Indiana’s Data Center Tax Break Clears Another House Hurdle

The proposal designed to lure data centers to the state was endorsed by the Senate Tax and Fiscal Policy Committee March 19.

by Dan Carden, The Times / March 20, 2019
Government Technology/David Kidd

(TNS) — A plan to incentivize the growth of the Digital Crossroads of America Data Center on Hammond's lakeshore, and to spur the development of similar facilities throughout the state, was endorsed 14-0 Tuesday by the Senate Tax and Fiscal Policy Committee.

House Bill 1405 is designed to enable the data center, currently planned as a $40 million, 105,000-square-foot project at the site of the former State Line Generating Plant, to grow into a $200 million campus with 400,000 square feet of lake-cooled data storage.

It does that by exempting data center equipment and most electricity used at the facility from business personal property tax as well as the state's 7 percent sales tax, on the condition that the data center developer invest up to $150 million in the project within five years.

The Senate committee revised the House-approved measure to require at least 75 percent of data center construction material and labor be sourced through Indiana vendors, to subject tax-exempt purchases to greater scrutiny by the Indiana Economic Development Corp., and to expire the tax exemption after 25 years.

Tom Dakich, the Merrillville native developing the Hammond data center, told the panel his company is "really, really happy" about the Buy Indiana requirement, because it helps support local construction companies, just as the completed data center will grow local businesses on the technology side.

"It's the ancillary jobs, it's the other services, those are the strength of the project," Dakich said. "But in order to make this grow, in order to make this become a real national player in the data center world, we need your help."

"If we don't have the tax exemptions, we're not going to be able to compete at that level."

State Rep. Ed Soliday, R-Valparaiso, the sponsor, said he's concerned about the committee imposing a 25-year limit on the tax exemptions.

He said other states tend to offer incentives for longer periods that could entice tech companies, such as Google and Apple, and other data center developers, to locate their data storage and transfer facilities elsewhere.

"We feel it should be 50. That's what makes us competitive," Soliday said.

Soliday suggested the tax exemption length could be changed next week when the legislation is eligible for amendment by the full Senate.

If ultimately approved in satisfactory form, Soliday said he's inclined to urge the House simply to consent to the Senate revisions, which would send the measure directly to Republican Gov. Eric Holcomb to be signed into law.

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