Omaha in race for data centers

LINCOLN — The race to land a billion-dollar computer data center for Nebraska made an Omaha pit stop Thursday.

While Omaha is said to be out of the running for the huge "Project Edge" data center, chamber of commerce officials sought Thursday to amend the bill for the big data center to provide additional incentives for smaller projects that would be more likely to locate in the metro area.

The amendment would allow data centers that invested at least $200 million — rather than the currently proposed threshold of $300 million — to qualify for more generous tax breaks.

Joseph Young of the Greater Omaha Chamber of Commerce said that $300 million is larger than many data centers being built by businesses and that $200 million is the threshold Iowa uses to qualify for tax incentives.

"This makes Nebraska more competitive," Young said. "We don't want to lose a project to Iowa."

Project Edge is said to be eyeing Kearney, Neb., and a site in Iowa for a project that state officials have said is difficult to comprehend due to its size.

Projected to be 10 times larger than the Yahoo data center that located in La Vista in 2010, the new project is said to be the biggest private investment ever sought by the State of Nebraska.

It would also become the state's single largest user of electricity.

Economic development officials have said that the introduction of two additional data-center incentive bills this year — one to provide more generous tax breaks on purchases of private property (such as computer servers) and another to allow discounted electric rates — has prompted a second mega-data center to look at Nebraska and has stirred interest from other, smaller projects.

"It's easy to say that there are several serious projects and at least five to six window shoppers at this point," said Richard Baier, a former state economic development director who now works for the Nebraska Chamber of Commerce and Industry.

Baier said lowering the threshold for investment to $200 million would allow Omaha, and the entire state, to compete for a greater number of projects. While the number of jobs is not large — about 30 for a $300 million data center — officials say they are high-paying, high-tech jobs.

The Omaha chamber-inspired amendment ran into a wall of questions Thursday and failed to advance, though a senator promised to bring it up again.

Senators, led by Burke Harr of Omaha and Lavon Heidemann of Elk Creek, said they couldn't support a last-minute amendment to lower the incentive thresholds unless they knew the fiscal impact to the state in lost tax revenue.

"We're being asked to go blindly forth without knowing the cost," Harr said. "We have a fiduciary duty to our constituents to spend their money wisely, and we don't even know what this is going to cost."

Heidemann, who heads the Legislature's budget-writing Appropriations Committee, said he might be willing to support Omaha's amendment if the cost was known but could not support the amendment Thursday.

That led to an agreement between Heidemann and Sen. Abbie Cornett of Bellevue to work on the Omaha amendment and seek a new fiscal impact statement before final-round approval of Cornett's bill to give new tax breaks for large data centers.

The original fiscal note for Cornett's Legislative Bill 1118 was based on one data center project, Project Edge, that would invest $1.2 billion. It showed that nearly $50 million in state taxes would be paid by the company — whose real identity has not been revealed — in the first three years before the state started to pay tax refunds of about $36 million over the next 12 years.

Cornett said that amounts to a net tax benefit for the state.

Young, of the Omaha chamber, said he has been told that smaller data center projects would also generate a positive fiscal note, but that can't be confirmed until a new fiscal note is generated.

LB 1118 was advanced to final-round debate by a voice vote.

Contact the writer:

402-473-9584, paul.hammel@owh.com

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