Facebook receives tax incentive to build fifth Altoona, Iowa, data center

Dive Brief:

Facebook announced earlier this week that it plans to invest $400 million in its fifth data center in Altoona, Iowa.
As part of the deal approving the nearly 1 million-square-foot facility, city officials agreed to waive property taxes for 20 years. In exchange, Facebook will pay the city $3 per square foot — or about $3 million — per year for 20 years, a discount of about 40% compared to paying property taxes over that time span, City Administrator Jeff Mark told the Des Moines Register. The social media giant will also pay for the construction of a new $500,000 pump station that will enhance water pressure for the data center and nearby retail stores.
Another 1 million-square-foot Facebook data center is also currently under construction in Altoona. Upon completion, the projects will bring the company’s total building space there to 2.5 million square feet.

Dive Insight:

Facebook’s up-and-coming presence in Altoona reflects the wider trend of large West Coast-based tech firms launching massive construction projects in small U.S. cities and suburbs. Pat Lynch, senior managing director for CBRE Group's data center solutions division, told Construction Dive earlier this year that locations like these often offer big companies reasonable land costs and incentive packages, which make them more attractive for data center sites.

For instance, a $750 million Facebook data center in Huntsville, Alabama, recently received a $6.6 million incentive package, including $2 million in waived permit fees and $4.6 million of infrastructure work around the project. The company is also on track to receive a $150 million property tax break for its 970,000-square-foot data center in Eagle Mountain, Utah.

Google, too, has found small cities welcoming to its new construction projects, opening data centers in places like Council Bluffs, Iowa, and Lenoir, North Carolina. In all, the firm plans $13 billion in new investments in data centers and offices across the U.S. over the next few years, a move that would grow the company’s footprint to 24 states and create 10,000 new construction jobs, the Washington Post reported.

Apple also has sought multimillion-dollar tax giveaways for its projects, most recently $25 million in taxpayer-funded grants for its new campus in Austin, Texas, its largest facility by number of employees after its headquarters in Cupertino, California.

Tax breaks like these help stimulate local economies by creating construction and other jobs, experts say. Nevertheless, some projects, like the recently canceled Amazon HQ2 in New York City, have faced backlash from residents who say they bring disruption, environmental woes and a higher cost of living.