natural disasters.  Missouri boasts more than 15 million square feet of subterranean sites carved out of former limestone quarries, providing climate control, enhanced security and reduced vulnerability.

Several groups also testified urging the committee to create the Angel Investment Incentive Act, in which wealthy individuals, or “angels,” would provide seed money for high tech start-up companies.

The bill would also provide incentives for businesses that forward freight internationally through any Missouri airport. Under this legislation, qualified freight forwarders would receive tax credits against income tax, based on the volume of outbound air cargo.

The bill would also shrink the cap on historic preservation incentives from $140 million a year down to $90 million for projects costing over $275,000.  Incentives to build housing for the poor would be capped at $130 million on July 1, 2015. It would then shrink each year down to $110 million by July 1, 2019.

HB 1498 would also revive the “distressed areas land assemblage” tax credit.  It would be redefined to include engineering, site and redevelopment planning, and it would expand coverage of maintenance costs from five years to 12.  St. Louis developer Paul McKee attended Tuesday’s hearing. Last year he sought to have the program extended to draw an additional $50 million for his North Side Regeneration Project.

A vote on the omnibus tax credit bill will be held later.  Last year’s tax credit measure failed on the last day of the 2013 session, as did a similar bill in 2011.

For more information on tax issues, please contact Tracy King at tking@mochamber.com or by phone at 573-634-3511.

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