Iowa Presses Microsoft on Data Center

In a sign of the increasingly political nature of data center site location, Iowa Gov. Chet Culver is making a pilgrimmage to Redmond, Washington today to try and jump-start Microsoft's stalled $500 million project in the state. Microsoft announced in January that it was postponing construction of the project in West Des Moines as part of the company’s cost containment moves.

Culver said he will urge Microsoft to move forward with its plans. "I know that Microsoft recognizes what we in Iowa have known all along: Our state is a great place for business because of our workforce and quality of life," Culver said in a news release.

The West Des Moines project was announced in August, but Microsoft never outlined a firm construction timetable, and rumors began to circulate that the project was on hold in October. That's when Microsoft said it would reduce its investment in its data center expansion, citing the economic slowdown and the need to cut expenses. Microsoft CFO Chris Liddell said the company will reduce its projected capital expenditures for 2008 by $300 million, all of which will come from planned data center spending.

Will Culver's visit change Microsoft's plans? That's not likely. Microsoft's decision was part of a much broader cost-cutting initiative in which several thousand jobs were eliminated. The company presumably still has plenty of capacity in its San Antonio data center, which opened last fall.

Culver probably knows this. But the trip is a political no-brainer for the governor, who will be seen as going the extra mile to advocate for the local project and the jobs it would create.

The West Des Moines project was slated to create 50 to 75 jobs paying $70,000 a year, and take 12 to 18 months to complete once construction began. Microsoft bought land for the facility southwest of Booneville Road and Xavier Place in West Des Moines near Interstate 35. The Iowa Department of Transportation Commission approved a state grant of $3.4 million in December to cover half the cost of road improvements to provide access to the site. The city will provide local matching funds.