Panel OKs tax breaks for Las Vegas company to expand

By Richard N. Velotta

Tuesday, Oct. 19, 2010 | 5:25 p.m.

The Nevada Commission on Economic Development has approved a tax-abatement incentive package for a Las Vegas-based company that is investing $120 million to expand its local operation.

The commission unanimously approved an $11.1 million tax abatement plan for the Switch Communications Group, which operates a collocation and data protection center in Las Vegas and will expand from two fully operational sections to six.

Switch qualified for the plan under an economic development program that measures the long-term benefit of a company to the state against short-term abatements and deferrals.

Under terms of the agreement, sales tax will be abated to 2 percent for a total of $7.3 million over the term, a modified business tax of 50 percent for four years for a total of $12,348 and a $3.8 million for abatement over 10 years for personal property taxes.

The company did not seek tax deferral or training grant incentives.

Switch provides bandwidth and connectivity services for Fortune 1000 corporations, government agencies and other businesses. The company’s Nevada Network Access Point is a major hub for broadband and technology. Among the company’s clients are Google, Intel, HP and Dell.

The company’s expansion eventually will lead to 18 new jobs in addition to the 100 already employed.

Switch’s Super NAP facility was built in Las Vegas because Southern Nevada does not encounter as many natural disasters – earthquakes, hurricanes, tornados and flooding – as other locations experience.

Switch easily met the state’s statutory requirements to qualify for the tax abatement incentive package with the creation of 18 new jobs (86 percent more than the statutory requirement of 10), average wages of $23 an hour (16 percent more than the requirement of $19.82) and capital investment of $120.1 million (1,573 percent more than the $7.2 million required by statute).

Rhonda Garlick, executive vice president of accounting and administration for Switch, said in addition to paying good wages, the company provides 100 percent health care coverage for its employees.

She also noted that Switch’s presence has led to a number of secondary jobs in Southern Nevada from support companies that use Switch’s facilities. Building the expansion also is expected to add 200 short-term construction jobs.

Executives for Switch clients often visit Las Vegas, Garlick said, generating business for resorts, restaurants and transportation companies of Southern Nevada.

In other business, the Economic Development Commission approved tax-deferral and abatement incentive packages for Brightpoint North America L.P., a new company building in Washoe County; Synvasive Technology, which is expanding its presence in Washoe County; and Scougal Rubber Corp., which is building a new operation in Storey County.

Synvasive manufactures medical products while Scougal, which also was approved for training grant incentives, has developed rubber connectors for the joints in bridges.