Iowa has become home to data centers or server farms for some of the biggest players in the tech industry. Why do companies like Google, Facebook and Microsoft choose a state in the middle of the country to store their data?
John Roth is a data center facilities manager for OneNeck IT Solutions in Cedar Falls says one advantage of securing data in Iowa is you don’t have to worry about earthquakes, hurricanes and other natural disasters. “You want to build where you can avoid that and have your facility maintain its up time. If you look at maps, Iowa has very low risk,” Roth says. He says tornadoes are about the only thing you have to worry about and you can build to mitigate that risk.
There are now large data facilities in operation or under construction in Council Bluffs, Altoona and West Des Moines. Iowa State University economist Dave Swenson says Iowa’s cheap energy prices are a major draw for the facilities. “These companies consume an unbelievable amount of electricity. They’re monsters. They eat electrify. That’s how they run, they require massive amounts of power,” Swenson says.
Iowa Economic Development Authority director, Debi Durham, says Iowa’s cheap electricity is due in part to the fact the state doesn’t apply sales taxes to the utility. Additionally, she says Iowa electric companies keep costs low with the investment in new renewable energy, and the diversity of their portfolios. “And then you have really strong investor owned utilities here, and then you couple those with the rural electric coops with are also strong in economic development, and then the third player is the municipalities, and then to be very competitive themselves,” Durham says.
ISU economist Swenson says Iowa’s attractive tax incentives sealed the deal for the companies locating the operations here. “Iowa is much more liberal in its range of state and local government incentives that it affords businesses,”Swenson says. “Other states, usually, usually are much more circumspect both in the amounts, the duration, the scope and the type.” Swenson says it’s doubtful whether places like Altoona and West Des Moines get back what they give up in property taxes.
However, Debi Durham says the state isn’t going into these agreements blindly. She insists Iowa will get the jobs Google, Facebook and Microsoft promise. “We actually hold all of our clients accountable –so there’s a day of reckoning down the road. And if they don’t meet those numbers then we exercise claw-backs. Which means you have to pay back incentives, or you don’t get to take, if you haven’t taken them,”Durham says.
When Microsoft announced West Des Moines as the site of its newest datacenter, many in the company’s home state of Washington were not pleased. Some speculated Iowa’s generous tax incentives tipped the scales, despite several logistical advantages of being in the center of the country. Both Microsoft and Facebook declined to be interviewed for this story.
By Sarah Boden Iowa Public Radio