[5/10/22] Earlier this month, the Washington Legislature voted to pass a bill that will further establish Pierce County as a prime region for business development. House Bill 1846 incentivizes investment in building, maintaining, and retrofitting data centers in Washington. With strong local support and hard work on behalf of our advocacy partners, the Tacoma-Pierce County Chamber celebrates the passing of this bill as a victory for community business interests.
Listen to the Chamber’s state lobbyist, Michael Transue, sit down with Board Chair AJ Gordon to discuss the data center bill that was recently passed by the State Legislature —and why this is a huge win for Pierce County business interests— on the latest episode of Making It in the South Sound.
Background: What is a Data Center?
Data centers are physical locations that store and compute data for businesses and organizations. In a growing digital age, data centers serve as an essential service for both businesses and communities to stay connected.
Data center development is a market currently experiencing high demand as businesses and organizations become increasingly active in the digital world. Data centers provide critical infrastructure not only for corporations, but also for small and medium-sized businesses, research organizations, healthcare institutions, and city governments. In doing so, they also create jobs in construction and operations, drive economic growth, and stimulate investment in local connectivity services like fiber and broadband.
Since 2019, advocates have been working to see legislation passed that will allow further growth and development of data centers in the region. Prior to this new bill, Washington offered incentives for data center development in rural areas exclusively.
Nearby areas such as Oregon are competitors in this market due to the personal property tax exemptions offered on data center servers and a lack of state sales tax. The passing of the new data bill will provide incentives to make the Puget Sound region an attractive competitor to Oregon for data center development.
What Does House Bill 1846 Do?
Before the passing of this latest bill, Washington offered a sales and use tax exemption exclusively for data centers in rural areas. This new data center bill expands these tax incentives to data center development in counties with populations over 800,000. This includes Pierce County, as well as King and Snohomish counties.
This bill is sure to lead to more development and investment in data centers in urban areas as a result of these tax incentives.
What Role Did the Chamber Play?
Chamber advocacy lobbyist Michael Transue has been involved in the journey of this bill from the very beginning.
Starting in 2019, the Chamber participated in lobbying the state legislature as the data center bill was discussed in hearings. As the bill moved forward, the Chamber played a critical role in coordinating letters to the legislature from local leaders voicing their support.
Leaders who supported the bill include Tacoma Pierce-County Chamber CEO Tom Pierson, Tacoma Mayor Victoria Woodards, Puyallup Mayor Dean Johnson, Pierce County Executive Bruce Dammeier, Economic Development Board for Tacoma-Pierce County President Bruce Kendall, Pierce County Council Chair Derek Young, and Pierce County Building & Construction Trades Executive Secretary Nathe Lawver.
When it came time for the bill to be voted on, the Chamber helped coordinate communications and testimony to the legislature on the importance of the bill.
What Does This Mean for Pierce County?
The incentives included in the new data center bill are expected to generate interest and investment in data centers in Pierce County.
Data centers bring high-paying, long-term jobs in construction and operations to a region. Building one data center typically takes around 500 workers and nearly 300,000 hours of labor. After that, jobs continue to exist to support the upkeep and operations.
Data center development also often leads to better digital connectivity for areas and incentivizes investments in fiber optics and broadband.
An economic impact analysis conducted by ECONorthwest in 2021 reported that increased data center development over the next ten years could increase Washington State’s gross domestic product by $2.7B and add $2.2B in personal income to workers, creating 6,660 jobs during construction and 665 jobs during operations per year.
To understand the effects that this increased development could specifically have in Pierce County, one can look at the city of Hillsborough, Oregon, as a case study. Between 2010 and 2015, the city saw a $695 million investment in the development of twelve data centers. Due to this it is estimated that, in 2015 alone, data centers contributed $65.2 million in output, 354 jobs, and $17.8 million in worker income in the Hillsborough area. Additionally, $5 million was generated in taxes from data centers to fund public services.
If a similar investment were to take place in a city in Pierce County, it would likely create equally positive economic outcomes. In a scenario analysis included in the same ECONorthwest report it was projected that such an investment could generate $48.2 million in Tacoma alone.
Curious to learn more?
Read the ECONorthwest report on the Economic Impacts of Colocation Data Centers and Tax Policy in Washington State.
View the letter written by Pierce County leaders to the Washington Legislature in support of the bill.
Read the testimony delivered by Chamber State Lobbyist Michael Transue to the Legislature in support of the bill.
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