On Friday Redmond-based Microsoft announced it will build a $1.1 billion data center in West Des Moines, Iowa that will be one of the company’s largest data centers in the country. The announcement to build the 1.16 million-square-foot facility came after Iowa approved granting Microsoft a $20.3 million sales tax rebate that would be available through 2021.
Sen. Janéa Holmquist Newbry, one of the state’s leading advocates for job creation, called the decision to locate outside of Washington disappointing, but predictable after House Democrats failed to hold a vote on Senate Bill 6550, which would extend a highly successful tax incentive to technology firms willing to build data centers in Washington.
“Sometimes it’s no fun being right,” said Holmquist Newbry, R-Moses Lake, who serves as chair of the Senate Commerce and Labor Committee. “Washington’s data center incentive is a proven economic-development tool that has benefited the entire state, but especially our rural communities. I was joined by data center developers, mayors, port developers, trade unions and others in warning that if we didn’t provide stability and predictability to this industry, other states would.
“The decision by Microsoft to locate one of its largest facilities in Iowa is a harbinger of things to come thanks to the failure of House Democrats to act.”
SB 6550 would have extended the expiration date, from 2015 to 2025, on the sales-and-use tax exemption for technology companies that purchase eligible server equipment and power infrastructure for eligible computer-data centers. It also would narrow the eligibility to exclude small container servers, known as IT-Pacs, to help guarantee the incentive would be used primarily by employers creating new, well-paying construction, electrical and high-tech jobs. The measure passed the Senate with a broad, bipartisan vote of 35 to 13, but died in the Democrat-controlled House Finance Committee.
According to a report in the Des Moines Register, the Microsoft data center project would translate to about $8 million annually in property taxes the city would collect from Microsoft once the data center is complete. The project will also create 84 direct Microsoft jobs, 66 of which must have a wage of $24.32 an hour. That wage is 120 percent of local prevailing wage.
“Those jobs could have gone to Quincy, Yakima or Pasco,” said Holmquist Newbry. “Iowa can’t compete with Washington when it comes to our quality workers or our clean, abundant and affordable energy; the difference maker was clearly that Iowa was willing to give the industry long-term certainty on its tax burden, while House Democrats in this state refused to do the same.”
Holmquist Newbry pointed out that Washington has been down this road before, losing out on hosting data centers for Facebook, Google and Amazon, among others, when the tax incentive was allowed to lapse in 2011. At that time, Microsoft cut back on plans for expansion in Washington and moved its servers to Texas, citing Washington’s tax burden as the main reason for the move.