116 3rd St SE
Cedar Rapids, Iowa 52401
State panel signs off on Cedar Rapids’ $56 million tax break for Google data center
Iowa Economic Development Authority board OKs incentives for $576M project
Marissa Payne
Mar. 22, 2024 10:26 am, Updated: Mar. 22, 2024 8:27 pm
The Iowa Economic Development Authority board on Friday signed off on Cedar Rapids’ $56 million local tax break over 20 years to support internet giant Google’s potential new $576 million data center in Cedar Rapids’ Big Cedar Industrial Center.
The project — the largest investment from an economic development project in city history and among the largest in state history — could build one or more data centers along 76th Avenue SW and Edgewood Road SW in the industrial park to power Google’s internet-related products. It represents an expansion for the multinational company and a milestone for the city and state of Iowa in supporting large-scale tech investments.
“We think it’s going to make a real contribution to the city of Cedar Rapids, the region and the state,” City Manager Jeff Pomeranz told the board’s due diligence committee, which met before the full board.
In 2022, Google initially proposed a $600 million data center in Council Bluffs. It became a $5 billion complex with another expansion, the Des Moines Register reported.
Google’s 2022 economic impact report states that in that year alone, it spurred $1.45 billion of economic activity for thousands of Iowa businesses and other entities.
The project’s advancement adds to tremendous growth in southwest Cedar Rapids as the construction of massive warehouses and other industrial facilities has taken off in the area around Interstate 380 and The Eastern Iowa Airport, which offers development-ready land and easy access to transit.
“As demand for Google’s services increases, our capacity must grow to meet this demand,” a Google spokesperson said in a statement Thursday. “We are always planning for future capacity needs and are currently evaluating the potential for a data center site in the Cedar Rapids area. These are complex projects and development of the site is subject to a variety of factors including but not limited to competitive energy rates along with a sustainable and sufficient energy supply.”
Google plans to build on an 890-acre portion of the Big Cedar site, Iowa's first certified mega site, which offers hundreds of acres of development-ready land. All 1,391 acres are controlled by Alliant Energy.
Alliant, the City of Cedar Rapids, the Cedar Rapids Metro Economic Alliance, ITC Midwest and the IEDA collaborated on this project.
“We're very confident this project will move forward with the assistance from the state that we received today,” Pomeranz told The Gazette. “This is an important step and we're hopeful based on the work we've been doing with the company that there will be a Google data center in Cedar Rapids.”
Google incentives include 20-year, 70 percent tax exemption
Under the deal with the city of Cedar Rapids, Google will receive a 20-year, 70 percent tax exemption so long as it meets employment thresholds. The tax break would start once the first data center is complete.
The development would create at least 31 new full-time jobs that pay at or above the high-quality wage rate, which starts at $26.20 per hour and ramps up to at least $31.44 by the end of the contract performance period. Construction is slated to start within three years of the city-approved development agreement taking effect.
City staff anticipate the company will employ more than 31 people, with potentially hundreds more jobs created. There would likely be hundreds of long-term construction jobs created from seven or eight years of construction, in addition to the permanent jobs at the data center.
For comparison, Google says it has created jobs for more than 900 people on its Council Bluffs data center campus. That includes full-time and external supplier roles such as computer technicians, engineers, food services, maintenance and security.
Other components of the deal with the city include:
- Google would give annual community betterment payments to the city “to increase economic development activities, including growth of amenities and infrastructure.” There would be yearly payments of $400,000 per data center for 15 years with a maximum of $6 million per data center — $36 million total.
- Google would still pay utilities, but the city also would provide a monthly credit of $1.30 per cubic feet of gray wastewater discharge. Per-unit credit would escalate each year at 2.5 percent, up to 57 percent for per-unit sewer discharge rate.
“I know how hard something like this is to get and getting economic development going with all the competition that’s there, so I want to commend the team for making this happen,” IEDA board member Pankaj Monga, from Cedar Rapids, said.
A 2017 report by the U.S. Chamber Technology Engagement Center found that construction of a typical data center “employs 1,688 local workers, provides $77.7 million in wages for those workers, produces $243.5 million in output along the local economy’s supply chain, and generates $9.9 million in revenue for state and local governments.” That same data center then “supports 157 local jobs paying $7.8 million in wages, injecting $32.5 million into the local economy, and generating $1.1 million in revenue to state and local governments.”
Mayor Tiffany O’Donnell said Thursday the city already has received interest from other companies that have heard of a data center coming to Cedar Rapids.
“Progress begets more progress, so in terms of economic development, this is a tremendous signal that our city is moving in an exciting direction,” O’Donnell said.
Comments: (319) 398-8494; marissa.payne@thegazette.com