The development of artificial intelligence has created massive growth in data center investment, increasingly in rural states like Montana. A large hyperscale data center would create jobs and income, but the largest public benefit would stem from property tax payments, according to a new University of Montana study.
Conducted by the Bureau of Business and Economic Research, the study looked at the potential economic impact from four data center sizes, with the assumption that the location is in Broadview – a small town 30 miles north of Billings. This is the location of Quantica Infrastructrue’s proposed Big Sky Digital Infrastructure Campus, the largest data center proposal in Montana.
The report looks at data centers ranging in size from 500 to 2,000 megawatts, with each 500-megawatt phase taking two years to construct. During each year of construction, BBER estimates that the hyperscale data center would:
- create about 500 construction jobs.
- support a total of 1,500 jobs statewide when considering indirect effects.
- increase personal income to Montanans by $93 million annually.
After construction, data center operations would support permanent jobs and make a large addition to the property tax base. The report estimates annual operation impacts of a 500 MW data center at:
- 168 direct jobs at the data center.
- 308 total jobs statewide.
- $22.3 million in personal income.
- $26 million in annual average property tax payments.
A 1,000 MW data center is estimated to support:
- 250 direct jobs at the data center.
- 452 total jobs statewide.
- $34.3 million in personal income.
- $47 million in annual average property tax payments.
Results for additional configurations of data centers and power plants are detailed in the report.
While there is substantial controversy around environmental and other potential negative community impacts, Montana would receive economic benefits from data center investment, according to Jeff Michael, BBER director.
“Property tax payments from a hyperscale data center may be the greatest source of public economic benefit in Montana,” Michael said. “While the billions of dollars invested in computing equipment in a data center does not directly support Montana employment, the value of this equipment would drive enormous property tax payments, which ultimately help fund local government operations, public education and lower property tax bills for other Montanans.”
Because most of the taxable value of data centers is rapidly depreciating computer equipment that is frequently needing to be replaced, data center property tax bills will have large variation from year-to-year, according to the report. The assessed market value of a 500 MW data center could fall from $15 billion to $5 billion over five years before its servers are replaced and the assessment rises again. In addition, changing market conditions, equipment replacement schedules and property tax policy could create additional changes over time.
This report does not address all of the questions surrounding data centers, Michael said. Its objective was to study the potential economic impacts in the unique context of the Montana economy.
To view the full study findings, visit the Bureau of Business and Economic Research website here.
