It makes good sense for Nebraska and Iowa to pursue data centers for economic development. The latest validation of that strategy came this week with two big announcements.
Facebook said it will build a $1 billion data center in a Des Moines suburb. On the same day, Google announced that it will make a $400 million expansion at its Council Bluffs data center. That will bring the company's total investment at the site since 2009 to $1.5 billion.
Although Nebraska officials were disappointed that Facebook didn't select a prospective site in Kearney for the $1 billion project, Nebraskans needn't be discouraged. Many data centers (huge banks of state-of-the-art computing equipment) will be in the offing in the years ahead, and Nebraska and Iowa are in strongly competitive positions nationally to attract such facilities.
This is why a 2010 report on Nebraska's economic prospects highlighted data centers as a niche the state needed to pursue as a growth opportunity.
Data center investments in Omaha, Council Bluffs and Sarpy County have been made by major corporations such as Google, Yahoo, Cabela's, PayPal, First Data, ConAgra Foods, Union Pacific, CoSentry and First National Bank. There no doubt will be more to come.
Legislative debate in Lincoln last year indicated that at least 1,000 such data centers are expected to be built over the next decade.
These facilities generate a considerable tax base, and although individual projects don't produce huge job numbers, the jobs they do produce are well-paying. The $200 million data center announced by Fidelity Investments last year for Papillion, for example, involves around 35 jobs.
The Midlands region competes for such sites because of our local strengths: low energy costs, well-constructed economic incentives, a positive business climate and effective, coordinated work by economic development officials in recruiting such facilities.
These were the factors cited last year by Fidelity Investments when it announced its plans for the Papillion site. That was the first project taking advantage of a 2012 state law that created an additional tier of Nebraska Advantage incentives.
Facebook indicated that Iowa's promotion of wind energy was one of the factors that led the company to choose the Altoona site. Nebraska has been diversifying its energy offerings, through wind energy legislation from a few years ago and from actions by the state's public utilities, and lawmakers again are debating the wind energy issue in detail this session.
Although it's understandable that officials in Kearney would feel disappointed that they didn't land the Facebook project, the site that Kearney has prepared remains a competitive one and can be marketed for future data centers. After all, that's why Kearney was in the running for so long for the Facebook facility.
As Kearney Mayor Stan Clouse said, “We've had people telling us it's just a matter of time because it's a great site.”
When it comes to data center recruitment, it's wise for the Midlands to stay in the hunt. This region is well positioned to bag plenty more.