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Compass Datacenters Gets Boost From Minnesota's Tech Push

Compass Datacenters, a third party certified data center provider, is the latest IT company to benefit from a tech infrastructure push by the state of Minnesota.

Compass Datacenters, a third-party certified data center provider, is the latest IT company to benefit from a tech infrastructure push by the state of Minnesota.

The Dallas, Texas-based company is expanding into Minnesota, opening its first data center in the Minneapolis area. The expansion was made possible in part by a tax credit from the state. CEO Chris Crosby said the tax credit is "just one of the many ways" that the Minnesota government has helped make the company expansion possible.

Minnesota provides a long-term sales tax credit on the equipment and electricity needed for the data center equipment. While that isn't the only factor in the location decision, Crosby said that all other things being equal, it helps tip the scales in favor of a Minnesota data center versus another location.

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"The tax situation is definitely one of the decision criteria. It's not the only criteria but it is definitely one of them," Crosby said.

The cost savings will continue for Compass Datacenters and its clients going forward, as tax credits apply to technology refreshes.

This facility in particular will be leased in its entirety to CenturyLink, Crosby said, for co-location, cloud and managed services. As CenturyLink grows and needs additional data center capacity, Crosby said the company and its clients will continue to benefit from the tax incentives.

Crosby gave thanks to the Minnesota Department of Employment and Economic Development (DEED), which initiated the tax credit program. He gave them credit for investing in companies that are "not the most sexy" of tech companies, but are still a vibrant and growing part of the industry. Minnesota should serve as a model for other states looking to grow jobs and the economy through stimulating technology and IT infrastructure companies, he said.

"There's some neat things going on in the Minneapolis market. It doesn't get the sizzle [of Silicon Valley,] but it's got a lot more meat than the other technology plays out there," Crosby said. "I think what the state of Minnesota has done is create a model that says it is an important fabric to our economy and that it stays here and continues to grow," Crosby continued.

The Minneapolis market, in particular, offers a lot of potential opportunity for IT infrastructure and outsourcing companies, Crosby said, with close to twenty Fortune 500 companies and a strong healthcare industry. The DEED program is designed to help IT infrastructure and outsourcing companies capitalize on that opportunity, Commissioner Katie Clark Sieben of the Minnesota DEED said in a statement. With tax credits and other incentives, she said Minnesota hopes to encourage companies to make investments in infrastructure within the state. That will ultimately drive job and economic growth, she said.

"This project by Compass is a great example of how private industry and the state of Minnesota can work together to strengthen the state's economy," Clark Sieben said in her statement.

While the Minnesota's Data Center Sales Tax Incentive Program has been around for more than a year, the legislation was changed in the most recent session to lower the thresholds for square footage and investment. Since the program changes were made, DEED spokesperson Madeline Koch said there's been an "uptick in interest" with three data centers getting certification and seven more data centers completing the application process.

As for Compass Datacenters, CEO Crosby said the company is "absolutely" planning to build more data centers in the state.

"We're looking forward to a good year. It’s a great opportunity. There's so many factors driving things in the data center space," Crosby said.

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