North Montana poised for data center development following new tax incentive approval

Written By: Jen Neville
April 10, 2018

acquisition financing

Following the State of Montana's approval in 2017 of a new tax incentive/tax abatement to help attract large high-value data centers, Shelby, MT is well-positioned for data center development.

A recent study indicates that Shelby, MT is an exceptional low-cost rural location to site a data center, with robust power and fiber optics infrastructure as well as cost-competitive and easy-to-develop commercial property.

The new incentive/abatement would reduce taxes on qualified data centers that locate in Montana to less than 50% of their taxable value in the first 5 years after a construction permit is issued. Each year thereafter, the percentage would increase by equal percentages until the full taxable value is attained in the 10th year. Additionally, Montana has no sales tax. Furthermore, as part of the new incentive/abatement, Montana has created a special (Class 17) property tax designation targeted to attract qualified data centers.

As a result, the reduced property tax and no sales tax now makes locations in Montana such as Shelby very attractive and competitive for future large data center development.

Shelby in coordination with the Port of Northern Montana has identified and zoned ten ~140 acres sites for large data center development. These sites are adjacent to substantial infrastructure including the city's water mainline, two electrical substations, and Interstate 15 access. Flat topography and large expanses provide developers with the potential to plan for large future growth or to create isolated campuses with buffer zones from roadways. In addition, two existing water lines run along the eastern boundary of planned data center sites (a 16" diameter line and a 20"- 24" diameter line). All sites are within minutes to city services and amenities. Furthermore, Shelby has a modern wastewater treatment system that can accommodate data center cooling water discharge.

Shelby is also located along major transportation corridors. Due to these corridors, Shelby continues to see an increase in fiber network installations within existing right-of-way's and in network capacity. Shelby offers cloud computing or data center companies a robust fiber network. The local fiber optics providers are Northern Telephone Cooperative and 3 Rivers Communications. Their network(s) are directly connected to the following Tier 1 carriers: CenturyLink/Level 3 Communications, Zayo Group, Vision Net, Axia, and Shaw. With all these fiber optics providers in the area, Shelby has good combination of fiber optics capacity & redundancy and is connected to internet hubs all over the United States and Canada.

Additionally, with its combination of cooler year-round weather and wealth of renewable wind energy, Shelby is an ideal location to construct air-cooled cloud computing data center facilities, according to the study. Cold external air is becoming a big attraction for data center operators, and many high-profile cloud computing companies are building new data centers in relatively cold and windy locations to cut power and cooling costs. Consequently, locating a data center in Shelby will result in dramatically lower power consumption costs associated with cooling.

Shelby has access to multiple power providers within Montana that can provide industry competitive rates, including Marias River Electric, NaturEner Wind, Energy Keepers, and NorthWestern Energy.

Shelby is readily accessible by car, plane, bus and train. Shelby is located on Interstate 15 and is home to an Amtrak train station with both bus and train services. The local Shelby airport is located approximately two miles north of town and provides daily services to local airports in the surrounding area. The Great Falls International Airport is located only 80 miles to the south on I-15 and is served by several commercial airlines.

In summary, Shelby, MT is an ideal location for data centers due to its rural setting, cool climate, infrastructure, tax incentives and accessibility.

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