IA to give Apple $208M in tax breaks for $1.3B data center

Dive Brief:

Apple plans to build a $1.3 billion data center in Waukee, IA, and receive nearly $208 million in state and local tax incentives in return, Reuters reported.
The data center is expected to create 50 permanent jobs in the growing rural community with workers making at least $29.12 per hour. The tech company will also donate $100 million to a Waukee economic development fund.
Local officials have been struggling to fund the infrastructure improvements necessary to accommodate the influx of new residents and have said that investment from Apple is expected to fuel economic expansion there.

Dive Insight:

Major tech employers like Google and Facebook have already sunk billions of dollars into new data center projects throughout Iowa, according to a 2016 report from The Des Moines Register. The state and local governments have offered up millions in property, sales and use tax breaks to those companies in exchange for meeting hiring goals.

Land and utilities in Iowa, as well as in other Midwestern states, are typically less expensive than in other parts of the country, and the potential for operation-interrupting natural disasters are not as likely.

Data company Switch cited those factors when it announced plans to build a $5 billion facility in Grand Rapids, MI. Switch, the developer of the SuperNAP datacenter ecosystem, said it chose Michigan in large part because of the low threat of natural disasters that could damage its physical infrastructure.

In late 2015, the state legislature sweetened the Switch deal by exempting the company and other Michigan data centers — as well as their co-located clients — from sales and use taxes on any data center equipment for 20 years. That's as long as the industry there, Switch included, added 400 jobs by 2022 and 1,000 jobs by 2026. In March, the company announced that construction on the first phase of its 1.8-million-square-foot Grand Rapids complex was complete.

Globally, however, the Midwest is still pushing to gain share in the data center market. In real estate and research company JLL's 2017 data center market outlook report, the only Midwest city to earn a mention was Chicago. JLL found that land and energy costs there were becoming more expensive, which could lead tech firms to consider campus-style locations in outlying suburbs.