Tax breaks bring data center expansion, plus environmental concerns
Data center tax breaks under debate
An expansion of data centers has started in Minnesota and the businesses could grow 40-50 times larger within a few years, but environmentalists have concerns about clean water, electricity overuse and tax breaks for huge corporations. FOX 9’s Corin Hoggard has the details.
ST. PAUL, Minn. (FOX 9) - A massive expansion of data centers seems to be coming to Minnesota, and they come with environmental and tax concerns.
The Minnesota Legislature is now hearing from companies pushing for tax breaks to last more than 30 years.
The current deal
Exemptions for decades:
Forty-one data centers currently qualify for a sales tax exemption until 2042 on building materials, computer equipment, and electricity.
These are big businesses, especially in rural Minnesota, and the number could be 40 or 50 times larger within just a few years.
Meta’s $800 million investment to build a data center in Rosemount is expected to create 1,000 construction jobs and 100 long-term jobs by next year.
Eyeing expansion
Building boom:
Amazon, Google and Microsoft also have their eyes on Minnesota for new data centers, partly because of generous tax exemptions drawn up in 2011.
But they want to lock in the tax breaks until 2059 before they commit.
"These incentives will raise money, not lose it, and it will make you more competitive and put you on that map as one of the most competitive states in the region," said Barbara Comstock, a data centers lobbyist.
Cause for concern?
Neighbors not thrilled:
That's been true in other states, but neighbors and environmental groups are raising concerns about having noisy and potentially polluting businesses moving in.
"We shouldn't be asking how we can sacrifice enough to entice them, but rather pose the question how will these businesses be good neighbors and honor our environment and our residents?" said Avonna Starck of Clean Water Action.
They’re also concerned about a spike in electricity demand making their own service more expensive and less reliable.
Some legislators are also uncomfortable with extending a tax break to the world’s richest corporations.
"Why are we giving giant corporations that make literally billions of dollars a year a better deal than we're willing to give meat packers or farmers or small business owners?" asked Rep. Athena Hollins (DFL-St. Paul).
One more concern that popped up during committee hearings on Thursday is that the expansion is coming so fast, the data centers will have to be built by out-of-state contractors, so the actual number of jobs created in Minnesota will be lower than expected.