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Just for all the inevitable comments about "the government should have just given X people Y dollars instead..." Iowa isn't "giving money." It does not have th

Just for all the inevitable comments about "the government should have just given X people Y dollars instead..." Iowa isn't "giving money." It does not have the additional revenue before Apple arrives, thus, it can't give anyone those revenues. All it can do is tell Apple you have to give us, Iowa, less than the state next door... now whether this is a good economic plan I disagree. I'd rather have a thousand small businesses be guaranteed no regulatory or other fees for the first five years than a corporate overlord be granted no requirement to pass on the enormous amount of wealth they extract from the land and environment but that's another discussion...

vacri 9y ago
So Iowa doesn't have to deal with providing services to the site? Land management services, emergency services, water, sewerage, etc?
- jessriedel 9y ago
  Why would Iowa agree to an amount of revenue that doesn't even cover the cost of additional services?
  - vacri 9y ago
    I'm just countering the idea that there is no cost to the state.
    - EpicEng 9y ago
      It's only a cost if the expenses are larger than the revenue...
      - vacri 9y ago
        You're missing my point. Painting a $20M donation as pure profit is misleading if it ends up costing 99% of that to get the donation. Yes, in absolute terms, there was a net benefit, but in your own words: don't pretend you don't understand the difference.
        EpicEng 9y ago
        With a made up number of 99% that seems like a good argument. What's the real number?
        vacri 9y ago
        I never claimed to have their P&Ls, I was just pointing out that that $20M is not 'pure profit'. Exactly how much spoon-feeding do you want?
  - rtpg 9y ago
    because the decision makers on this deal are not those who have to manage the costs down the row? Pretty classic principle-agent problem
    - jessriedel 9y ago
      I mean, that applies to all local government actions. And in any case, we don't need to speculate. You can just total up these costs.
      - macintux 9y ago
        Totaling up the public infrastructure costs of one specific user of resources is non-trivial. What are the additional road repair costs? How much extra money and time do local firefighters spend to be trained on how to deal with data centers?
        jessriedel 9y ago
        There is lots and lots of data on this.
  - yequalsx 9y ago
    Because they hope that the jobs created will provide enough of a boost to the economy to offset the cost of providing services for the land. Sometimes this is done in the hopes of encouraging other companies to set up shop in the area. Sometimes the Governor feels like he/she needs to reward a region for past votes or favors. Sometimes soft bribes are the reason.
- kenjackson 9y ago
  They are paying taxes still on it. Just the same as farmland. So the question is does the data center services cost more to the state?
birken 9y ago
Iowa is "giving money". If there is a greater than 0% chance Apple would have built on that site anyways, then Iowa is directly losing that money. And it seems based on the local advantages of the Iowa location there was a non-zero (and potentially high) chance Apple would have picked the site anyways. And even if Iowa isn't "giving money", somebody is. Maybe without the Iowa deal, Apple would have located in Kansas or Illinois and now those states are losing out on the money. And fine, maybe you say the deal wouldn't happen at all unless some state gave this deal; the deal is a requirement for the datacenter to exist. OK then. So why would we make the deal? Aren't the point of these regulations to incentivize land use in a way that we as society want? If we as a society decide farmland is incentivized over datacenters (by having lower taxes for that land use), then so be it. Why is putting a datacenter on the land assumed to be "good" when our tax laws say the opposite?
- eridius 9y ago
  > If there is a greater than 0% chance Apple would have built on that site anyways, then Iowa is directly losing that money. That doesn't make sense. Perhaps you meant to say if there's 100% chance Apple would have built there anyway?
  - tpxl 9y ago
    It does make sense if you take the expected value of the money Iowa would get, ie probability * money = money gained. So if the probability was greater than 0, the expected value of the tax gain was greater than 0, which Iowa now lost.
    - eridius 9y ago
      That would only be true if that tax gain was literally the only benefit of having Apple pick Iowa (and if that were true, nobody would ever offer the tax breaks because there'd be no point in having the company pick your state anymore).
      - birken 9y ago
bb88 9y ago
> Iowa isn't "giving money." It does not have the additional revenue before Apple arrives, thus, it can't give anyone those revenues. That's incorrect. The question is does the apple datacenter consume more of the state's resources in dollars than the state gets back in taxes? Services provided by the state and county include regulatory, legal, educational, emergency and safety, transportation, etc. Then there's the cost of the environment, e.g. do they cause an increase in pollution due to their increased use of electricity? So while I would say that it's unlikely they would cost more than the taxes they would pay, it's not guaranteed either. So yes, they could in fact be "giving money" away.

vacri 9y ago

So Iowa doesn't have to deal with providing services to the site? Land management services, emergency services, water, sewerage, etc?

jessriedel 9y ago
Why would Iowa agree to an amount of revenue that doesn't even cover the cost of additional services?
- vacri 9y ago
  I'm just countering the idea that there is no cost to the state.
  - EpicEng 9y ago
    It's only a cost if the expenses are larger than the revenue...
    - vacri 9y ago
      You're missing my point. Painting a $20M donation as pure profit is misleading if it ends up costing 99% of that to get the donation. Yes, in absolute terms, there was a net benefit, but in your own words: don't pretend you don't understand the difference.
      - EpicEng 9y ago
        With a made up number of 99% that seems like a good argument. What's the real number?
        vacri 9y ago
        I never claimed to have their P&Ls, I was just pointing out that that $20M is not 'pure profit'. Exactly how much spoon-feeding do you want?
- rtpg 9y ago
  because the decision makers on this deal are not those who have to manage the costs down the row? Pretty classic principle-agent problem
  - jessriedel 9y ago
    I mean, that applies to all local government actions. And in any case, we don't need to speculate. You can just total up these costs.
    - macintux 9y ago
      Totaling up the public infrastructure costs of one specific user of resources is non-trivial. What are the additional road repair costs? How much extra money and time do local firefighters spend to be trained on how to deal with data centers?
      - jessriedel 9y ago
        There is lots and lots of data on this.
- yequalsx 9y ago
  Because they hope that the jobs created will provide enough of a boost to the economy to offset the cost of providing services for the land. Sometimes this is done in the hopes of encouraging other companies to set up shop in the area. Sometimes the Governor feels like he/she needs to reward a region for past votes or favors. Sometimes soft bribes are the reason.
kenjackson 9y ago
They are paying taxes still on it. Just the same as farmland. So the question is does the data center services cost more to the state?

birken 9y ago

Iowa is "giving money". If there is a greater than 0% chance Apple would have built on that site anyways, then Iowa is directly losing that money. And it seems based on the local advantages of the Iowa location there was a non-zero (and potentially high) chance Apple would have picked the site anyways. And even if Iowa isn't "giving money", somebody is. Maybe without the Iowa deal, Apple would have located in Kansas or Illinois and now those states are losing out on the money. And fine, maybe you say the deal wouldn't happen at all unless some state gave this deal; the deal is a requirement for the datacenter to exist. OK then. So why would we make the deal? Aren't the point of these regulations to incentivize land use in a way that we as society want? If we as a society decide farmland is incentivized over datacenters (by having lower taxes for that land use), then so be it. Why is putting a datacenter on the land assumed to be "good" when our tax laws say the opposite?

eridius 9y ago
> If there is a greater than 0% chance Apple would have built on that site anyways, then Iowa is directly losing that money. That doesn't make sense. Perhaps you meant to say if there's 100% chance Apple would have built there anyway?
- tpxl 9y ago
  It does make sense if you take the expected value of the money Iowa would get, ie probability * money = money gained. So if the probability was greater than 0, the expected value of the tax gain was greater than 0, which Iowa now lost.
  - eridius 9y ago
    That would only be true if that tax gain was literally the only benefit of having Apple pick Iowa (and if that were true, nobody would ever offer the tax breaks because there'd be no point in having the company pick your state anymore).
    - birken 9y ago

bb88 9y ago

> Iowa isn't "giving money." It does not have the additional revenue before Apple arrives, thus, it can't give anyone those revenues. That's incorrect. The question is does the apple datacenter consume more of the state's resources in dollars than the state gets back in taxes? Services provided by the state and county include regulatory, legal, educational, emergency and safety, transportation, etc. Then there's the cost of the environment, e.g. do they cause an increase in pollution due to their increased use of electricity? So while I would say that it's unlikely they would cost more than the taxes they would pay, it's not guaranteed either. So yes, they could in fact be "giving money" away.