The state of Florida has approved a tax package that introduces a sales and use tax exemption for new data center properties, as well as equipment and electricity they use.

The tax breaks are among the most generous in the US – just four states currently apply such exemptions to data center electricity.

In order to qualify, the facility must have total power capacity of at least 15MW, and its owners or tenants must make a cumulative capital investment of at least $150 million. In addition, every tenant must have at least 1MW of dedicated power capacity for their own operations. Each of these requirements must be satisfied no later than 5 years after the commencement of construction.

Citizen engagement

Hollywood Beach, Florida
Hollywood Beach, Florida – Thinkstock / felixmizioznikov

To receive a tax exemption, data center developers must apply to Florida’s Department of Revenue (DOR) for a temporary exemption certificate and provide information on the scale of the facility. They will also have to submit to periodic reviews by DOR to assure continued qualification.

Similar legislation failed to pass in 2016, but a small team of data center specialists worked with the local government to raise awareness of the benefits that data center projects could bring to local communities.

This team included Crystal Stiles, economic development lead at Florida Power & Light, Todd Weller, founder of technology consultancy CyberXperts, and Lee Kestler, former DuPont Fabros executive, now a consultant at Kopeland Ventures.

“In 2017, we were brought on board to try and expand the level of understanding for legislators on the benefits that other areas of the country have realized by encouraging large scale data center campuses to develop in their region,” Kestler told DCD.

“The achievement of this milestone is exciting and we believe the tax exemption improves Florida’s ability to compete for large-scale data center projects. Of course, there are several other factors that will still need to be addressed in order to attract this type of digital industry to Florida.

“We’ve discovered that the business and political leaders in Florida are deeply sensitive to creating an environment that can stimulate work for its citizens. Veterans of this burgeoning industry understand it is a competitive landscape and the power of technology will continue to be the most prolific growth engine for people and lifestyles.”

We have to note that the new tax exemptions on electricity apply to the critical IT load and do not include power spent on cooling, lighting and other functions of the facility.