Data center developers must now agree to terms to obtain Nevada tax breaks
Nevada Governor Joe Lombardo has signed an executive order requiring data center developers to agree to new community support terms, including paying local schools sales tax, to qualify for state tax breaks. This move aims to address concerns about the industry's impact on water, power, and local communities, and follows calls for stricter regulations from various advocacy groups. The Governor's Office of Economic Development is tasked with drafting these new commitment terms by November 6.
Nevada Governor Joe Lombardo has issued an executive order mandating new conditions for data center developers seeking tax abatements in the state. Under the order, companies must agree to a "Nevada Community Support Commitment" which includes paying the state's local schools sales tax in full. This commitment, to be drafted by the Governor's Office of Economic Development by November 6, will also address issues such as water usage, grid reliability, siting, workforce development, and community benefits.
The directive comes amid rising national and local concerns regarding the data center industry's impact on water and power resources. The Clark County Education Association estimates that tax breaks have cost K-12 schools $357 million since 2015 and has advocated for developers to pay the local schools sales tax. Attorney General Aaron Ford, a political opponent of Lombardo, has criticized the order as insufficient, proposing a statewide pause on tax breaks and a ban on evaporative cooling for data centers.
While the Data Center Coalition, an industry group, expressed concerns about additional hurdles, it also affirmed shared commitments to job creation and natural resource protection. Environmental groups like the Toiyabe chapter of the Sierra Club remain skeptical, advocating for a state law to set water standards and ratepayer protections rather than conditions tied to tax breaks, and continue to support Ford's more stringent proposals. The order is seen by some as a significant shift in how Nevada will engage with the data center industry, moving away from a "status quo" of unlimited abatements.