CoreSite

Sep 19, 2024

Council members scrutinize tax incentive for proposed north Denver data center An image showing the scale of the proposed data center. (City documents) A proposed data center project in Elyria-Swansea that taxpayer money would partly fund has received pushback from some Denver City Council members. “This would never be able to go into Highland, this would never be able to go into Sunnyside, this would never be able to go into Wash Park, this would never be able to go into Platt Park. Things like this go into neighborhoods where you don’t have advocates and you haven’t had voices,” Councilwoman Amanda Sandoval said at a meeting last month. At the time, Sandoval and other members of a City Council committee were discussing whether to approve a deal that would provide $9 million in sales tax revenue to a planned three-building data center campus at 5050 Race St., just northeast of the National Western Center. The money would come in the form of a 50 percent rebate on the developer’s sales tax payments, which would largely be for materials purchased to build the project. The last time the city approved this type of incentive was back in 2020 for a Costco-anchored retail plaza in northeast Denver. Denver’s Department of Economic Development and Opportunity, which presented the proposal to the council, said it would generate $200 million in local tax revenue over 20 years. It would also create up to 75 new jobs. The developer of the project, CoreSite, is based in Denver and has two data centers operating here in Uptown and downtown, as well as several others around the country. The firm purchased the roughly 15-acre site along Race Street, a former concrete manufacturing facility, in late 2022 for $33.15 million, or about $50 a foot, records show. CoreSite did not respond to a request for comment. At the August meeting, the council members present voted unanimously to postpone discussion to October, instead of sending the measure to the entire council for a vote. They expressed skepticism about whether the project justified the incentive and how much it would benefit the surrounding community. “If we are giving up public tax dollars, I really truly believe that we should be getting above and beyond,” Sandoval said. “I am very concerned about a tax incentive for a company that’s using some of our most valuable resources. I am concerned about our water usage and the impact on our grid,” Councilwoman Flor Alvidrez said. Erick Bromfield, vice president of acquisitions, countered at the meeting that “there’s a misconception that data centers are a source of pollution.” “In actuality, we’re not really too different than a big office building 99 percent of the time,” Bromfield said. A substation would be constructed as part of the process so that Xcel could transmit directly to the campus. The first building constructed would consume 18 megawatts of electricity. The other two would be built “years” later, but are planned to eat up another combined 48 megawatts. Anthony Hatzenbuehler, senior vice president of operations at CoreSite, said at the meeting that 500 megawatts are enough to power “a small town.” On the data center’s “worst day,” where it is most difficult to cool the computers, it would consume up to 275,000 gallons of water. The buildings use evaporative cooling to keep the servers running, like a giant version of the swamp coolers many Denverites have in their homes. The reason for the urban location is due to CoreSite’s desire to be close to its users, Bromfield said. It would be easier to buy a bunch of land and build in the suburbs, he noted, adding that there are few places in Denver with industrial zoning on land of this size. An image showing the scale of the proposed data center. (City documents) A proposed data center project in Elyria-Swansea that taxpayer money would partly fund has received pushback from some Denver City Council members. “This would never be able to go into Highland, this would never be able to go into Sunnyside, this would never be able to go into Wash Park, this would never be able to go into Platt Park. Things like this go into neighborhoods where you don’t have advocates and you haven’t had voices,” Councilwoman Amanda Sandoval said at a meeting last month. At the time, Sandoval and other members of a City Council committee were discussing whether to approve a deal that would provide $9 million in sales tax revenue to a planned three-building data center campus at 5050 Race St., just northeast of the National Western Center. The money would come in the form of a 50 percent rebate on the developer’s sales tax payments, which would largely be for materials purchased to build the project. The last time the city approved this type of incentive was back in 2020 for a Costco-anchored retail plaza in northeast Denver. Denver’s Department of Economic Development and Opportunity, which presented the proposal to the council, said it would generate $200 million in local tax revenue over 20 years. It would also create up to 75 new jobs. The developer of the project, CoreSite, is based in Denver and has two data centers operating here in Uptown and downtown, as well as several others around the country. The firm purchased the roughly 15-acre site along Race Street, a former concrete manufacturing facility, in late 2022 for $33.15 million, or about $50 a foot, records show. CoreSite did not respond to a request for comment. At the August meeting, the council members present voted unanimously to postpone discussion to October, instead of sending the measure to the entire council for a vote. They expressed skepticism about whether the project justified the incentive and how much it would benefit the surrounding community. “If we are giving up public tax dollars, I really truly believe that we should be getting above and beyond,” Sandoval said. “I am very concerned about a tax incentive for a company that’s using some of our most valuable resources. I am concerned about our water usage and the impact on our grid,” Councilwoman Flor Alvidrez said. Erick Bromfield, vice president of acquisitions, countered at the meeting that “there’s a misconception that data centers are a source of pollution.” “In actuality, we’re not really too different than a big office building 99 percent of the time,” Bromfield said. A substation would be constructed as part of the process so that Xcel could transmit directly to the campus. The first building constructed would consume 18 megawatts of electricity. The other two would be built “years” later, but are planned to eat up another combined 48 megawatts. Anthony Hatzenbuehler, senior vice president of operations at CoreSite, said at the meeting that 500 megawatts are enough to power “a small town.” On the data center’s “worst day,” where it is most difficult to cool the computers, it would consume up to 275,000 gallons of water. The buildings use evaporative cooling to keep the servers running, like a giant version of the swamp coolers many Denverites have in their homes. The reason for the urban location is due to CoreSite’s desire to be close to its users, Bromfield said. It would be easier to buy a bunch of land and build in the suburbs, he noted, adding that there are few places in Denver with industrial zoning on land of this size. 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