From a data center perspective, Iowa has a lot going for it.
Its industrial electric rates are 5.71 cents per kWh, near the bottom nationally, according to U.S. data. It has experienced “minor earthquake activity” since the U.S. took control in 1803 under the Louisana Purchase.
It’s also far from hurricane trouble, but Iowa is at higher risk for tornadoes, and that may help explain Microsoft’s data center building plans.
Microsoft is building a 1.7 million-square-foot data center complex in the West Des Moines area. The project, announced last week, is on top of two other Microsoft data center projects for the area that were announced in 2008 and 2014.
In total, Microsoft is creating some 3.2 million square feet of data center space in the West Des Moines area, but in three separate locations. The combined investment is about $3.5 billion.
Microsoft may be building its facilities at different locations to minimize the risk of tornado damage, said Clyde Evans, the director of community and economic development for West Des Moines. If a tornado were to strike, “it wouldn’t get them all,” he said.
The site of the latest data center, called Project Osmium, is on 200 acres. As a point of comparison, the Pentagon, at 6.6 million square feet, is located on 34 acres, so Microsoft has room to grow.
Microsoft’s first data center was called Mountain and the second one is Alluvion.
Work on Microsoft’s 1.7 million-square-foot data center will begin next year and is scheduled to be completed, in four phases, by 2022. Data centers aren’t big direct employers, and the total number of employees for the latest data center was estimated around 130.
The number one reason for locating in the state is probably low electric rates, Evans said. Microsoft is not commenting on its data center projects, and is leaving it up to government officials to detail its plans.
In terms of incentives, Microsoft is getting a refund on the sales taxes paid on construction materials. The company isn’t getting a property tax break. Instead, the city is funding about $65 million in infrastructure improvements, such as roads and sewers, for Osmium, but this cost will be fully funded by Microsoft’s property tax payments.
The Osmium data center will generate more than $12 million a year in property taxes, but the taxes collected from all three Microsoft data center facilities, once they are built, will be about $23 million a year, government officials said.