Nicholas Miller

I'll just add to that that states are often, in almost every state, 32 out of the 37 that offer these incentives.

There is a minimum capital investment threshold to receive the incentive.

And that can go anywhere from $2 million in Maryland up to $500 million in Arkansas.

And so that's another way that states are trying to tap in to some of these benefits.

They're requiring the data centers invest.

It's often $100 or $200 million to receive those incentives.

So I do think state lawmakers and states are keenly aware of the tradeoff between offering tax incentives, but also making sure that you're delivering a benefit to the community.

Absolutely.

I think that is something that in the states where they are evaluating their tax incentives, they're keenly aware of the revenue tradeoffs between the tax incentives that are being sort of awarded to these data centers and then possible tax revenues coming in, maybe from the income tax that the workers are paying or sort of knock off economic benefits in their communities.

And again, in Illinois, where they release a lot of data, their Department of Commerce has estimated they have given away, they have forgone about a billion dollars in tax revenue to data centers, but that they've sort of recaptured $2 billion through increased property taxes and increased local taxes and things like that.

And it's a lot harder actually to measure the possible economic benefit versus the direct cost of these data center incentives.

But I do think states are taking a very close look at the return on investment from these data centers, and they want to make sure that they are sort of getting the bang for their buck.

Absolutely.

And I think we see that baked into the structure of the incentives.

And so in a few states, including Illinois, they require that the data centers become either carbon neutral or that they receive some sort of green building certification within two years or five years of starting their operations.

And then I think on the incentive front, just incentives themselves, we're actually seeing the most movement around the energy piece.

So in Minnesota, in June, they became one of the first states that we're aware of that actually took away part of the incentive for data centers.

Minnesota no longer exempts the large data centers, the hyperscale data centers.

from the sales tax exemption for electricity only.

And last summer in Georgia, the legislature actually passed a bill that would pause their data center incentives across the board for two years to study the data center energy use.