Idaho legislators are making another attempt to limit how many tax benefits data center developments in the state can qualify for.
HB 328 was introduced last week and passed the house in a 59-9 vote. The bill has now been passed to the Senate.
The bill adjusts existing terminology in the state’s urban renewal regulations that a data center making capital investments of least $250 million in five years and creating and maintaining at least 30 new jobs in two years shall be added to the property tax base assessment roll.
As reported by BoiseDev, the bill essentially blocks data centers from benefiting in urban renewal districts.
In an effort to lure more developers to the state, Idaho passed a bill in 2020 granting sales tax exemption for operators that hit investment thresholds of $250 million or more and create at least 30 jobs.
Under current rules, data center developers can qualify for both the sales tax exemption and a property tax benefit known as an urban renewal district that improves local infrastructure where the facility is located. Property taxes in urban renewal districts don’t go back to the general base but go towards infrastructure improvements in that area, essentially paying for the infrastructure a data center will use.
The HB 328 bill started as HB 159, which aimed to force data centers to choose between the sales tax benefit or the urban renewal benefits and prevent double-dipping of benefits.
The new HB 328 offers simpler language for the same effect as the old bill, preventing data centers from meeting the qualifiers for the sales tax exemption from benefiting from the urban renewal perks.
Idaho isn’t known for having a large data center industry – although the FBI, DataSite, Tonaquint, and Involta all have facilities in the state. The bill would mostly affect Meta, which in early 2022 announced plans for a new data center campus in Kuna in Ada County.
The social media company said it was investing $800 million in the project, set to be 960,000 sq ft (89,200 sqm). The company broke ground around September 2022, with construction anticipated to continue through 2025. Meta had been working with the city under the title Project Peregrine. At the time of the original announcement, Meta said it was investing approximately $50 million in a new water and sewer system for the city that would be dedicated to the City of Kuna to own and operate.
The project was large enough to qualify for sales tax exemption, with the City of Kuna then creating an urban renewal district encompassing the 325-acre industrial park in which the data center was located.
Opponents of this and the previous bill still say limiting the tax incentives would kill the Meta project and prevent further investment in local infrastructure at the park that could attract more companies in future.
Another bill, HB 046, had attempted to ensure that data centers that didn’t take advantage of the sales tax exemption and but were located in an urban renewal district would benefit from the urban renewal perks. After several readings, it was returned to the Local Government Committee in mid-February and has seen no movement since.