Colorado Approves Tax Breaks to Attract Data Centers

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In a significant move to bolster its tech industry, Colorado lawmakers recently approved the Colorado Data Center Development and Grid Modernization Act, aimed at attracting data center operators with the promise of substantial tax breaks. This legislation, endorsed by the state senate’s Transportation and Energy Committee, proposes up to 30 years of tax incentives to entice these high-tech operations, reflecting a strategic effort to enhance Colorado’s competitiveness in this burgeoning market. The Act exempts data center companies from 20 years of sales and use taxes with an additional 10-year extension contingent on meeting specific criteria. To qualify for these incentives, companies need to invest at least $250 million locally and create a minimum of 25 full-time jobs, all while adhering to stringent energy and water efficiency standards.

Economic Implications and Environmental Concerns

The bipartisan initiative to boost Colorado’s data center industry has generated mixed reactions. Supporters claim it could position Colorado as a leader in the sector, which has flourished in other states. The bill passed the Transportation and Energy Committee with a 6-3 vote and now heads for further legislative review. Senator Paul Lundeen, a proponent, argues that data centers are crucial for the digital economy and essential to the state’s economic growth.

On the flip side, environmentalists oppose the bill. Megan Kemp from EarthJustice criticizes the fast-tracked legislation, warning it lacks protections for utility customers and communities. Opponents emphasize the need to scrutinize long-term environmental impacts and ensure it doesn’t hinder Colorado’s climate goals. While the state hosts data centers from companies like DataBank, Flexential, Novva, QTS, CoreSite, IPI, and Verizon, it hasn’t yet become a major hub for such operations. The initiative for data center investments through significant tax incentives reflects a dual objective of economic gain and managing environmental challenges. Lawmakers must balance economic growth with sustainable practices. As the bill progresses, the debate underlines the necessity for careful planning to ensure benefits outweigh costs. Industry and environmental groups will closely monitor Colorado’s steps in this tech sector development.

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