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Montgomery Co. giving $12M in tax breaks to data center

Friday - 7/11/2014, 6:03pm  ET

Montgomery County has agreed to give tenants of ByteGrid's Silver Spring data center up to $12 million in property tax breaks over 12 years, the first such move for a county looking to foster a competitive data center cluster and fend off competing jurisdictions.

The package of tax breaks applies to customers of ByteGrid, which operates — and leases space in — two facilities totaling 91,000 square feet on its main Silver Spring campus. "Given the extraordinarily high personal property investment for IT infrastructure by the tenants of these centers, the easiest way for us to level the playing field is to offset some of those infrastructure costs over a 12 year period of time," said Montgomery County Economic Development Director Steve Silverman.

When Silverman says "level the playing field" (and he did say this several times), he's referring to the patchwork of tax initiatives that state and local governments have passed in recent years. Oregon, for example, has passed a series of tax breaks aimed at attracting and retaining Google's and Facebook's server farms. Virginia, which boasts one of the country's largest data center hubs in Loudoun County, has passed measures of its own.

Many jurisdictions, including Montgomery County, have opted to focus their data center incentives around personal property taxes, which can present a particularly big burden to an equipment-heavy business.

The MoCo measure doesn't, however, mean the county will get no tax revenue from incoming ByteGrid tenants. Under the county's predictions, those tenants will spend the amount of money that would normally (assuming no incentives) produce $36 million in local tax revenue over a dozen years. With the tax package, "We end up, out of every dollar that would be generated by new tenants coming to ByteGrid's data center, we will get 67 cents," Silverman said.

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