Get the Facts: Douglas County’s Business Personal Property Tax Incentive for Flexential

Recent coverage of the Flexential data center planned in Parker has generated questions about Douglas County’s role in the project and the tax incentive considered by the Board of County Commissioners.

During a regular Business Meeting Tuesday, the Board of County Commissioners voted unanimously to approve a 35-year rebate of the county’s share of Business Personal Property Taxes for Flexential, a data center planned for Parker. Why? The Board says Business Personal Property Tax is an unfair burden on all businesses – and they’ll waive it for just about any business that asks.

What is Business Personal Property Tax?
Business Personal Property Tax is an annual tax businesses pay on equipment.

“Under this regressive tax, businesses are taxed over and over on the exact same piece of equipment after sales tax has already been paid—creating an unnecessary burden on job creators and capital investment. It’s perpetual double taxation,” said Commissioner Kevin Van Winkle. “One thing that can set us apart in Douglas County is saying we won’t charge you the same tax over and over on every piece of equipment that you buy for your business.”

What is Flexential?
Flexential builds, owns and operates data centers across the United States and has been based in Colorado since 1999, Vice President of Procurement Jack Faunce told the Board Tuesday. Its planned Parker facility will have 22.5 megawatts of capacity and encompass just under 250,000 square feet.

The company also addressed two issues that have generated significant public interest: water and electricity.

According to Faunce, the Parker facility will use a closed-loop water system, comparable to a vehicle radiator that circulates the same water rather than continually consuming new water for cooling. The company estimates the entire facility will use less than 600,000 gallons of water annually, with much of that associated with bathrooms, employees and vendors, break rooms and landscaping.

Faunce also told Commissioners the company is paying for the electrical infrastructure necessary to serve the facility. The company said it has already paid toward the work needed to upgrade the system and bring electrical lines to the site and will pay the full utility rate for the electricity it consumes.

Key Facts about the Rebate

• The incentive applies only to Douglas County’s portion of Business Personal property tax. The agreement presented to Commissioners provides a 100% rebate of that County portion for 35 years, which is about $543,000 each year.
• Flexential will continue paying its real property taxes. As commissioners emphasized during the meeting, the incentive is not a waiver of traditional property taxes on the data center property.
• The County is not waiving taxes belonging to other taxing entities. Commissioners specifically noted that the agreement does not waive business personal property tax attributable to entities such as the school district.
• Douglas County will continue receiving other applicable revenues, including real property tax and applicable sales tax revenue.
• The County has an established history of providing business personal property tax Commissioners described the tax as an impediment to business investment and said Douglas County has historically sought to waive its portion when businesses request such an incentive, absent another determining factor.
• The Board views the incentive as an economic-development tool. Commissioners said reducing this particular tax burden helps Douglas County compete for major investments that could otherwise locate elsewhere in the Denver metro area, Colorado or another state.
• This is a Parker project. The data center went through the Town of Parker’s development review process, including consideration by the Parker Planning Commission and unanimous approval by the Parker Town Council.

“I have never been a fan of the business personal property tax,” Laydon said. “It’s an impediment for business,” said Commissioner Abe Laydon. “We have always had the practice, when an entity reaches out and requests a waiver of Business Personal Property Tax that, barring some other determining factor, we do always try to wave this tax, regardless of who that applicant is.”

“Business personal property tax is the worst thing this state has done for businesses in this state. I will give a 100% credit to any business that asks for it.”

What is the impact of a primary job?
A primary job is generally associated with a company that sells or exports a substantial share of its goods or services outside the region, bringing new money into the local economy. Examples include: Aerospace, Advanced manufacturing, Software and technology, including data centers, Bioscience, Financial services, and Corporate headquarters. These jobs are particularly valuable because they can bring new money into the community rather than simply moving existing local dollars from one business to another.

A primary job does more than create employment for one person. When a company sells goods or services outside the region, it brings new dollars into the local economy. Those dollars circulate through local suppliers, businesses, households and public services, which support additional economic activity and strengthen the local tax base.

Every $1.00 of direct wages associated with the primary job is assumed to support approximately $0.20 of secondary supply-chain activity and $0.30 of tertiary household-spending activity, for approximately $1.50 of total labor-income-related economic activity.

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