Lombardo sets new conditions for Nevada data center tax breaks

Nevada will condition tax breaks for data centers under a new executive order from Gov. Joe Lombardo amid growing concern about the industry.

The order requires the Governor’s Office of Economic Development to create a binding agreement that data center developers must sign before their tax-abatement applications can proceed. Applicants also must agree to pay the Local School Support Tax in full, according to a news release.

“Data centers can be an unprecedented opportunity for Nevada, but if companies want to build here, they need to play by our rules,” said Lombardo, a Republican, in a statement. “This order sets clear expectations while opening the door to billions in responsible investment, good-paying jobs and long-term economic growth for Nevadans.”

The executive order directs the executive director of the Governor’s Office of Economic Development to consult with the State Engineer, the Public Utilities Commission of Nevada, state agencies, local governments and school districts to create the “Nevada Community Support Commitment” no later than Nov. 6.

That commitment must address water, ratepayers, grid reliability, siting and neighbors, workforce, community benefit, transparency and speed to power, according to the executive order.

The move comes after several local governments considered data center moratoriums or bans in response to local outcry, and the Clark County Education Association called for the Nevada Legislature to revisit data centers’ tax breaks.

Coalition has ‘concerns’

Lombardo’s Democratic opponent in the gubernatorial election, Attorney General Aaron Ford, has called for the state to pause tax breaks altogether and has released a detailed plan to address similar environmental impacts.

As it stands, the state’s economic development office can slash data centers’ sales tax to 2 percent from the state’s base sales tax rate of 6.85 percent. It can also reduce property taxes by 75 percent.

For a 10-year abatement, companies must employ 10 full-time Nevada residents within five years, pay a wage of at least 100 percent of the statewide average wage and spend at least $25 million over half a decade. For the 20-year abatement, the number rises to 50 full-time employees and at least $100 million in spending.

Now, that list of requirements will include the local schools tax and signing the to-be-drafted pledge. No abatements will be awarded to data center owned by a country classified as a foreign adversary under federal regulations, a list that includes China, North Korea, Iran, Russia and Nicolás Maduro’s Venezuelan regime.

The announcement from the governor’s office includes a statement of qualified support from Khara Boender, a government affairs director for the pro-industry Data Center Coalition.

“While we have concerns that some of the policies in his Executive Order create additional hurdles to data center development in Nevada, we share the Governor’s commitment to job creation and protecting Nevada’s natural resources, as well as his mission to elevate Nevada’s teachers and public education system,” Boender said.

This is a developing story. Check back for updates.