The problem: For Dan Dutcher, the hunt for land started with a phone call last year from the Greater Des Moines Partnership, which had a company that wanted 1,000 acres along Hickman Road in Waukee.

In rapidly growing Waukee, where Dutcher has been economic development director since 2013, the search for open land is still relatively simple, almost as easy as looking out the window. To help the Partnership, Dutcher and other city officials knew which direction to look: west.

Waukee is nothing if not a city of gateways running east and west, north and south. Big roads — Hickman for one example, University Avenue for another, with the wallapalooza of a development corridor called Grand Prairie Parkway opening two years ago as a third — help feed traffic to a city that is growing by three people per day, according to census numbers.

Still, nothing with the nearly unfathomable breadth that Dutcher was about to deal with had landed in the city. Dutcher has spent a lot of years watching the city grow. He is a former member of the Waukee City Council and Planning and Zoning Commission. His background is in commercial real estate. He was the project manager on Principal Life Insurance Co.’s 801 Grand building.

Getting what turned into 2,000 acres for one private development, well, that’s difficult to top.

The innovation: The deal hinges on Dutcher and a cast of Waukee city personnel. 

Dutcher has spent the last year getting a good feel for the land, the people who live there, the developers who have bought some of it in anticipation of future development, even the superintendent of an Oklahoma school district that owns 80 acres near there that were a gift.

The call last July coincided with an announcement that Microsoft Corp. planned to build its third data center complex in West Des Moines, on 140 acres west of Interstate 35 in an area of Warren and Madison counties. At one point, Waukee had been in the running for that project.

After the phone call came a meeting, also in July, in Waukee with representatives from the Iowa Economic Development Authority, the Partnership and two guys identified only as Oscar and Bob.

Oscar and Bob indicated they needed land for a data center, a network of computer servers in one spot. Initially, they were interested in 1,000 acres; the request for another 1,000 came later.

They wanted to see the land. That July day was one of the hottest of the summer, Brad Deets, the city’s development services director, recalled. The group drove out to T Avenue, parked, walked along the Raccoon River Valley Trail to give Oscar and Bob an idea of the lay of the land. Bob wanted to walk the perimeter. They were in an area of griddle-flat farmland. Bob started walking and didn’t seem to want to stop. Dutcher, who is partially bald, wasn’t wearing a hat. Oscar and Bob got their long walk. Dutcher got a sunburned pate.

The two returned to Waukee a month later with financial and real estate specialists. That’s when Dutcher learned that maybe 1,000 acres wouldn’t be enough, 2,000 would be better.

“We weren’t real high on” adding the additional land, Dutcher said.

That’s when officials at the Partnership persuaded Oscar and Bob to identify the company they worked for. Oscar Gonzalez works in data center site selection for Apple. Bob was Robert Sterling, head of worldwide data centers for Apple.

Dutcher told a handful of people at City Hall the name of the company. The 2,000 acres would lock up a large part of a 3,500-acre annexation that city officials had been piecing together since 2009, during an annexation dust-up with the city of Adel.

After preliminary meetings a year ago with Oscar and Bob, the big annexation that would add nearly four square miles along the west side of Waukee took on more urgency. (The annexation was completed in June 2017.)

“We still had a lot of questions,” Dutcher said. “We thought they (Apple) might pick off a few parcels at a time. … We wondered whether this was the best thing for the city.”

Dutcher and City Administrator Tim Moerman traveled to Apple headquarters in Cupertino, Calif.

“They laid out plans for what they wanted to do,” Dutcher said. “At that point, they were talking about 32 buildings.”

How they did it: Back in Iowa, Dutcher began meeting with landowners, telling them only that a large data center user wanted to buy their farms. He expected some pushback from folks who were concerned about all that farmground disappearing (corn appears to be the predominant crop this year). He heard no complaints. (As it turns out, Apple plans to lease farmland to tenant farmers while its development plans unfold.) In all, Apple will buy land from 21 property owners.

Apple was represented in its negotiations by Atlanta-based T5 Data Centers and its subsidiary, Bravo Real Estate LLC. Members of the Waukee City Council knew only that city staff was negotiating a deal for a development with the code name Project Morgan.

One farmer was curious to know why T5 needed so much land, Dutcher said. A Greater Des Moines commercial real estate broker, representing a client, told Dutcher that he suspected T5 was fronting for a multinational corporation. Other land buyers, hearing that a big deal was brewing in Waukee, tried to buy farmland ahead of the deal closing.

Officials across Greater Des Moines seem to have come to terms with the fact that mega deals are negotiated with companies operating behind code names. It happened during West Des Moines’ first negotiations with Microsoft Corp. Its first project, located near 88th Street and Booneville Road, was code-named Project Mountain. West Des Moines Mayor Steve Gaer often tells the story that the company’s name remained a mystery until sharp-eyed staff noticed that a laptop carried a sticker that said it was the property of Microsoft Corp.

Few officials, including Dutcher, defend negotiations with companies that reveal their identity to a relatively few officials, other than to say it is necessary to keep from driving up the cost of land. They are quick to point out that until the deals are finalized, the companies demand anonymity. 

Apple’s first proposal is for two buildings. The first, a 400,000-square-foot data center, is expected to be completed in 2020, according to Apple. The second should be finished the following year. In all, they will add up to $1.4 billion in spending. The cost includes an estimated $75 million in land acquisitions and is sweetened by 20-year $188 million in property tax abatements from the city — representing 71 percent of the property tax haul from those buildings ­— and $19 million in investment tax credits from the state of Iowa. On Aug. 24, the IEDA and the Waukee City Council approved the abatements and credits.

When the first buildings are completed, they are expected to be staffed by 50 people, the number of jobs linked to the Iowa tax credits. Estimates on the number of construction jobs created by the development range from 500 to 1,600. To Dutcher, construction employment could play out for 30 years or better.

Still, the early going of the deal was the tough part. To demonstrate that the last year of phone calls in the middle of the night — trying to match time zones in Iowa, California and, occasionally, China, can be a difficult thing — had not been in vain, both Dutcher and Moerman invited their wives to attend a news conference Aug. 24 featuring Gov. Kim Reynolds and Apple CEO Tim Cook.

“Both of them had to put up with a lot, especially after the last two or three weeks,” Dutcher said. 

Dutcher said that one day he spent six hours driving from Waukee, reaching western Nebraska, during a telephone call with Apple representatives.

“I would be out watering the lawn or walking the dog and get a phone call from Apple’s real estate representative. I would have conference calls at home with 10 or 12 people,” he said. “It was just crazy. We thought if nothing else, we should (have our wives) meet these people.”

The payoff: Among the most difficult negotiations was persuading Apple, the most valuable company in the nation, to contribute to a public improvement fund that city officials proposed. The initial thought in Waukee, based on Apple’s building schedule, was to get more money from the company in the early stages of the deal for local projects.

“It morphed into a way that we could get funds that would help us do things,” Dutcher said. “It was not something that they had done before.”

Those “things” Dutcher referred to are money for a youth sports complex that already was in the planning stage as part of the construction of a new high school, as well as streets, sidewalks, and water and sewer systems.

“We spent most of our time trying to convince them that this was a good idea,” he said. That idea jelled when “Tim Cook bought into it, a lot.”

The fund works this way: Apple will deposit $500,000 for every every building permit it takes out, with a cap of $100 million.  Some, but not all, of that money will go toward the Waukee Youth Sports Campus near the new high school. The bills will come due for the sports complex sooner than Apple dollars will flow into the public improvement fund, Dutcher said.

These days it is difficult to drive around Waukee without seeing signs of residential and commercial development along Hickman Road. The commercial development helps spread the property tax burden in a city that has experienced a boom in residential rooftops. The city’s website says there were 5,180 residents in 2000 and has reached 17,705.

Apple puts a new twist on all of that development.

“Anytime Apple does anything, it becomes international news,” Dutcher said. “That’s free advertising that we can’t get anywhere else.” 

SUBMITTED RENDERING FROM APPLE INC.