Developers propose $576 million data center project in Cedar Rapids

A $576 million data center project in southwest Cedar Rapids, now in the preliminary stages of planning and development, would become one of the largest economic development projects in the city’s history if it comes to fruition. According to an item on the Cedar Rapids City Council’s consent agenda for Feb. 13, a public hearing is being proposed for Feb. 27 to consider a development agreement with Heaviside LLC for the development of “one or more” data centers in the Big Cedar Industrial Center, near the intersection of 76th Avenue and Edgewood Road SW. The project would comprise a minimum capital investment of $576 million, according to the agenda item. While Heaviside LLC is listed as the project’s developer, there’s currently no indication who would own or operate the Cedar Rapids data centers. Construction of the project would begin within three years of the effective date of the development agreement, according to city documents. The project would qualify for economic incentives under the city’s Local Match Economic Development Program, which authorizes city sponsorship of the unnamed company’s application for financial incentives under the state of Iowa’s High-Quality Jobs program. The project would include the addition of at least 31 full-time employment positions, all at or above the high-quality wage rate, which was $24.20 per hour in Linn County as of 2022. If approved by the city, the proposed development agreement would include a number of financial incentives, including:

• A 20-year, 70% tax exemption, available through the High Quality Jobs program, subject to meeting employment thresholds and an approved high-quality jobs application. Under the agreement, if the high-quality jobs application is not approved, the city would work in good faith to provide comparable Tax Increment Financing (TIF) rebates in lieu of the tax exemption. The earliest the high-quality jobs application could be reviewed by the Iowa Economic Development Authority board is at its meeting March 22.
• A 20-year, 75% economic development rebate of franchise fees collected by the city through the electrical provider for each data center constructed.
• A Gray Water Discharge Credit, under which the city would provide a monthly credit of $1.30 per hundred cubic feet of gray wastewater discharge, with a per-unit credit that would escalate annually at 2.5%, up to a maximum of 57% per unit sewer discharge rate.

The city and the developer would also agree to create a community betterment fund, under which the company would provide annual community betterment payments to the city "to increase economic development activities, including growth of amenities and infrastructure." The company would make annual payments of $400,000 per data center for a period of 15 years, with a maximum of $6 million per data center and a $36 million total maximum. And the agreement would incorporate a number of off-site improvements, under which the company would provide necessary easements to serve the development site, including the extension of utilities. The developer would also cooperate with the city on any potential Revitalize Iowa’s Sound Economy (RISE) Grant, if the city were eligible and applied for the program. The project would comprise the first development in the Big Cedar Industrial Center, Iowa’s largest industrial site at 1,391 acres, which includes an 890-acre parcel designated as the state’s only certified Mega-Site. The entire site is controlled by Alliant Energy, and the majority of the property has been rezoned in recent months from light industrial to general industrial, a move to make the site more attractive to potential large-scale industrial developers.