Pocatello Data Center Development: Tax and Community Benefit Considerations
A permit for the Lex data center project in Pocatello, Idaho, was denied due to concerns over water, noise, and remediation. The author advocates for structured deals for future data center developments to ensure community benefits and fair taxation, leveraging Idaho's cold climate for cooling efficiency.
The rapid advancement of artificial intelligence is creating immense demand for computing power, necessitating the construction of large data centers. In Pocatello, Idaho, a proposed data center development at the old Hoku site is being considered in this context, following the recent denial of a permit for the "Lex project."
The permit for the Lex project was denied by a hearing examiner due to insufficient assurances regarding water usage, noise impact, and site remediation. The author highlights Idaho's naturally cold and dry climate as a significant asset for data centers, allowing for more efficient cooling and substantial electricity savings compared to hotter regions like Arizona, which could benefit the local power grid.
The article discusses existing state incentives, such as Idaho's sales-tax exemption for data center equipment and construction materials, and a property tax exemption for facilities valued over $800 million. To ensure community benefit, the author proposes three key protections for Pocatello city and county: prohibiting discretionary property tax exemptions without equivalent measurable value, implementing a change-of-control clause to maintain revenue streams upon sale or expansion, and negotiating a community-benefit payment tied to the operator's climate-derived savings.
Demonstrating the potential impact, the author calculates that a well-structured $500 million data center could generate approximately $6 million annually for the community through property taxes and negotiated benefits. This revenue, representing nearly a fifth of the City of Pocatello's entire levy, could address budget deficits, restore community grants, and potentially reduce property taxes for residents. The piece argues that while the future is inevitable, towns like Pocatello have the opportunity to shape it through smart, contractually bound agreements.