The Ottumwa Courier

Opinion

May 1, 2013

Other opinions Are huge giveaways the best strategy?

State and local leaders heralded the announcement that Facebook will build a computer center in the eastern Polk County city of Altoona as evidence that Iowa is on an economic-development roll in attracting high-tech jobs and investment.

Facebook’s Altoona data center represents a major investment by any measure. It will begin with a $300 million development and will grow to an investment of perhaps $1 billion in a sprawling computer processing center that will rival a small college campus in size. It will create a massive presence in the community that is also home to Prairie Meadows Racetrack and Casino and the Adventureland amusement park.

Still, it’s fair to ask whether the direct economic benefits to the state have been oversold in light of substantial taxpayer incentives offered by the state and the city of Altoona.

The project will mean as many as 250 temporary jobs and ripple effects throughout the central Iowa economy during construction. Longer term, however, the computer server facility will demand a lot of electricity but not a lot of people: Facebook says it will employ 31 people at the Altoona center. Meanwhile, the state has agreed to give the company $18 million in tax credits and the city of Altoona will forgo all property taxes on the facility for 20 years.

The state incentives alone come out to be more than $580,000 per employee. It’s hard to calculate how much property-tax revenue Altoona will forfeit for two decades, but in the meantime, the city will be investing $1.35 million in infrastructure improvements, in part to accommodate this project, and it will have to provide police and fire protection to the facility.

There is more at stake for the state and the city than just 31 jobs, no doubt. A lot of money will be spent to keep a facility that size in operation beyond those employed by Facebook. That will ripple throughout the central Iowa economy. Also, state officials believe landing Google and now Facebook could serve as a catalyst for attracting even more high-tech employers.

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