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U.S. Bank to build data center in Chaska

Minneapolis-based U.S. Bank will start building a $250 million data center in Chaska this spring to add information storage to the bank’s computer network.

The bank, whose parent company’s assets exceed $450 billion, will get at least $835,000 in grants and abatements from the state of Minnesota and Chaska to pay for the center. Officials say the public aid was worth keeping the project from going to another state.

The center will employ 18 workers when it opens in early 2018, according to a Tuesday press release from the Minnesota Department of Employment and Economic Development. The jobs will pay an average of $80,000 per year, according to city documents.

Chaska is already home to a number of data centers, including one owned by Dallas-based Stream Data Centers. Stream, which will own the future center and lease it to U.S. Bank, has a 75,675-square-foot data center at 1708 W. Creek Lane. The U.S. Bank data center will be built adjacent to that building, said Kevin Ringwald, Chaska’s planning and development director.

U.S. Bank’s data center will be housed in a 56,000-square-foot building. Chaska Mayor Mark Windschitl said it will be built on the west side of the intersection of Highway 212 and Engler Boulevard in the Clover Ridge area. It will be built on property owned by Stream, said U.S. Bank spokesman Dana Ripley. Ripley declined to identify who the general contractor will be for the project.

The center will offer enough capacity to run the bank’s full digital workload in a pinch, Jeff von Gillern, U.S. Bank’s vice chairman of technology and operations services, said in an interview Tuesday.

The bank will move operations from an older data site when the facility is complete, von Gillern said, declining to identify the site’s location for security reasons. The Chaska center will replace that older site. Data operations will then be split between the Chaska facility and a data center in Kansas.

The Chaska project is getting incentive funding from the state and the city. DEED awarded the bank $287,000 from the Job Creation Fund for the capital investment and the projected hiring; the money will be awarded once the bank fills its investment and hiring promises. The Chaska City Council on Monday approved tax abatements worth almost $548,000 over 20 years.

DEED’s Innovative Business Development Public Infrastructure program also awarded $250,000 to the city to help make improvements at the city’s West Creek substation to accommodate the data center’s power needs, Delaney said. That work is expected to cost $1.13 million.

U.S. Bank can also take sales tax exemptions on computers and servers, cooling and energy equipment, energy use and software, according to DEED’s website.

The incentives helped bring the center to Chaska, Ripley said. He said the bank sought out the best incentive package as one factor in picking Chaska as the winning location.

“Tax incentives are just part of the economic model when we’re making decisions about these projects,” he said. “It is a competitive process.”

Still, the bank was motivated to keep the center in its home state. “This is our home market so we wanted to be here,” Ripley said.

U.S. Bank’s parent company, U.S. Bancorp, claimed $454 billion in assets as of Sept. 30. Its holdings were no bar to getting state incentives, said DEED spokesman Shane Delaney. Awards for capital investment and job creation are given to companies that “meet the requirements for the funding.”

“Each application is looked at on a case-by-case basis,” he said Tuesday.

The funding was critical in keeping the data center in Minnesota, said Delaney, adding that U.S. Bank considered sites outside the state.

Windschitl said Chaska officials have known about the data center project for more than six months, but only recently learned that is will be built for U.S. Bank. It had been referred to by a code name, “Project Cofferdam,” at Chaska City Hall. (A cofferdam is a watertight enclosure built inside a body of water to permit construction or repair of a ship below the waterline, according to the Merriam-Webster dictionary.)

The tax abatement is worth it, Windschitl said, because Chaska will earn income on the power the center will use. Chaska is part of the Minnesota Municipal Power Association, the utility that supplies electricity to the city. The association turns back a portion of its revenue to its member cities.

Data centers boost that income, Windschitl said. A half-dozen centers have moved to Chaska to take advantage of what he said is a reliable power system.

“They’re ginormous power users,” he said.

More than 25 new or refurbished data centers have been completed in Minnesota since 2012, according to DEED. Total capital investment in those centers came to $1.8 billion and have brought about 2.2 million square feet of additional space to the market.

Nearly 90 percent of the state’s facilities are in the Twin Cities. The area ranks eighth among the nation’s large metro areas for the size of its data processing workforce, according to DEED. Nearly 360 data-processing, data-hosting and related businesses in the state employ about 7,000 people, Delaney said.

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