How Google’s plan to build a data center created a rift between local governments in eastern Iowa

Google's proposal to construct a 545-acre hyperscale data center in eastern Iowa has sparked a significant disagreement between the city of Palo and Linn County. Initially, Google negotiated with Linn County for months, leading the county to draft and unanimously approve its first-ever data center ordinance in February. This ordinance includes specific zoning rules for data centers, mandates water studies for large projects, and requires special agreements for water use and economic development, largely influenced by resident concerns about water quality and resource consumption. Linn County District 2 Supervisor Sami Scheetz emphasized the ordinance's role in protecting residents and ensuring developers meet high standards. However, Google abruptly shifted its strategy, informing Palo that it wished to build within the city limits through annexation, thereby avoiding Linn County's new regulations. This move was met with skepticism by Palo residents, who suspected Google was seeking a more favorable deal, and created a "rift" between the two jurisdictions. Palo Mayor Bryan Busch maintained that the city was unaware of Google's annexation plans until late January, stating that initial discussions with Google revolved around the project's location in unincorporated county land and municipal water services. Public records reveal that Google had engaged in extensive negotiations with Linn County, including offering "community betterment" payments, job creation, and a water balance study. However, the county deemed this insufficient, countering with significantly higher demands. Google's final offer to the county, which did not address the county's water-related ordinance provisions, was ultimately rejected by Google in favor of pursuing annexation with Palo. This decision left the $500,000 water balance study unfunded. Palo stands to gain millions in additional annual tax revenue if the data center is annexed, potentially collecting over $1 million per building annually, compared to $872,000 for the county if the project remained in its jurisdiction. Palo is now actively drafting its own data center ordinance, drawing inspiration from Linn County's work while also incorporating specific local resident feedback. The timeline for the ordinance's finalization and the potential annexation process remains unclear, as Google has not responded to requests for comment.