Colorado Bill would give new data centers large tax exemptions, but critics wonder whether that is necessary – or rather

A two-fold proposal that is intended to attract data centers to Colorado by offering huge 20-year tax benefits is confronted with a litany of criticism resulting from the impact of the environment of the centers about whether state-officials are needed to attract an already blooming industry.

Senate Bill 280 Would create a certification system that would provide tax stimuli to data center builders if they meet certain benchmarks for investments and water and energy efficiency.

The development and grid modernization program for data center would go both lucrative development to the state and ensure that extra energy consumption would not influence other electric customers, the sponsors said last week during the first hearing of the bill. They also noted that it would establish guardrails to minimize the environmental effects.

“Welcome to the future,” said sponsor Senator Paul Lundenen, a Republican of the province of El Paso, during the meeting of the Senate Transport and Energy Committee on Wednesday. “The future that unfolds all around us – and I mean all around us. It is now happening in almost every state except Colorado and we would like to change that.”

Critics are concerned that if the bill takes, the state will lose millions of dollars in tax revenues from an industry that could come to Colorado with or without the new stimuli. The large quantities of strength and water that data centers need can already burden the stocks of limited stocks and further derail the state to achieve its goals for clean energy consumption, they say. And they consider the rules of energy and water efficiency in the account as essentially meaningless.

“While we are working to meet our growing energy demand and the federal government continues to reverse the climate progress – endangers communities while the climate crisis is deteriorating – Colorado has to lead to defend our transition to clean energy,” said Paul Sherman, the climate campaign leader for Conservation Colorado. “This legislation threatens to trample our progress to achieve our ambitious climate goals and lacks enough crash barriers for communities.”

The bill State of the committee about a 6-3 votes and will then be heard by the Senate Credit Committee.

Data centers offer the infrastructure required for internet, cloud storage, streaming, computer needs of companies and the growing use of artificial intelligence. The construction of such centers has come throughout the country, but the facilities use large quantities of strength and water, which is needed for cooling.

As an example, a medium -sized center can be presented in Denver, at maximum capacity, use the same amount of water in a day as 16,100 denverites and as much power as 82,500 houses.

How the stimulans would work

To obtain certification under the proposed program of the account, a data center operator must commit to issuing $ 250 million in capital investments and creating 25 well-paid jobs; meet certain standards for energy and water efficiency; And consult with the State Department of Natural Resources on Wildlife and Water Impacts.

The data center company must also prove that the addition of the center will not “result in unreasonable cost effects” for the rates of other electric utility users.

In exchange, the company would be exempt from sales and use 20 years of taxes. Companies can also apply for an extension of 10 years if the first 20 years expires if they met certain additional requirements.

The Colorado Office of Economic Development and International Trade would supervise the certification system. The State would be obliged to withdraw the certification of the center if it no longer met its obligations under the program, and the company would have to pay the State back for the tax benefits it received.

If legislators take the bill, Colorado would join 31 other states that offer tax stimuli for data centers, according to the tax memorandum of the account. State legislators in 2023 And 2024 Considered, but not passed, accounts that data center companies would have granted millions of tax benefits on the purchase of building materials and equipment.

Data center companies are looking for the states with competing tax stimuli, testified business representatives last week. The centers create hundreds of building courses and fuel local economies, they said.

“Unfortunately, Colorado misses all of that,” says Greg Mikulecky, the vice president of development at Stack infrastructure. The company has its head office in Denver and builds data centers around the world, but has no data centers in Colorado.

Lunden, one of the bill sponsors, said that Colorado only receives 2% of the investments in the National Data Center. But that is proportional, given the 50 states in the nation, pointed to Leslie Hylton-Hinga, the director of Special Projects at the Colorado Office of Economic Development.

“Really unique opportunity”

Colorado is the home base of 56 data centers, including various new facilities under construction As a hyperscal facility that is being built in Aurora. A company in Denver that is planning to build a new data center in the city last year decided to refrain from a city tax holiday after he was confronted with pushback from the municipal council based on the likely energy and water use of the facility, but it will continue with construction.

The tax stimuli can help lure data center companies to communities that are looking for economic replacements for coal, oil and gas development, said Senator Nick Hinrichsen, a Pueblo-Democrat and sponsor. Communities such as Pueblo need alternative industries for jobs and to support the local tax basis, he said.

“We go to this cliff and we have a number of important challenges – but with data centers we have a real, really unique opportunity,” he said.

Nothing in the bill instructs companies to build in national or transitional communities. All Colorado data centers are in front – mainly the Denver Metro – and the bill will not shift that trend, said Caroline Nutter of the Colorado Fiscal Institutewho opposes the bill.

“Stimulating development outside the front series can be an efficient way to issue tax dollars, but this account does, as changed, not,” she said.