Apple wins more than $207 million in Iowa state, Waukee City incentives to build two new data centers for $1.375 billion

“State and local officials awarded Apple Inc. more than $207 million in incentives to build a proposed data center in Waukee,” Kevin Hardy and Kim Norvell report for The Des Moines Register. “Documents released Thursday morning by the Iowa Economic Development Authority show Apple plans to spend $1.375 billion to build two ‘state-of-the-art’ data centers on 2,000 acres in Waukee. The company plans to power the buildings with 100 percent renewable energy, state records show. The project is expected to create 50 jobs, which must pay a minimum of $29.12 per hour, per the state incentive program. ”

“The economic development authority board awarded $19.65 million in investment tax credits to Apple at a specially called meeting Thursday morning. State documents say that total is ‘negotiated as the amount of sales tax refund.’ The appointed board unanimously approved the incentives,” Hardy and Norvell report. “State incentives require matches from local governments. For its part, the Waukee City Council approved a 71 percent property tax abatement over 20 years for Apple ― an incentive worth $188,239,943 state records show. The city is expected to also fund ‘significant’ infrastructure improvements for Apple’s project, though state officials said those costs are ‘to be determined.'”

Apple joins Facebook, Google and Microsoft as the latest tech giant to build roots in Iowa. Those companies have cited Iowa’s large inventory of available land, low energy costs, high portfolio of renewable energy and low risk of natural disasters as reasons for locating here,” Hardy and Norvell report. “The incentive package from the economic development authority falls in line with previous awards for Iowa data centers…”

Read more in the full article here.

MacDailyNews Take: Congratulations, Iowa and Waukee!

UPDATE: 3:59pm EDT:

SEE ALSO:
Apple’s ‘Project Morgan’ revealed – August 24, 2017
Apple to build data center in Iowa – August 23, 2017
Apple to build second renewables-powered data center in Denmark – July 10, 2017
Apple’s huge data center in Ireland hits a snag – February 3, 2016
Some residents object to Apple’s planned new €850 million data center in Ireland – June 18, 2015
Apple’s strong commitment to the environment sets a powerful example for other companies – May 15, 2015
Apple to invest €1.7 billion to build two new european data centers – February 23, 2015

18 Comments

  1. So in exchange for a guaranteed 20 year payroll of 50 jobs at $30 and hour ($62.4 million), the city council cuts a deal where the guys with $260 billion in the bank get a $190 million tax cut?

    The robber barons of our generation strike again!

    1. Agreed. I understand why jurisdictions are willing to use taxpayer money to encourage businesses to relocate in their zip code (rather than someone else’s), but it seems odd that Iowa taxpayers should be subsidizing the richest company on the planet.

      Honestly, this sort of extortion should be illegal on a local, state and national basis. Let companies pick locations based on merit, and not which municipality they can get to kick back the most cash. If this were private industry rather than the government, we’d call it organized crime. Just saying…

      1. Iowa — and the other farm lobby states — has made a HUGE fortune on the rest of us …by pressing the Federal government to require adding ethanol (form corn!) to gasoline in the USA. HUGE boondoggle. It has skewed farm grain production. And it is not very environmental when all costs are considered to: growing, fertilize — did you know most commercial fertilizer is produced from petroleum stocks …and requires a huge amount of energy (from petroleum) to produce ? ! — “transport” to corn biomass distilleries, produce ethanol, and distribute to gas refineries. Super crazy

    2. Good point. 50 jobs at 2,000 hours each per yer at $30/hour yields $60 million in compensation for employees over the 20-year deal. In effect, the other taxpayers in Iowa are paying for these jobs, not Apple.

  2. ‘Apple plans to spend $1.375 billion to build two ‘state-of-the-art’ data centers ‘

    Apple is investing nearly 1.44 billion in construction and purchasing of material. I would imagine a lot of that will be sunk into the local economy…. no?

    1. That’s assuming the labor and supplies come from this town. Chances are a lot of it — perhaps virtually ALL of it — will need to be brought in from outside. Doubt they produce IT gear in central Iowa, or that they have the technical workforce standing by to build “state-of-the-art” data centers. Yes, SOME jobs will be generated by this, and other projects, but the payback on a lot of these tax abatement schemes is often a lot longer than promised…

  3. If you read about this elsewhere that provides more info, Apple will create 550 jobs.
    ‘Apple is investing $1.3 billion into the facility, which it says will create over 550 construction and operations jobs in the Des Moines area.’

    Also…
    pple also said it will contribute up to $100 million to a newly created Public Improvement Fund dedicated to community development and infrastructure around Waukee. The fund, to be established and managed by the City of Waukee, will support the development of community projects like parks, libraries and recreational spaces, as well as infrastructure needs.’

    Everyone feel better? I say it is a pretty decent investment by the City of Waukee myself.

  4. Buster, I don’t think any of them understand. I find it fascinating that smart people either misunderstand or don’t quite comprehend this. I blame the media, who themselves don’t grasp economics, for such biased and poorly written explanations.

    This is simply a matter of Apple not paying the above amounts in Taxes. The citizens are not paying Apple anything. No taxes are being collected for distribution to Apple; just a forgoing of taxes, which are already not being collected, because there’s nothing there, at least until Apple builds it. For which they will receive a 20 year reprieve.

    The only expenditures by the community will be for infrastructure, which will be of benefit to the entire community and likely cause an influx of other business interests into the community.

    1. Sorry, but no one thinks the town is going to start cutting Apple checks. But who do you think makes up the difference when large corporations don’t pay their local property taxes, but services have to increase to deal with increased demands? The locals, of course.

      Also , some infrastructure spending will help the community. But adding high-speed data and the electrical service needed to run giant data centers only benefits the corporations that require the new infrastructure. Just extending water, sewer and electrical service to formerly rural areas can cost tens of millions of dollars — and it sounds like that’s a cost the town is planning on picking up.

      1. Who’s paying property taxes right now? How much would that be?

        Infrastructure always takes time to pay off but always, if built with proper planning, pays for itself multiple times over. The community will reap the rewards of future expansion as other businesses follow Apple into town and when the taxes take effect. Apple is also likely to be a net energy producer rather than consumer.

        Beyond all that, you seem to think that those taxes are the governments money. But its not; the government didn’t earn it, the taxpayer did, so in reality, the government (and the taxpayer) isn’t losing anything because it’s not theirs to begin with.

        1. Artimus – Beyond all that, you seem to think that government services are delivered magically, at no actual cost. When companies — any companies — move into a town, there’s a demand for services. More traffic lights, repaved roads, increased police protection, more building inspectors, etc.

          If the companies increasing the demand for the services aren’t paying property tax — the primary way cities and towns raise money — who do you think will make up the difference. Individual property owners (basically, you and me).

          The government didn’t EARN the money. But the government needs the money to provide the services businesses and individuals require. And if Apple (and other tech firms) aren’t paying for those services, guess who is?

          Big data centers are not huge employers (it’s not like they’re stamping steel into cars). And it’s not like they’re going to base thousands of high-paid engineers there, either. This is no Apple Park.

          This really isn’t complicated stuff. Tax giveaways give big breaks to corporations to move to an area, but often leave regular taxpayers holding the bag.

          1. It is a strategic inducement. Once the benefits lapse, it is doubtful Apple will get up and take their data center with them out of Iowa. The politicians believe all this will pay off in the long run.

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