QUINCY - Two of the most important jobs producers in Grant County - data centers and food processors - will benefit from a bill recently passed by the state Legislature.

Governor Chris Gregoire is expected to sign Engrossed Substitute Bill 6635 into law next week. Among other things, it restores sales and use tax exemptions for data centers built in rural areas and extends business and occupation tax breaks for the state's food processors.

Data centers

The bill extends tax breaks from three to eight years for data centers, depending on the type and purpose of the facility being built or, in some cases, what type of equipment is being replaced. It also includes jobs provisions dictating how many people must be hired at new facilities looking to take advantage of new incentives.

District 13 Rep. Judy Warnick, R-Moses Lake, said she worked alongside other Central Washington representatives to get the exemptions passed just before the end of the legislative session.

"I would have liked to see a longer time period, but three years is good enough for me to at least keep us involved in the search for companies who are looking to locate," she said.

Pat Boss, spokesman for the Port of Quincy, said the new legislation would serve to create more interest from technology companies looking to relocate in Quincy, Moses Lake and other areas around Grant County.

"I think we'll see more of that interest because the tax exemption will put us back on a level playing field with Oregon, which has been a big competitor," he said.

The preamble to ESB 6635 points out Washington's "intense competition" for data center construction and operation on several fronts, including Oregon, Arizona, North Dakota, Virginia and Texas.

"Unprecedented incentives are available as a result of the desire of these states to attract investments that will serve as a catalyst for additional clusters of economic activity," the bill states.

Boss said little competition existed before 2007, when companies such as Microsoft, Yahoo! and Dell began siting or expanding existing data centers in Grant County. But the county's gain led other states to pass property tax exemptions in an attempt lure data centers their way.

Oregon has since had some big successes - attracting Amazon, Apple and, more recently, Facebook - and Boss said cities like Prineville and Boardman quickly caught up with Quincy and Moses Lake.

"Once Oregon made their move to put some tax incentives in, Washington state had to battle back, so to speak," he said. "After it became apparent that we were losing some business to Oregon, we came in and did some sales tax exemptions."

The counter-strike seemed to work, with Quincy's existing data centers continuing expansion plans and new companies expressing interest until June of 2011, when a bill extending a temporary tax break for data centers died in the House during the final week of the Legislature's special session.

"Last year, when the exemptions were taken away, we all of a sudden lost out to companies like Apple and Facebook, who we believe would have looked at Grant County but went to Oregon because the tax situation last year was favoring them," Boss said. "We don't want to see these big companies go to Oregon, we'd like to have a chance to go after them and now that we've got these exemptions again we should be back in the game."

But more is left to be done Warnick cautioned, saying she's heard talk that Oregon is now looking to offer 15-year tax breaks to data centers in certain cases.

"I feel fortunate that we were able to get any type of tax break through, but I think we're going to have to take another look at it if we want to compete with other states, because they are out there offering better deals than what we have," she said.

Food processors

Just as important as the data center tax exemptions included in ESB 6635 are the bill's three-year tax breaks for food processors, Warnick said, calling the industry a "huge employer" not just for Grant County, but across the state.

Dave Zepponi, president of the Northwest Food Processors Association, said the exemption will create jobs by enticing companies to add processing lines within existing facilities and, possibly, site new plants in the state.

"More than anything, this is a signal to the food processing industry nationally to look at Washington as a good place to build their processing facilities," he said.

After seeing how processors in the past have taken advantage of similar tax incentives, some of which have been around for most of a decade, Zepponi estimates the latest bill could have a combined positive impact of about $7 million.

"In the grander scheme of state economics it's well below the radar in terms of an investment, but in terms of job creation it's huge," he said, pointing out that food processing is the only industry in the Northwest to show consistent growth throughout the economic downturn.

John Cedergreen was the owner of Quincy's Columbia Foods Incorporated until the company was sold to National Frozen Foods about three years ago.

He said the original purpose of offering tax incentives to processors was to stimulate new capital investments in the state during a period of hardship in the agriculture industry.

"In a community like Quincy at the time, before the server farms, (processing) was a major part of the economic base," he said. "In my opinion, (tax breaks) have been useful in terms of the total dollars in general fund money spent. Was it as big an aid as everybody hoped it would be? I doubt it. But it was at least a positive indication the legislature understood that we had some unique problems in agriculture and food processing that Boeing and Microsoft didn't have."

The flip side, Cedergreen said, is that companies must have the capital to invest if they're going to see much use for tax exemptions.

Zepponi said the exemptions will benefit a number of food processing companies that are currently looking to expand or relocate in Washington. On top of the tax breaks, he notes the state is well-positioned to supply international markets and is known for producing some of the highest quality produce in the world.

"This is a way to bring the production and manufacturing of food processing to the state and expand the manufacturing while exporting to other states and other markets globally," he said. "(Tax incentives) are going to create jobs, create our food manufacturing base, and allow us to send a signal to companies to grow their businesses in the state of Washington."