Bill Description: House Bill 328 would establish that, under certain circumstances, a large data center will be added to the base assessment roll for property taxes in a revenue allocation area, if no bonds have been issued for that area.
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NOTE: House Bill 328 is related to House Bill 159 and House Bill 46, introduced earlier this session.
Does it increase government redistribution of wealth? Examples include the use of tax policy or other incentives to reward specific interest groups, businesses, politicians, or government employees with special favors or perks; transfer payments; and hiring additional government employees. Conversely, does it decrease government redistribution of wealth?
Idaho law says a large data center (one involving at least a $250 million investment and creating at least 30 jobs) qualifies for a significant sales tax exemption on the equipment it purchases. A data center can also be included in a revenue allocation area, more commonly known as an urban renewal district (URD). If this is the case, the property taxes it pays will go to the URD — and they can be used to help build the data center itself, or its supporting infrastructure.
House Bill 328 would amend Section 50-2903, Idaho Code, to say "Any increase in valuation due to property owned, leased, or used in the operation of a business entity that makes capital investments in one (1) or more data centers, as defined in section 63-3622VV(2)(f), Idaho Code, after July 1, 2020, in amounts of at least two hundred fifty million dollars ($250,000,000) in the aggregate within the first five (5) years after commencement of construction, that creates and maintains at least thirty (30) new jobs at the data center within two (2) calendar years after the commencement of operations, and that is located in a revenue allocation area for which no bonds have been issued pursuant to section 50-2909, Idaho Code, as of March 16, 2023, shall be added to the base assessment roll in the current tax year."
In other words, when a large data center that is in a URD pays its property taxes, those taxes will be distributed as if it were not within the URD (provided there have been no bonds issued for the URD before March 16, 2023.)
This change should prevent a large data center that qualifies for the special sales tax exemption from being able to redirect the property taxes it pays back to itself through a URD.
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Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?
Urban renewal districts (URDs) are funded through tax increment financing (TIF), which means that as the assessed value of property inside the district increases, the difference is credited to the URD rather than to the normal tax rolls.
As an example, an empty lot worth $10,000 might be included in an URD and then developed into an office building assessed at $1 million. When it comes time to allocate property taxes, the URD would receive the taxes due on the assessed value of $990,000. The county and other taxing districts would only receive the taxes due on $10,000 in assessed value.
This would happen even though the property would receive police and fire protection and other services, funded through regular property taxes. Effectively, tax increment financing forces property taxpayers outside the URD to subsidize the increased services received by properties within it.
House Bill 328 says that when a large data center that qualifies for the special sales tax exemption pays its property taxes, those taxes will not go to a URD (provided there have been no bonds issued for the district prior to March 16, 2023). This change would reduce the subsidies taxpayers are forced to fund for the benefit of the data center.
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