The Cedar Rapids City Council’s recent approval of agreements and urban renewal plans for two significant data center projects marks a crucial step towards fortifying the city’s economic future. These transformative projects, spearheaded by Google and Quality Technology Services (QTS), underscore the local government’s commitment to fostering large-scale economic development and embracing technological advancements. At the heart of this initiative lies the construction of the $576 million Google data center and the $750 million QTS data center, both strategically located in the Big Cedar Industrial Center. This expansive commercial park, encompassing 1,391 acres and owned by Alliant Energy, is positioned at the nexus of 76th Avenue and Edgewood Road SW.
Monumental Developments for Cedar Rapids
The city council meeting held on January 28 served as a pivotal platform for delineating the potential benefits and ramifications of these monumental data center projects. During this meeting, City Manager Jeff Pomeranz emphasized the economic significance of the QTS project. Despite offering only 15 long-term employment opportunities per phase, the construction phase is projected to create over 500 construction jobs over its 10-year duration. Pomeranz, drawing from his experience overseeing the Microsoft data center in West Des Moines, which greatly benefited the local economy, stressed the parallel benefits anticipated for Cedar Rapids.
Projected to bring in an estimated $18 million in community betterment payments to Cedar Rapids over two decades, the QTS data center is set to foster significant local improvement projects and bolster support for nonprofit agencies. The substantial investment associated with the data centers is expected to notably enhance Cedar Rapids’ tax base, marking these projects as among the most significant economic development initiatives in the city’s history. The council’s discussions and subsequent ordinances and agreements signal a proactive approach to leveraging these technological investments.
Phased Construction and Economic Impact
To maximize the economic impact, the development agreement with QTS outlines a phased approach for constructing the data center campus. The first phase of construction is scheduled to commence within three years of the agreement’s effective date, with the subsequent phase set to start within three years following the completion of the first. The first two phases are expected to conclude within six years, while any additional phases are projected to be completed within 25 years. This structured timeline aims to ensure steady progress and sustained contributions to the local economy.
As part of the agreement, the city committed to providing 20 annual rebate payments per project phase, covering 70% of the tax increment generated from value additions due to the project’s minimum improvements. Municipal estimates indicate that the initial two phases could produce $1 billion in total property taxes over the rebate periods, with approximately $529 million rebated back to QTS. Additionally, the agreement includes a 20-year, 75% rebate of franchise fees collected by Alliant Energy for the data centers, further supporting each phase. QTS, in return, is expected to contribute to a community betterment fund by making annual payments of $300,000 for the first two phases, culminating in an estimated $18 million across all phases.
Council Support and Community Development
The council’s unanimous support for the QTS project highlighted the broader community development goals associated with these initiatives. Council member Ashley Vanorny underscored the essential role of large-scale projects in sustaining community development, especially as the Iowa Legislature deliberates on property tax reform. She emphasized the need for innovative funding strategies to support quality-of-life programs, which in turn, enhance Cedar Rapids’ appeal to businesses and residents.
Vanorny also pointed to the potential for these high-tech projects to address Iowa’s “brain drain”—the outflow of educated individuals seeking advanced career opportunities elsewhere. By nurturing high-tech employment opportunities, Cedar Rapids can retain and attract skilled professionals, enriching the city’s talent pool and elevating its competitiveness in the technology sector. Such projects not only bring immediate economic benefits but also foster a conducive environment for sustained innovation and growth.
Mayor’s Endorsement and Broader Implications
The Cedar Rapids City Council recently approved agreements and urban renewal plans for two major data center projects, marking a vital step toward strengthening the city’s economic future. These transformative endeavors, driven by Google and Quality Technology Services (QTS), highlight the local government’s dedication to fostering significant economic growth and adopting technological advancements. Central to this initiative is the construction of two cutting-edge facilities: the $576 million Google data center and the $750 million QTS data center. Both centers are strategically situated in the Big Cedar Industrial Center, a sprawling commercial park that spans 1,391 acres and is owned by Alliant Energy. This industrial hub is conveniently located at the intersection of 76th Avenue and Edgewood Road SW. These projects not only promise to enhance the local economy but also position Cedar Rapids as a key player in the technology sector, attracting further investments and creating job opportunities for the community.
