Why Iowa is giving Apple $208 million for a project that will create 50 full-time jobs

Source: By Danielle Paquette, Washington Post • Posted: Friday, August 25, 2017

The data centers will support iPhone users in North America. (Regis Duvignain/Reuters)

In exchange for nearly $208 million in state and local tax breaks, the technology giant Apple has agreed to build two new data centers on 2,000 acres of Iowa land — a project that would create just 50 permanent jobs.

This isn’t a deal about workers, though. At least, not directly.

At a time when government officials are partnering with companies to boost employment, Apple’s agreement with Iowa lawmakers highlights another reason states are courting businesses with colossal discounts: Corporate investments can help rural communities afford to grow.

Apple is a boon for Waukee, a town about 18 miles west of Des Moines, which is working to keep up with its rising population. Over the past seven years, the community has swelled from about 13,700 residents to 19,200.

Dan Dutcher, Waukee’s director of economic development, said money from Apple will be crucial for updating roads and building public amenities such as parks. The city expects it will make $2 million each year from property taxes.

“We’re a fast-growing community,” said Dutcher, who has lived there 24 years. “A lot of our capital is eaten up by expanding streets and infrastructure to keep up with growth. The tax revenue that will come in will help us continue to build that.”

Construction is expected to start this spring in Waukee, and city officials anticipate the process will spark hundreds of construction jobs. But the buildings, slated to open by 2020, will house more computer servers than humans.

That doesn’t bother Anna Bergman, a city council member who grew up in the area.

“Honestly, it’s the only way a town like ours can continue to thrive,” she said Thursday, moments before Apple chief executive Tim Cook was scheduled to visit Waukee’s city hall. “We have to update and expand our infrastructure.”

Waukee has offered Apple a tax abatement that is projected to save the company roughly $188 million over two decades. The state is pitching in an additional $19.65 million in tax credits.

Apple, meanwhile, will pour $1.3 billion into building the new properties, which will neighbor corn fields, a cattle farm and chicken pens.  The 50 permanent workers at the data centers will make a minimum of $29.12 per hour, state officials said.

The company will also fork up $100 million to a fund that bolsters Waukee’s economic development.

Cook told reporters Thursday that the data centers “will create hundreds of jobs for people in Iowa, from construction to engineering.”

Though data centers require few employees, they can inject millions into the local economy, according to a recent report from the U.S. Chamber of Commerce.

Construction on a new center employs an average of 1,688 local workers and generates $9.9 million in revenue for cities and states, the study found. After that, a typical operation supports 157 local jobs.

The country’s top technology firms plant their data centers largely in the Midwest and South. Facebook, Microsoft and Google all run centers in Texas and Iowa.

Tina Hoffman, spokeswoman for the Iowa Economic Development Authority, said building the project will bring more wealth to the community.

“With a billion plus investment, it will also create many spinoff and construction-related jobs,” she said.

Over the past 20 months, state and local officials have worked with the company to find a location for the new facilities. The data centers, which will run on wind energy from the state, will support North American customers who use iPhone functions such as iMessage and Siri.  

Iowa touts itself a prime spot for computer storage because of its lack of hurricanes, earthquakes and rolling blackouts.

“Apple’s significant investment and commitment to grow in Iowa is a clear vote of confidence in our state,” Iowa Gov. Kim Reynolds (R) said in a statement. “This announcement further solidifies Iowa as a hub where innovation and technology flourish and demonstrates this is a place where world-class companies can thrive.”