What would you do for a $1.2 billion datacenter?

Huge numbers make datacenter projects seem really attractive, but who is actually benefiting from that spending.
Written by David Chernicoff, Contributor

With the potential of a $1,200,000,000 datacenter project coning to their state, lawmakers in Iowa and Nebraska are going head to head in legislating tax breaks and other economic incentives to land this mega-datacenter project known only as "Project Edge."  All of the parties involved in this project are working under strict confidentiality guidelines, and other than some negative information making the rounds (the datacenter client is not Microsoft, Google, or IBM), the story is primarily how hard the two states are working to win the contract out from under their competitor.

These economic development stories where states pass some special legislation making it attractive for a company to build a datacenter in their location are fairly common news these days. The story is basically that the states tend to offer short-term economic benefits to the datacenter builder with the hopes of getting their share of the economic development in the long term from property taxes and such after the term the legislated incentives is over, and in the short-term from taxes on the earnings of local workers and suppliers in the build stage of the project.

As tracking the datacenter industry is part of my job I read these news stories almost weekly, usually in the form of a small blurb in the online version of the local newspaper, and had been following this story, waiting for something definite to happen, but surprisingly this inter-state battle has made the national news, with CBS News and CNN picking up on what looks to be a very large investment by someone in one of these two states.

But even the national press isn't asking the hard questions; how much, exactly, are these states willing to concede in tax revenues, and spend in infrastructure updates to attract these datacenter construction projects.  And can they point to any successful projects, so far, in places that have made these concessions and gotten the payback they expect, which is usually some sort of technology renaissance happening in a rural community with additional technology vendors opening shop there.

The amount of money spent on building and equipping a datacenter can be mind-numbingly huge to areas that are not used to seeing those kinds of dollars spent on technology projects. But there still seems to be little understanding in these areas as to how the money is actually spent and the impact of that spending, or rather the lack thereof, on the local community.

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