Microsoft Corp. was awarded up to $20 million in state economic development incentives today for the third expansion of its sprawling data center complex in West Des Moines, in an area the city calls the Grand Technology Gateway.

The software giant opened its first data center in 2011. The current expansion is on a larger scale, adding up to $677 million that the company plans to self-finance. The Iowa Economic Development Authority board approved a $15 million sales and use tax refund that will be paid during construction and a $5 million investment tax credit.

The project will create 29 new jobs, 24 of which are incented at a qualifying hourly wage of $23.12. The project also could generate more than 200 construction jobs.

“Microsoft has enjoyed a strong working relationship with the state of Iowa and West Des Moines and we are excited about our latest expansion project,” Christian Belady, general manager of Data Center Services at Microsoft, said in a news release. “The expansion of the West Des Moines data center is a win-win, bringing both new jobs to Iowa while supporting the growing demand for Microsoft’s cloud services. The new facility is designed to provide fast and reliable services to customers in the region and features our latest efficient data center thinking.”

Earlier this month, the West Des Moines City Council approved a five-year property tax rebate that could amount to $8.4 million. The rebate would be paid after the city retires debt for infrastructure improvements for the project.

The project expansion will house servers, networking equipment and office space needed to operate Microsoft's cloud services. Microsoft opened its first data center in Central Iowa in 2011 in West Des Moines and almost immediately announced an expansion.

Microsoft announced in 2008 that it planned a $600 million data center which would store and deliver its products around the world. However, the recession put those plans on hold until 2010, when the company started construction on a scaled-back $100 million center. The construction triggered millions of dollars in infrastructure improvements that included extending Grand Avenune and running fiber optic lines.

For that project, Microsoft and West Des Moines agreed to minimum property assessment of $15 million. If the valuation exceeds $18 million, the city will use tax increment financing to return the excess property taxes to Microsoft. The agreement expires in 19 years or when West Des Moines recovers its development costs. Microsoft has since expanded that initial center, located on 41 acres at South 88th Street and Grand Avenue. Click here for a related article in the Business Record.

Microsoft is not the only marquee name to enter what has become a golden circle of data center development in Greater Des Moines. Facebook Inc. announced in April that it would spend at least $300 million and possibly up to $1.5 billion for a data center in Altoona.

Greater Des Moines also is host to colocation centers that lease their servers to a range of clients. Altoona already is home to one such center and another company has announced plans for a second location. Waukee is home to another and several large local companies also maintain their own private and largely hidden from public view centers.

That growth has prompted landowners to compile parcels of land suited for the data centers, with access to large generating stations, fiber optic lines and transportation routes. Steve Bruere, one of those landowners, says it is just a matter of time before other companies find their way to the sites. Click here for a related Business Record article.