Lawmakers in Minnesota are proposing bills that would grant new tax breaks for data centers in the state.

The house-and-senate companion bills SF4983 and HF4929 amend the state’s existing tax exemptions for data centers to include additional exemptions for 'large-scale' data centers – and extend the tax exemption period from 2042 to 2059.

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A data center in Minneapolis – DataBank

The current program provides companies with the money through a tax refund, but the proposed bill would create an upfront sales tax exemption.

Qualified ‘large-scale’ data centers must span at least 25,000 square feet (2,320 sqm) and see at least $250 million in investment.

Both bills were introduced last month by a bipartisan group of Republican and Democratic politicians. Both have been referred to the Taxes Committee.

Sen. Grant Hauschild, DFL-Hermanton, told the Minnesota Reformer he’s proposing the bill so Minnesota stays competitive with its bordering states, which offer the upfront exemption, lest they win all the data center business.

“This is a net benefit. And yes, will there be some sales tax breaks for a business? Sure, but we’ve done that in a lot of other industries to ensure that we have the jobs … and one of the most diversified economies in the country here in Minnesota because we’ve been willing to push the envelope on those things,” said Hauschild, chief author of the bill.

The original tax exemption bill was introduced in 2011, and around 40 data centers have qualified for the rebate in that time.

Minnesota hasn’t traditionally had a large data center market; players including DataBank, Cologix, T5, and LightEdge are present around Minneapolis, while Stream has developed two facilities in nearby Chaska and Compass has a site in Shakopee.

A number of hyperscalers, however, are now looking at developing in Minnesota on the fringes of Minneapolis. Meta is planning a campus in Rosemount, while CloudHQ is planning a large campus near Stream’s site.

Microsoft is planning a campus in Becker. Another, unidentified, company working under the name ‘Elk River Technologies’ is planning another 348-acre data center project at Becker.

Google had long been planning to develop a campus in Becker but apparently backed away from the project in 2022.

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