A groundbreaking ceremony is set next week for the Quality Technology Services (QTS) data center project in southwest Cedar Rapids – which, when completed, is expected to be the largest economic development project in the city’s history.
The invitation-only event is set to begin Tuesday morning, July 29, at the data center site, in the Big Cedar Industrial Center at 6200 76th Ave. SW, a 1,391-acre commercial park owned by Alliant Energy.
In the original announcement of plans for the data center, QTS officials estimated the project would comprise an investment of $750 million. However, according to the announced groundbreaking plans, the project will have an investment of $10 billion – placing it among the largest economic development projects in Iowa history.
The project, QTS says, “places Iowa as a leader in global digital infrastructure … the water-free cooling and sustainable facility will bring thousands of construction and trade jobs to the region, ensuring Iowa remains innovative and future-ready.”
When a formal development agreement for the QTS project was approved by the Cedar Rapids City Council in January, city manager Jeff Pomeranz discussed the benefits of the two-phase project for Cedar Rapids. While acknowledging the project will only bring 15 long-term employees per phase, Mr. Pomeranz said it will bring 500 or more construction jobs in its 10-year construction timeframe.
The QTS data center will return an estimated $18 million in community betterment payments to the city over a 20-year period, to be used for city improvement projects and nonprofit agencies, Mr. Pomeranz said.
Under the development agreement, QTS will construct a data center campus with a minimum of two phases. Construction of the first phase will begin within three years of the effective date of the development agreement, with the second phase beginning within three years of the completion of the first phase. Both are expected to be completed within six years.
Any additional phases, if pursued, will be completed within 25 years of the development agreement.
Under the development agreement, the city agrees to provide 20 annual rebate payments per project phase at 70% of the tax increment created from the value added by the minimum improvements from each project phase. Based upon the estimated increased value generated by the first two phases, city officials estimate that $1 billion in total property taxes could be generated over the applicable rebate periods, with an estimated $529 million being rebated back to QTS.
The agreement also provides a 20-year, 75% economic development rebate of franchise fees collected by the city through Alliant Energy for each data center constructed as part of the project.
QTS, in turn, will make up to twenty annual payments for each project phase into a community betterment fund established by the city, in an amount equal to $300,000 annually for each of the first two phases. The total amount of payments into the fund for all project phases will not exceed $18 million, according to the agreement.
The QTS data center will be built near the Google data center in southwest Cedar Rapids, which is already under construction.
Google officials said at an “investment announcement” in Cedar Rapids in May that they plan to invest an additional $7 billion across Iowa in the next two years, primarily to expand data centers in Cedar Rapids and Council Bluffs.
The Google announcement marked the first official confirmation that the tech giant is building a large-scale data center in Cedar Rapids, though construction has been evident at the site along Edgewood Road SW for several months.
A Google spokesperson confirmed after the event that the Google investment in Cedar Rapids is part of the $7 billion announcement, but added that the long-cited $576 million local investment figure “is not representative of the full Cedar Rapids project, which is well above that.”
The spokesperson declined to further specify the new Cedar Rapids project estimate, or how the $7 billion investment will be distributed across the state, but company officials said during Friday’s event that the investment will help expand the company’s cloud and artificial intelligence (AI) infrastructure.
Google has already invested $6.8 billion in Iowa since the company established its presence in the state with the opening of a Council Bluffs data center in 2007.
