Microsoft project is big data boom for West Des Moines
A new billion-dollar data center planned for West Des Moines may not create hundreds of jobs, but it will infuse a flood of new tax money into the city's budget — a benefit city leaders hope will spur future growth in the area.
"This is a staggering amount of property tax dollars," West Des Moines Mayor Steve Gaer told the Register in an interview.
On Friday, it was officially revealed that Microsoft is the company behind Project Alluvion — a $1.13 billion data center that will be built on the southern nine holes of Willow Creek Golf Course in the southeast corner of West Des Moines. Combined with its current data center off Grand Avenue, Microsoft has plans to invest almost $2 billion in West Des Moines, one of its biggest data center projects in the nation.
At a news conference Friday in West Des Moines, Gov. Terry Branstad touted the two Microsoft data centers as the most expensive investment in state history. It narrowly tops a $1.9 billion investment by MidAmerican Energy for wind turbines in five locations.
As part of its investment, Microsoft has agreed to create at least $255 million in taxable value in West Des Moines. That value, city officials said, would translate to about $8 million annually — or about 14 percent of the city's annual operating budget — in property taxes the city would collect from Microsoft once the data center is fully built out in five to seven years.
State adds $20.3M in sales tax rebate
Microsoft was first officially unveiled as the company behind Alluvion at an Iowa Economic Development Authority board meeting, where the board approved a $20.3 million sales tax rebate for the company.
Those state incentives come on top of the $18 million in incentives already promised by West Des Moines. City officials said their incentives to Microsoft could rise to about $87 million during the course of the project.
State documents place the city's local match at about $53 million for infrastructure improvements.
To receive that state money, Microsoft has to create 84 jobs by full build-out, 66 of which must have a wage of $24.32 an hour. That wage is 120 percent of Polk County's qualifying wage threshold.
Site work is expected to be finished by October, according to state documents. Construction for the four-phase project is then expected to be complete by December 2020.
Microsoft, based in Redmond, Wash., plans to take up 154 acres, which includes the southern portion of Willow Creek Golf Course. Under the deal, the golf course would lose nine of its 36 holes, but city officials said Willow Creek is looking to expand elsewhere to make up for the lost land.
In total, Microsoft has plans to construct a 1.16-million-square-foot data center on the land west of Iowa Highway 28 between Pine Avenue and Iowa Highway 5. For comparison, that is about the size of 20 football fields.
Microsoft has been in negotiations to purchase the land for the last few months. Project Alluvion was originally scheduled to come before the state board in March, but the request was postponed when a property agreement could not be finalized.
No Microsoft representatives attended Friday's meeting or returned calls for comment.
Creating a corridor for development
Having two large data centers on either side of the city's borders — one on the west and one on the east — has city officials hopeful they can create a new corridor for development.
Under its agreement with the city, Microsoft would pay back the costs of the infrastructure improvements in less than 20 years with the tax dollars it generates in an urban renewal district, according to city staff, who plan to cover all costs with a tax-increment financing district.
Specific work would likely include building or improving five roads near Veterans Parkway and Highway 5, redirecting power lines, expanding water lines and storage and installing fiber optic conduits.
The TIF revenue from the new data center site is also expected to pay for the construction of a new public safety facility in the area, but those plans are further down the line.
City staff described the undeveloped southeast corner of West Des Moines as a "chicken and egg" scenario: Developers have been waiting for infrastructure while the city has waited years for a major project to justify, and ultimately fund through tax valuation, the necessary work.
Clyde Evans, the city's economic development director, said Microsoft intends to connect its two data centers via fiber optic cables and other points of contact.
A massive data center, Evans said, is the perfect solution to entice development in West Des Moines' southeast corner, which is already mapped out for light-industrial and commercial use.
"These infrastructure improvements will certainly pave the way for substantial economic development in the corridor in the future," Evans said Friday.
Connecting Microsoft's two sites would create a 6- to 7-mile-long path from the city's west side to its eastern border with Des Moines.
The connection would also significantly expand West Des Moines' vision for a Grand Technology Gateway. The evolving plan has already designated a technology corridor that runs west of Interstate 35 at Microsoft's current site to DMACC West on Grand Avenue.
With the two data centers connected, the Grand Technology Gateway would now potentially stretch several miles east of I-35.
"This is an opportunity to create probably one of the most fiber-rich areas in the state along the Highway 5 corridor," Evans said in an earlier interview. "That's an extreme benefit for the city of West Des Moines."
Register reporter Joel Aschbrenner contributed to this report.
Facebook's 'Project Catapult' data center
LOCATION: Altoona
LAND AREA: 192 acres
TOTAL EXPECTED COST: $1 billion
JOBS: 31
STATE INCENTIVES: $18 million in tax credits
LOCAL INCENTIVES: A 20-year property tax abatement
Google's data center
LOCATION: Council Bluffs
LAND AREA: 1,000 acres
TOTAL EXPECTED COST: $1.5 billion
JOBS: About 130
STATE INCENTIVES: $18 million in tax credits
Microsoft's 'Project Mountain' data center
LOCATION: West Des Moines
LAND AREA:
42 acres
TOTAL EXPECTED COST: About $900 million
JOBS: 89
STATE INCENTIVES: $20.7 million in tax credits
Microsoft's 'Project Alluvion' data center
LOCATION: West Des Moines
LAND AREA: 154 acres
TOTAL EXPECTED COST: $1.126 billion
JOBS: 84
STATE INCENTIVES: $20.3 million sales tax rebate
LOCAL INCENTIVES: Up to $87 million estimated