Project Unicorn: Fireworks, Whistles, Details to Follow
From a recent article in the Columbia Missourian:
An incentive plan designed to lure a $1 billion data center to Columbia got a thumbs-up this week from the Boone County Fire Protection District, which is one of the taxing entities that could be affected by the ambitious economic development effort dubbed “Project Unicorn.”
Rich Miller writes about Project Unicorn in an article on Data Center Knowledge. He expresses the following concerns, which I share:
Is it really a $1 billion project? Or are numbers being inflated to try and sway legislators and local officials whose support [is] essential in assembling tax breaks? So long as the “Unicorn” prospect is cloaked in secrecy, these huge numbers are difficult to substantiate or debunk.
A unicorn, by definition, is an imaginary creature. Are we to believe that this project is imaginary as well?
I ask the same questions that I asked last week: Is this level of subsidy the best use of taxpayer monies, particularly at a time when the state government has decided to make cuts to other services? How much subsidy is the state and local government going to provide to the technology industry in the region?
Even with 50 percent real estate tax abatement, [chairman of Regional Economic Development Inc. Dave] Griggs said that one property that currently pays $503 annually in tax would pay more than $2 million with the development being by Project Unicorn. “When you’re dealing with billions of dollars, a little bit of tax comes out to be a lot,” Griggs said.
Why would schools be excited for Project Unicorn? It abates 100 percent of personal property taxes and up to 50 percent of real estate taxes. They will probably have to provide services to more people, with no increase in revenue. If the project weren’t abated, or if a different project moved in, they would receive all of the revenues. Using the numbers quoted in the article, Project Unicorn would contribute $4 million in estate taxes. Why wouldn’t they be angry that they are missing out on $2 million?
Additionally, from the article:
Griggs said Project Unicorn is focusing on a data center that would create up to 70 jobs that pay an average salary of $70,000. He said that new sales taxes, home purchases and other economic activity — including data center vendors that might set up shop in the same area — would benefit the community.
According to the U.S. Census, the median household income in Columbia was only $33,729 in 1999 (which is the most recent year available). The median household income in the state of Missouri was $37,934. Because they will be stuck subsidizing the employment of people who earn twice as much as they do, individuals and families in Columbia will have less money to spend in the private sector. For this reason, a subsidy of this magnitude could well reduce economic activity in the region.