Data center urban renewal bill dies in committee
by Logan Finney, Idaho Report
The House Revenue and Taxation Committee voted 7-8 against a bill on Monday that would have excluded certain data centers from being included in urban renewal districts.
The legislature in 2020 passed a law creating a sales tax exemption for data centers that meet certain capital investment and job creation requirements. That incentive attracted Meta, the parent company of Facebook, to begin constructing a data center facility in Kuna.
Lawmakers say that the original law to attract data centers was intended to reduce local property taxes – which was then sabotaged, in their view, by Kuna creating an urban renewal district around the Meta development. An urban renewal district freezes existing property tax collections and directs any additional tax revenue to the district for localized improvements.
Opponents argued it is unfair to change the rules to allow either inclusion in urban renewal or the sales tax exemption – not both – because lawmakers don’t like a specific instance where they were used.
Rep. Jeff Ehlers, R-Meridian, presented House Bill 159, which is cosponsored by House Speaker Rep. Mike Moyle, R-Star; Rep. John Gannon, D-Boise; and Rep. Barbara Ehardt, R-Idaho Falls.
“I don’t see where this bill is changing the game,” Ehlers said. “I think it’s staying with the original intent of the law.”
Kuna Mayor Joe Stear spoke against the bill, detailing his city’s vision and their negotiations with Meta.
“It will essentially kill our urban renewal east district,” Stear said. “This project is the kickstart to our industrial zone.”
Moyle said the data center exemption was meant to add commercial facilities to property tax rolls and reduce levy rates for residents, not to create industrial park anchor properties for mayors like Stear.
“He is literally, through his actions, raising property taxes in Kuna,” Moyle said. “This urban renewal district is to subsidize someone coming later.”
Several testifiers, both developers and urban renewal agencies, argued that the bill would send a message that developers’ use of these mechanisms only incentivizes lawmakers to take them away.
“I think we need to focus on the urban renewal problem, not the data centers,” said John Eaton, vice president of the Idaho Association of Commerce and Industry. “They [Meta] are not benefitting from this urban renewal district, they had it placed on top of them.”
Others agreed that cities use urban renewal for too many things, but only because it’s their only option.
“We have become so tight in the state legislature that we are restricting tools,” said Rep. Stephanie Mickelsen, R-Idaho Falls. “An urban renewal district is one of the only tools they have to put in very expensive infrastructure.”
Rep. Rick Cheatum, R-Pocatello, and Rep. Jeff Cornilles, R-Nampa, both serve on their respective cities’ urban renewal boards.
“It is a tool, probably the only tool, a lot of communities have to attract businesses and increase the tax base,” Cornilles said.
Cheatum said that putting data centers directly onto property tax rolls would provide some tax relief for homeowners – but not as much as a large-scale commercial development with several businesses would.
“Urban renewal districts will produce property tax relief. It just takes time,” Cheatum said. “You have to play the long game in development.”
Yes (7): Jason Monks, R-Meridian; David Cannon, R-Blackfoot; Sage Dixon, R-Ponderay; Charlie Shepherd, R-Pollock; Melissa Durrant, R-Kuna; Jeff Ehlers, R-Meridian; Douglas Pickett, R-Oakley.
No (8): Dustin Manwaring, R-Pocatello; Jon Weber, R-Rexburg; Jerald Raymond, R-Menan; Rick Cheatum, R-Pocatello; Jeff Cornilles, R-Nampa; Stephanie Mickelsen, R-Idaho Falls; Lauren Necochea, D-Boise; Ned Burns, D-Bellevue.