Data Centers in Colorado: Boon or Burden?

As Colorado positions itself to attract more tech infrastructure, state lawmakers are debating Senate Bill 280 — a proposal that would offer major tax incentives to data center developers. Supporters see it as a path to economic growth and innovation. Critics warn it could shift public costs to private gain, while straining the state’s resources and infrastructure.

So… is SB 280 a bold economic strategy, or a risky long-term bet?

Let’s break it down.

What Is SB 280?

Senate Bill 280 is a legislative proposal designed to bring more data centers to Colorado by offering significant tax breaks and utility-related incentives.

Here’s what the bill includes:

• 100% sales and use tax exemption for data center equipment like servers, cooling systems, and power infrastructure
• Minimum $250 million investment and at least 25 full-time jobs required for base-level certification
• Additional income tax credits for companies that invest in grid enhancements or build in rural areas
• Mandatory energy efficiency and renewable benchmarks for qualifying projects
• Benefits can last up to 20 years, but companies must submit annual compliance reports to remain eligible

📌 Read the full bill summary

Why Supporters Say It’s Worth It

Supporters of SB 280 argue that Colorado needs to be competitive with states like Virginia, which has attracted over $9 billion in data center investment using similar incentives.

Key points they highlight:

• Attract Big Tech Investment: Supporters say SB 280 would help Colorado compete with states like Virginia by drawing in major data center projects from companies like Google, Meta, and Microsoft.
• Generate Billions in Development: Virginia’s similar incentives led to over $9 billion in private investment—expanding local economies and infrastructure.
• Create High-Volume Construction Jobs: A single data center can create 1,000–1,500 jobs during construction, delivering a temporary but impactful boost to the local labor market.
• Grow Property Tax Revenues: Even with fewer long-term jobs, data centers contribute heavily to local tax bases, especially in communities transitioning away from coal or manufacturing.
• Keep Colorado Competitive: Proponents argue that without tax breaks, Colorado will continue to lose large-scale data center deals to more incentive-friendly states.

📌 Source: Colorado Sun

Why Critics Are Pushing Back

Critics of the bill raise concerns about long-term trade-offs for taxpayers, ratepayers, and the environment.

Here’s what they’re worried about:

• Few Long-Term Jobs: Most employment comes during construction. After completion, a typical data center only supports about 50 full-time positions—many of them contract-based.
• Massive Energy Demand: Data centers run 24/7 and require huge amounts of electricity. Critics worry this could slow Colorado’s progress toward its clean energy goals.
• High Water Usage: Cooling servers takes millions of gallons of water per year—a major concern in a drought-prone state like Colorado.
• Risk of Higher Utility Bills: Without strong guardrails, the cost of upgrading power infrastructure could fall on everyday ratepayers—not the tech companies.
• Budget Trade-Offs: With a $1.2B state budget shortfall, opponents question whether tax breaks for billion-dollar firms should come before funding for local services.

📌 Sources: Water Education Colorado, Utility Dive

What This Means for Industrial Real Estate

If passed, SB 280 could reshape Colorado’s industrial landscape, especially for warehouse owners, tenants, and investors.

Here’s how:

• More Demand for Power-Ready Space: Data centers need serious infrastructure—think high power, cooling, and fiber access. That demand could spill over into adjacent warehouse and flex markets.
• Rising Rents in Key Submarkets: Areas like Aurora, Commerce City, and the DIA corridor may see rent pressure as tech firms and logistics users compete for well-located industrial space.
• New Life for Underutilized Sites: Older or vacant industrial properties near substations or fiber lines could become valuable again—especially if they can be retrofitted or repositioned.
• Infrastructure Could Be a Differentiator: Access to robust utilities may become as important as location, especially for tenants in cold storage, manufacturing, or e-commerce.
• Regional Investment Opportunity: If SB 280 passes, rural areas could benefit from enhanced tax credits—making land near power and fiber infrastructure more attractive to developers.

The Big Question

Should Colorado use public incentives to attract private tech infrastructure?

Some say it’s a smart play to grow long-term tax revenue and bring big tech to the state. Others worry about giving away too much — without enough accountability or benefit to the public.

Questions worth asking:

• Who benefits most from this bill — local communities or large corporations?
• Should taxpayers and ratepayers help fund the infrastructure needed to support these developments?
• What protections should be in place to ensure responsible water, energy, and job commitments?

Want to Learn More?

At the Warehouse Hotline, we’re closely tracking SB 280 and what it could mean for Colorado’s industrial market. If you’re a warehouse owner, investor, or tenant looking to better understand how this bill might impact your next move—