| | April 20178CIOReviewOver the past 10 years, we have had the fortune to work with a multitude of businesses as they have weighed their data center location options. While no single experience mirrors another, we have found the following five factors are consistently top of mind: financial incentives, climate, power resources, fiber infrastructure, and talent.Financial Incentives are Not All AlikeA growing number of states have passed legislation to attract and grow data centers. But not all states' financial incentives are alike. Some states offer only short-term benefits or ones that cover only certain aspects of a project. Some provide benefits for small operations, while others place minimum square footage or investment thresholds on eligibility for incentives. Fewer states, although growing in number, are providing benefits for retrofitting existing operations. There are around five states which offer more robust incentives than most others. In Minnesota, for example, companies that build data or network operation centers of at least 25,000 square feet--and invest $30 million in the first four years--qualify for sales tax exemptions for 20 years on computers and servers, cooling and energy equipment, energy use, and software.Exemptions also apply to clients who purchase equipment for the centers--so they can help both enterprise/single company data centers and those that co-locate in a large facility.Sometimes refurbishing an existing facility makes more sense than building new. In Minnesota, businesses that refurbish a data or network operations center of at least 25,000 square feet and invest $50 million in the first two years qualify for the state's data center sales tax incentives.In addition, Minnesota does not tax personal property, inventories, utilities, internet access, information services, or custom-created software. These exemptions create an extremely favorable climate for data centers.In fact, since 2012, Minnesota has seen over $2 billion invested in data centers and has had 25 facilities certified to participate in our sales tax exemption program, with more projects in the pipeline.In the early 2000s, states such as North Carolina, South Carolina, Oklahoma and Iowa created legislation to support data centers--all within a couple of years of each other. The focus was on large enterprise users. However, many states have modified their legislation to incent smaller- to medium-sized colocation facilities as well, recognizing the important role these facilities have in supporting the needs of users that do not need a dedicated data center.Our recent success with data centers has been driven by legislation and incentives, but this success is also due to other aspects of the business environment outlined below. What Will Matter Most Tomorrow is the Data Center Location You Choose Today?By Jeff Rossate, Executive Director, Office of Business Development,State of Minnesota Department of Employment and Economic DevelopmentIN MY OPINIONJeff Rossate
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