Nebraska’s data center incentive that gives companies a 10 percent credit on their investment will provide Facebook its biggest tax credit. But the company will be eligible for a number of other incentives, too.
Nebraska’s data center incentives also offer a 3 to 6 percent compensation credit on the wages of new employees. The amount of the credit depends on how much the company pays its local data center employees, and Facebook hasn’t disclosed those salaries.
On top of that, the company will get a property tax exemption on all “personal property” at the site for up to 10 years. That applies, for example, to any personal aircraft as well as to data center equipment and office furniture, said Nebraska Department of Revenue managers familiar with the law.
The total amount of tax credits that the social media giant gets from the State of Nebraska will depend on how much it invests, how many employees it hires and what those employees are paid.
“A lot of that is dependent on factors we don’t know right now,” said Jim Bogatz, a policy manager in the revenue department.
The tax credits earned can be used to pay the company’s income tax liabilities, to get refunds of sales taxes paid on some purchases and for reimbursements of real estate taxes, he said. The compensation credits can be used to pay payroll withholding taxes for new employees, he said. But the credits do expire 15 years after the company submits its application to the state.
“Just because they’re earning and eligible doesn’t necessarily mean the state will pay out all those credits,” said Mary Hugo, economic incentive manager for the revenue department.
Many states offer similar incentives to encourage large investments from data centers. In some places, such as Iowa, such incentives have proven controversial.
Across the Missouri River, data centers are eligible for a 50 or 100 percent refund on sales tax on electricity, equipment and temperature control equipment, among other things. Whether the company gets the full refund depends on investment.
In Nebraska, business tax incentives also have been debated. A state report in November 2016 said the state incentives have lured only nine new companies in eight years. And each new job created under the act cost state and local governments between $24,500 and $320,000.
Still, economic development leaders maintain the incentives are important for keeping Nebraska on the radars of large companies.
Besides the state efforts, Sarpy County also worked to make the future data center site more appealing to Facebook through extensive infrastructure work.
The county agreed to extend sewers to the site and improve nearby roads, at a cost of about $7.6 million. Grants and sewer connection fees will more than pay for the cost of constructing the sewer, said Brian Hanson, fiscal director for Sarpy County.
Facebook also will contribute $1.6 million of the cost to grade and widen 150th Street, the site’s western boundary, as well as Capehart Road. When the land on the south side of Capehart or the west side of 150th Street develops, the county will charge those developers to help pay for the road improvements.