Indianapolis officials on May 20 proposed a rough framework for how the city’s economic development nonprofit will gauge data center projects and how the city should provide tax incentives for centers in the city limits.
Indianapolis Economic Development Inc. Interim CEO Andrea Richter-Garry said her team has developed a scorecard to grade data centers and set up guardrails before the city signs off on specific tax incentives to operators. The goal, she said, is to set a clear “floor” for data center standards while encouraging developers to go above and beyond the bare minimum to unlock more savings.
“We want to make sure that we’re aligning our decisions and incentive offers for win-win scenarios, ones that again, attract that best-in-class development but also can be measurable and defined to meet those metrics,” Richter-Garry told the Metropolitan Development Commission Wednesday.
As an appointed body, the MDC ultimately votes to approve or deny any economic incentive packages and tax breaks. The IEDI negotiates on behalf of the city for new economic development and business retention.
Richter-Garry’s public presentation represents the first indicator of what local leaders will consider when giving incentives to data center operators, as no such tax breaks have been doled out publicly. Yet, several proposed projects have stirred public controversy due to unknown long-term impact, questions about power generation and community sentiment that Indianapolis neighborhoods need other types of development.
Operators already stand to benefit from choosing to build in Indiana. Per state law, data center developers can receive sales and use tax exemptions on equipment and energy for 25 years.
Using the scorecard, IEDI plans to grade projects on eight categories, including electricity use, tax impact and job creation.
The rough framework is in draft and subject to change based on feedback. Richter-Garry said specific packages for the first data centers will likely be released and voted on later this summer.
In addition to future developments, the scorecard will be applied to projects that have already been approved under local zoning regulations, including a large hyperscale center in Decatur Township and a 13-acre site in Martindale Brightwood on the near northeast side. It’s unclear how much in incentives either project might receive.
City officials will also consider another data center proposed for the east side of Indianapolis just east of Irvington.
IEDI will present to the Commission again in the coming weeks before the Commission votes on any incentives packages. A few commissioners noted that the incentives packages would be nice to know before they vote on any zoning changes, but IEDI officials say the incentives must be decided after land use has already been approved.
Data center owners stand to benefit greatly in Indiana from tax breaks on property taxes and on expensive equipment needed to power the inside of the centers. In Northern Indiana, an Amazon Web Services data center is expected to save a total $8 billion over the course of several decades thanks to a mix of state and local incentives.
At the same time, data centers can also significantly boost tax payments. Goggle will pay $1 million annually in Morgan County for its hyperscale data center, making it the county’s third highest source of revenue.
What will Indianapolis consider before data center tax incentives?
Per Richter-Garry, there’s a total of eight proposed categories on which data center operators will be graded and then given a total score out of 35 points, but the categories for grading could still change.
If the operator scores at least 18, they can be considered for incentives; if they reach 27 points, they can earn a “best-in-class incentive package.”
The categories are:
Alysa Guffey writes business and development stores for IndyStar. Contact her at alysa.guffey@indystar.com.
This article originally appeared on Indianapolis Star: How Indy data centers will be graded before tax breaks
Reporting by Alysa Guffey, Indianapolis Star / Indianapolis Star
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