West Des Moines will spend between $10 million and $12 million on road construction surrounding Microsoft Corp.’s planned $500 million data center, said City Manager Jeff Pomeranz.

In return, Microsoft is guaranteeing $50 million in property taxes for West Des Moines during the next 14 years, which the city will use to pay off bonds used to finance the infrastructure. Anything left over – an estimated $2.5 million to $2.8 million – will be given back to the company in the form of a tax rebate, paid out over a period of five years.

“They pay taxes and we finance the infrastructure,” Pomeranz said.

Iowa topped the transnational corporation’s list of possible locations following a stringent site selection process, said Michael Manos, the general manager of Microsoft’s data services operations.

At a press conference Thursday, Manos said the tax incentives were “helpful” in the final decision. In addition to tax incentives, Manos said the “quality of students that Iowa is producing” also was a draw to the software giant.

Referring to the strength of Des Moines Area Community College’s information technology program, Casey Niemann, a Microsoft account executive, said the close proximity of the school’s West campus to the site also appealed to the software giant.

Design details are being finalized for the facility, which will represent the “future” of how Microsoft will design and operate its data centers, Manos said, adding that the new model will drive “significantly better energy efficiency.”

Though the design of what Manos calls a “next-generation facility” should significantly reduce the amount of water needed – mainly to cool thousands of computers – the Iowa data center will still use hundreds of millions of gallons each year, according to a release by the West Des Moines Water Works.

Manos said Microsoft is interested in sustainable building practices, but must address the concerns regarding the considerable amount of electricity needed to power the machines. The company has plans, however, to “change how (it does) do many things.”

Microsoft’s Boulder, Colo., data center is powered entirely by its own wind farm. Though Manos declined to comment on whether the company would build a wind farm to power its West Des Moines data center, he said Microsoft is “always looking for possibilities.”

The planned facility will be Microsoft’s fifth data center in the United States, and the company hasn’t ruled out future projects in Iowa. Once under way, construction will last 12 to 18 months.