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As Google plans $1B expansion in Council Bluffs, Internet giant says it's 'thrilled' by partnership with city, state

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Thousands of construction workers are adding three new stories onto a single-story building at Google’s site in Council Bluffs. The building will house thousands of computer servers for the company.

DES MOINES — The ever-expanding nature of the Internet is paying off big for Google, and leading to the expansion of the company’s data center operations in Council Bluffs.

Google Inc. is planning another $1 billion expansion at its facility on the city’s south side. It won approval Friday for an additional $19.8 million in Iowa economic development incentives from the Iowa Economic Development Authority.

The Council Bluffs City Council is scheduled to vote on the deal Monday, and Mayor Matt Walsh said he expects approval.

The project would bring Google’s investment in the area to $2.5 billion and the total in High Quality Jobs incentives — refunded sales taxes — from the state to $36.6 million.

The company said use of its search engine, e-mail, video and other services prompted the expansion. Every time someone sends an e-mail, searches for information online or creates a YouTube video, it creates data. That data has to go somewhere; among those places are Google’s Council Bluffs data centers.

“We’re thrilled by the partnership we’ve had with the city and state,” said Andrew Silvestri, public policy and government relations manager for Google. “The ease of doing business in Iowa is one of the reasons why we are there.”

Google has two data centers in Council Bluffs, one near Lake Manawa that opened in 2009 and the Southlands facility that opened in 2013. The added construction will be at Southlands.

At the site, passers-by can see the development, including three additional stories being added to an already-existing single-story building that will hold thousands of computer servers.

Gov. Terry Branstad said in a statement that Google’s latest investment “is yet another indicator of Iowa’s emerging leadership position in welcoming tech giants.” He said Google has been “an exemplary corporate citizen” that continually reinvests in its community.

In order to get the state incentives, Google pledged to create 35 additional skilled technical jobs, up from 35 it has pledged in the past for previous incentives, although there are more than 70 Google employees in Council Bluffs that would be considered technically skilled, the company says.

Google in the Bluffs now has more than 300 employees and full-time contractors, a number that does not include “thousands” of construction jobs at the site, the number of which fluctuates, said Chris Russell, the company’s data center operations manager in Council Bluffs.

Since 2007, the state of Iowa has awarded nearly $71 million in tax incentives to Google, Microsoft and Yahoo for various data centers built in the state.

At nearly $523,000 in tax incentives for every qualified job, Greg LeRoy says the math for the amended Google award doesn’t add up.

“I would go out on a limb and say Iowa can never break even on a deal costing more than half a million dollars a job,” said LeRoy, executive director of Good Jobs First, a Washington, D.C.-based economic development policy research organization. “The people working in that facility are never going to pay a net excess of a half million dollars in taxes over their lifetime above and beyond the costs they’ll create using (public services).”

Google gets other benefits as well. For example, in an agreement with the city, it has to pay only 20 percent of what would be its normal property tax bill for its first five years at Southlands.

In Friday’s meeting, no IEDA board members publicly questioned Google’s application.

IEDA director Debi Durham said there is value to Iowa being recognized as having the infrastructure to support high-tech projects coupled with “long and wide economic ripples” that more than account for the state’s incentives associated with this kind of continued development.

“The incentive plan only requires a certain number of jobs, but we know there are many more jobs on these complexes than what we’ve incentivized for,” Durham said

Since 2009, the company has awarded $825,000 in grants to Iowa nonprofits and schools. In 2011, Google partnered with the city to provide free public Wi-Fi in parts of Council Bluffs.

Google plans an additional 24 months to complete the next phase of construction, which it expects to continue until 2019. The company is not forecasting a specific date it would be done developing its Council Bluffs data center sites.

Contact the writer: 402-444-1534, cole.epley@owh.com

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