62
many investments farexceedingthis
number(equatesto$5,000persquare
foot). Also,datacenteroperators
“refresh”computingequipment
frequently(typicallyeverythreeyears).
Othercompaniesare leasingspaceand
seekingtoattracttenantstoshare it.
NationaldatastoragecompanyByteGrid
recentlyselectedCleveland,Ohio, fora
333,000-square-footdatacenter
downtownthatwillspanthreeblocks.
ByteGridsecuredtaxcredits for$100
million inexpected investments;a
change inOhio’sstate lawallows
ByteGridtosharethosetaxcreditswith
itstenants.
InKansasCity,Mo.,LightEdgeSolutions
Inc.,aDesMoines-basedproviderof
managed IT,cloudcomputingandco-
locationservices,willsoonopenthe first
phaseof its60,000-square-footregional
datacenteratSubTropolis,an
undergrounddevelopment.TheMissouri
DepartmentofEconomicDevelopment
hasofferedLightEdgea 10-yearsalestax
exemptiononequipmentpurchases, job
creditsequalingtwopercentofpayroll
for fiveyearsandannual investmenttax
creditsof0.5percent for fiveyears. In
addition,ClayCountywill issueChapter
100bondsallowingLightEdgetoreceive
a 10-year, 100percentpersonalproperty
taxabatement.
Process toObtain Incentives
Theprocess foracompanytoobtain
incentives ismulti-facetedandcantake
monthstosecure. Here isasummaryof
recommendedstepscompaniescan
take, typicallywiththehelpofan
incentivesspecialistoradvisor:
•Preliminary IncentiveEvaluation-
Reviewandconfirmthoseproject
characteristicsthatcanhavethegreatest
bearingon incentivesvaluesand
feasibility. Review incentives impacton
theproject’spotential location, related
capital investmentandstaffing impacts.
Thepreliminaryresultwilldetermine if
incentivesshouldbe included inthereal
estateprocess.
•Evaluationof IncentivePrograms-
Analyze likelyrangeof incentivesaspart
ofacost/benefitanalysis. Inmostcases,
anetbenefitanalysisneedstobe
completedtodemonstratethe financial
impactsonthestateandcommunityare
greaterthantherequested incentive
package. Thisanalysiswillprovidethe
necessarydatatopositivelypositionthe
project inthe incentiveapplicationand
negotiationstages.
•CompletingApplications-
Include
importantdecisionsregarding levelsof
jobsand investmenttobe“offered”and
disclosuresandcertificationstobemade.
•Negotiations-
Manage incentives
negotiations incoordinationwiththereal
estateprocurementteamtoenhance
competitiveprocessandassure
timeliness. Payparticularattentionto
definitionsof jobcreationandcapital
investment,aswellascure/default
provisions, toensure flexibility inthe
eventofunforeseenbusiness
circumstances.
•Documentation&Administration-
Manage formalapprovals, finalize
incentivesagreements,andprovidepost-
closing“roadmap”ofreportingand
claimingrequirements.
•EstablishingComplianceProcedures -
Put inplacemonitoringandreporting
systems,andassistance implementing
thenecessaryprocedures.
7X24MAGAZINE SPRING2014
n
**Otherstateshave incentive
programsthatadatacenterproject
maybeabletotap,howevertheydo
notspecificallytargetdatacenters.
Incentive
ominal
Value
Term Authorizing
Agency
Description ofBenefit
SalesTaxExemption –
Materials&Equipment
$36.4million 15 County Industrial
Development
Agency
Partial exemption of sales tax on
materials and equipment
SalesTaxExemption –
BuildingConstruction
$5.5million 2 County Industrial
Development
Agency
Sales tax exemption on
constructionmaterials
UtilitiesEconomic
Development Rider
$ 1.3million 5 Utility
20% discount off electricity
delivery for 5 years
ReChargeNY
$ 4 – 5
Million
7 TheNewYorkState
PowerAuthority
Offset to commodity price of
energy
NYSERDAEnergy
ConservationProgram
$ 1.7million 1 x NYSERDA
One-time grant basedon energy
saved by higher efficiency
equipment
TOTAL
$50-52
million
Payment inLieu of
Taxes (PILOT)
$ 2.2million 12 LocalMunicipality
School Board
Belowmarket assessment
n
Casestudy–RecentDataCenterExpansiontoNewYorkState
In2013,BLS&Co.andSugarloafAssociatesworkedwitha large financialservices
companythat locatedahighlysecuredatacenter inNewYorkState. Belowarethe
detailsofthe$50+million incentivepackagenegotiatedonbehalfofthis firm.
State: NewYork
Size: 130,000SF
Capital Investment:$700million initialconstructionandongoingrefreshment
ConstructionJobs:250
FullTimeJobs:75
