$800 million data center has merit

davenport data center
The 328 acre site of a proposed high-tech data center in the Eastern Iowa Industrial Center. CREDIT CITY OF DAVENPORT

There is much discussion about the merits of massive data centers like the $800 million data center for Meta, formerly known as Facebook, that was recently announced to be built in Davenport.

This announcement comes on the heels of a $576 million data center for Google that is being proposed in Cedar Rapids.

The concerns are that these data centers use too much electricity and water; they don’t create very many permanent jobs; the existing construction industry will be negatively impacted by workers, especially electricians, migrating to these data centers from other projects; and the social media giants like Meta and Google don’t need financial incentives since they are extremely profitable right now.

All of those concerns have merit, but we feel that the long-term benefits of these data centers, especially with the increase in property taxes and the construction impact, will benefit Davenport and the entire Quad Cities region. Not to mention that this positions Iowa well as Artificial Intelligence and big data continue to rapidly grow.

The Iowa Economic Development Authority (IEDA) board granted the City of Davenport the ability to utilize the High Quality Jobs (HQJ) program provision for value-added property tax exemption for this project. The project represents an $800 million capital investment and is expected to create 35 jobs incentivized at a qualifying wage of $28.76 per hour. 

Bruce Berger, Davenport’s director of community and economic development, previously told the QCBJ that the construction project alone would generate an economic impact of more than $1 billion in the region, and operationally, an annual economic impact of $78.6 million is projected. 

The new data center also would bring the estimated assessed value of the proposed location – which now stands at $958,000 – to $420 million. In addition, under this plan, the City of Davenport would benefit from retaining the remaining 40% of property taxes on the completed facility.

For example, it’s expected to generate $5.3 million each year in property taxes for Davenport and a total of $107 million over 20 years. Broken down further, the annual estimated property tax generated that will go to local taxing districts would include $2.5 million for the city, $900,000 for Scott County and $1.7 million for Davenport schools, according to a recent QCBJ news report.

Had this been a proposed $800 million manufacturing facility with thousands of permanent jobs, we certainly would have been supportive, but the reality is that adding that many permanent jobs to an already tight labor market would have been extremely problematic for the region. This data center is the best case economic scenario while the region looks to improve its workforce base.

We hope that this data center project comes to fruition and helps the region continue to grow and accommodate these rapidly expanding industries.

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