Google’s plan to spend $13 billion on new and expanded offices and data centers around the U.S. this year is aided by state and local tax incentives worth at least tens of millions of dollars.
The California-based tech giant announced the broad strokes of its 2019 expansion plans Feb. 13, including “major expansions” in 14 states. Among these, the company plans to double the size of its Georgia and Virginia workforces, CEO Sundar Pichai wrote in a blog post.
The projects could qualify for an abundance of tax credits and exemptions that Georgia, Virginia, and most other states offer for job creation and business capital investments. Some are meant to attract specific industries, such as tax breaks for new data center construction.
In Ohio, the company plans to develop a $600 million data center in an industrial park outside Columbus—yielding the online search giant up to $43.5 million in a 40-year sales tax exemption from the state, according to the Ohio Development Services Agency.
The agency approved the package in December 2018 for Google Inc. subsidiary Montauk Innovations LLC, which plans to develop the facility and create $2.5 million in new payroll. The company plans its new facility at the New Albany, Ohio, International Business Park, which is home to data centers from industry leaders such as Facebook Inc. and Amazon.com Inc., due to the park’s fiber-optic network, fast permitting, and large sites.
In Nevada, the company could reap about $25 million in state tax incentives related to its plan for a $600 million data center in Henderson, just outside Las Vegas. The Nevada Governor’s Office of Economic Development board approved the incentive application filed by Google subsidiary Design LLC in November 2018.
The deal includes tax abatements for sales, use, and personal property taxes for two decades, contingent on Google meeting job creation, wage, and capital investment requirements. The project would generate an estimated $85 million in state and local tax revenue over that period, according to the economic development office.
The company’s plan for a data center in Midlothian, Texas, didn’t involve state tax incentives, John Wittman, press secretary for Gov. Greg Abbott (R), told Bloomberg Tax Feb. 14. But a Google affiliate got a 10-year tax abatement for the facility, approved in July 2018 by the Ellis County Commission—dependent on a minimum investment of $500 million and the creation of 40 jobs over five years.
A Google spokeswoman declined to comment Feb. 14, saying the company wasn’t ready to provide more details than what Pichai shared in the blog post.
Data Center Competition
States have added tax incentives specifically targeting data centers over the last decade, as companies such as Amazon, Facebook, and Google have spread new facilities around the U.S.
These include South Carolina and Virginia, where Google plans data center expansions in 2019. Both states exempt equipment purchased for qualifying data center projects from sales and use tax, dependent on certain investment and/or job creation thresholds. In Virginia, the company must invest at least $150 million in the project and create 25 new jobs, while South Carolina requires at least a $300 million investment and 100 new jobs.
Georgia offers a similar sales tax break for large data center projects, which the state Legislature enacted in 2018 just a few months after announcing that Facebook planned to spend up to $750 million to build a new data center east of Atlanta. Google’s 2019 plans for Georgia involve expanding its offices, not its data center, according to a map that accompanied the company’s announcement.
Northern Virginia hosts the largest concentration of data centers in the U.S.—primarily in Loudoun County’s “Data Center Alley,” near Reston, Va., which is home to a number of federal agency headquarters.
Google announced in November 2017 it had purchased 148 acres of land for $70 million in Loudoun County to build two new data centers, according to a local news report at the time.
Nebraska officials expressed delight Feb. 14 at Google’s announcement that it plans to build a new data center in the state but remained close-lipped about the details. The company’s expansion map suggests the new center is planned for Omaha, which also is home to data centers run by Yahoo Inc!, Travelers Insurance, Cabela’s Inc., and Fidelity Investments.
“Nebraska has built a reputation for itself as the Silicon Prairie and a hub for tech companies, start ups, and entrepreneurs. Today’s announcement from Google underscores that reputation and will bring great opportunities for Nebraskans,” Gov. Pete Ricketts (R) said in a written statement.
Google’s plans also include further expansion of its data center outside Tulsa, Okla., where the company says it has already spent $2.5 billion and created 400 jobs.
—With assistance from Chris Brown, Alex Ebert, Brenna Goth, and Paul Stinson.