Faced with the possibility that property taxes will apply to their equipment, data centers are mobilizing to fight what they see as a game-changer for their industry.
Posted at 11:00am
“Data center equipment should enjoy the same real estate tax exemption as that of the manufacturing sector,” explains Bahador Zabihiyan, partner and director of the Enovum data center.
The entire data center industry has been in flux since the Court of Appeals ruled in favor of the City of Montreal, which applies property taxes to certain data center equipment, increasing the value of the buildings they house, and their municipal taxes.
The rise in operating costs resulting from the ruling threatens not only data centers but also all companies using digital and cloud services, the Conseil du patronat and the Fédération des chambres de commerce du Québec recently denounced.
Two buildings housing Ubisoft’s and the iWeb group’s data centers are at the heart of the Court of Appeal’s decision, which authorizes the City of Montreal to add fans and other cooling equipment for servers to the property value of the buildings they host. located .
The Supreme Court may eventually rule on the case, but in the meantime, the ruling is sending shockwaves through the growing data center industry.
Industry giants with a presence in Quebec have appointed a McCarthy Tétrault lawyer, Nicolas Cloutier, to take their case to the Quebec government. Compass, Cologix, Vantage, Qscale, Equinix and eStruxture want the Municipal Taxes Act be modified to exempt their equipment from the real estate tax, as is the case in the manufacturing sector.
Their agent, Nicolas Rioux, is the lawyer who successfully defended Uber’s case before the Quebec Department of Transportation.
Enovum, which has a data center in Quebec and is eager to expand, has decided to advocate for the government itself.
We took risks, we invest and we create jobs. We should benefit from the same exemption as the manufacturing industry.
Bahador Zabihiyan, Partner and Director of Enovum Data Centers
Enovum focuses on video game and artificial intelligence customers, whose need for digital services is growing rapidly. “Legislation and taxes must adapt to a changing economy, which is more focused on the digital sector and less on the manufacturing sector. †
This is also the view of representatives of companies in all industries, who fear that broadening the application of property taxes will hurt the productivity of the Quebec economy.
The ruling makes it possible to put municipal funding on the backs of companies, while Quebec already lags behind Ontario in terms of productivity and investment, estimates Karl Blackburn, president of the Conseil du patronat.
The scope of the Court of Appeal’s decision has yet to be clarified, but it could mean increased operating costs for all types of businesses, from dental centers to supermarkets.
eStruxture, the digital services company of which the Caisse is the dépôt shareholder, counts media, content creators and financial service providers among its customers.
Since 2016, the government of Quebec and Hydro-Quebec have been actively promoting low-cost renewable electricity to attract data centers to Quebec. This campaign was successful, attracting about 50 of these companies, including the largest in the industry such as Google and Amazon Web Services.
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- From $1.54 to $11.03 per square foot
- Example of an increase in the land value of a building in the Montreal area leased to a data center, taking into account certain equipment installed by the tenant.
Case supplied by a company