Rebecca Nicole Schweitzer | Data Centers in Iowa: Real Economic Upside, Real Costs, and the Tax Questions We Can’t Ignore

If you’ve followed local development news in Iowa over the last decade, you’ve seen the same pattern play out again and again: big announcements, big buildings, big numbers. Data centers have become one of the most visible symbols of that trend.

I’m Rebecca Nicole Schweitzer, and I’m writing this from an Iowa lens because the conversation here is getting bigger and more urgent. Data centers can bring investment and revenue, but they also bring heavy infrastructure demands, complicated tax deals, and long-term questions about who benefits most.

How many data centers are already in Iowa?

The first thing to know is that Iowa isn’t “starting” a data center boom. We’re already in it.

One widely used industry directory, Data Center Map, lists 95 data centers in Iowa, with 69 in the Des Moines market and 11 around Council Bluffs, plus smaller counts in cities like Cedar Rapids and Davenport.
A separate Midwest reporting story (citing Data Center Map) puts the number higher, stating Iowa is home to 104 data centers, with 76 in the Des Moines market.

Different directories count “data centers” differently (some include colocation sites and smaller facilities; some focus on larger campuses), but the takeaway is the same: Iowa is already a major data center state.

Why Iowa keeps winning these projects

There are practical reasons companies like Iowa:

• Central location and strong fiber connectivity.

• Available land near metro areas.

• A grid that’s heavily wind-powered, which helps companies meet clean-energy goals.

• And, honestly, the part we argue about most: tax incentives.

The tax incentives: what Iowa offers (and why it matters)

Iowa’s Department of Revenue lays out specific sales and use tax incentives for eligible data centers. Depending on the program, a data center can purchase qualifying equipment (servers, cooling systems, power infrastructure, etc.) exempt from Iowa sales/use tax or receive refunds.

A few key points from the state guidance:

• For one major incentive track, eligibility can require a minimum investment of $200 million within the first six years in Iowa.

• There are also programs that allow partial refunds of sales/use tax for smaller (but still large) investments, with rules around time windows and percentages.

• Notably, one refund option specifically states it does not apply to local option sales tax.

This matters because sales tax on data center equipment is not small. Servers and electrical gear are expensive, replaced frequently, and scaled up fast. When those purchases are exempted or refunded, Iowa is making a very real trade: less tax revenue now in exchange for investment and (hopefully) long-term local benefit.

And there’s growing scrutiny of how large those tradeoffs are. A Good Jobs First analysis summarized by Axios estimated Iowa provides at least $150 million per year in data center tax credits/exemptions. Another Axios story also flagged ongoing concerns about transparency around these deals.

What “economic impact” really looks like in Iowa cities

Data centers absolutely create economic activity, but it’s important to separate the construction boom from the permanent footprint.

West Des Moines: property taxes and infrastructure (a clear upside)

West Des Moines is one of the best Iowa examples of a city trying to structure agreements so the community sees tangible benefits.

A city development article about Microsoft’s investment emphasized that infrastructure improvements (streets, sewers, water lines) would be funded through property taxes tied to the project, and that there would be no property tax abatement for that specific project.

The West Des Moines Chamber of Commerce also highlights just how significant Microsoft’s property tax payments are relative to the city’s overall levy, citing $21 million in Microsoft property taxes for FY 2024–25.

That’s the “best case” local argument for data centers: even if they don’t employ thousands of people permanently, they can add taxable value and help fund the physical improvements a growing region needs.

Altoona: water use is a big part of the debate

Altoona has become a focal point because water capacity and long-term planning questions feel more immediate.

Inside Climate News reported that Meta’s data centers in Altoona have been cited as using up to 16% of the city’s water supply (in the context of regional scrutiny around data center water demands).
That doesn’t automatically mean “too much,” but it does mean cities and utilities have to plan for a world where a single campus can function like a major industrial water user.

And the bigger issue isn’t just the gallons, it’s the pressure it creates: if a city has to expand wells, treatment capacity, storage, or distribution, who pays, and how are those costs shared over time?

Council Bluffs: massive investment, but the tax question never goes away

Council Bluffs is the long-running Iowa example of a hyperscale campus that just keeps expanding.

Google’s own Iowa page states it has invested $6.8B+ in Iowa since 2007 and cites $2.1B in economic activity generated.
Independent industry reporting also notes Google’s continued expansion commitments in Iowa.

Investment is real. The question communities keep asking is: how much public revenue did we give up to land it, and what do we get back each year that schools, public safety, and infrastructure can actually use? That’s why the transparency debate keeps resurfacing.

The two biggest “hidden” costs: power and water

Electricity demand is changing Iowa’s energy conversation

Data centers don’t just “use power,” they can reshape load forecasts for utilities.

An Iowa business publication summed up the trend bluntly: projections in Iowa call for a 30% to 60% increase in electrical load by 2030, driven in part by data centers.

And the ripple effects are showing up nationally, too: rising data center demand is one reason tech companies are pursuing big new supply deals, including nuclear. Reuters reported that Google partnered with NextEra to restart Iowa’s Duane Arnold nuclear plant, with a plan to resume operations by early 2029, backed by a 25-year power agreement.

Whether you love or hate that idea, it shows how far the energy implications go: we’re no longer talking about a single substation upgrade. We’re talking about long-term generation planning.

Water use and transparency are becoming policy issues

Here in Iowa, the shift from “concern” to “legislation” is already happening.

Axios reported that Iowa lawmakers proposed a bill (House File 2447) to create new reporting requirements for data center water use, including quarterly reports to the Iowa DNR on usage, sources, and efficiency.

That’s a big deal: it signals the state is starting to treat data center growth as something that needs ongoing measurement and rules, not just one-time economic development announcements.

My bottom line: Iowa should ask better questions, earlier

I’m not anti-data center. I’m pro-Iowa communities getting a fair deal.

If a city or the state is going to offer tax advantages, the public deserves clear answers upfront:

• What taxes are being waived (sales/use, property, both)? For how long?

• What is the annual net revenue to the community after infrastructure costs?

• What are the power and water commitments, and what happens during drought or grid stress?

• How many permanent jobs are created locally, and what’s the plan for workforce development? (This is often where the hype gets ahead of reality, nationally.)

Iowa can absolutely benefit from this industry. But “benefit” shouldn’t be measured only in press releases and construction cranes. It should be measured in transparent tax policy, protected utility affordability, and long-term planning that doesn’t push costs onto residents after the ribbon cutting.

If you’re searching “Rebecca Nicole Schweitzer Iowa” because you care about what’s happening here, my hope is that this gives you a grounded way to think about the tradeoffs. Data centers aren’t automatically good or bad, but they are powerful, and Iowa should negotiate like it.