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CL- 1989 Work Session   Item #:   F.    
Work Session Meeting
Meeting Date: 09/04/2018  
Subject:    Discussion on Data Center Tax Rates
From: Ken F. Larking

COUNCIL ACTION
Work Session:     09/04/2018
SUMMARY
City Council is considering lowering the personal property tax rate for computer equipment in order to attract large data centers to the City of Danville.  
BACKGROUND
Last year, Vice Mayor Vogler requested that City Council consider lowering the business personal property tax rate for computer equipment in order to attract large data centers. 

Data Centers typically look at a number of factors when deciding to locate in a particular area. This includes cost of power, cost of construction, access to high speed internet, and tax rates, among others.  During previous work sessions, Council Members have discussed setting the business personal property tax rate to the lowest in the State of Virginia.  A rate below 40 cents when combined with Danville's low real estate rates would make Danville the most competitive location in the state.  The following is the estimated business personal property tax revenue that would be generated over five years by a 20 megawatt data center with $200 million in computer equipment at various tax rates:
  • Current rate:  $15,260,000 (average of $3,052,000 annually)
  • 40 cents: $1,744,000 (average of $348,800 annually)
  • 35 cents: $1,526,000 (average of $305,200 annually)
  • 30 cents: $1,308,000 (average of $261,600 annually)
RECOMMENDATION
Staff recommends that the City Council set a minimum size of 20 megawatts for data centers to qualify for a reduced rate for the tax for computer equipment.  The tax rate is recommended to be 35 cents.  

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