Denver data center builder won’t pursue city tax break following concerns over water, energy use

A company planning to build a new data center in north Denver will no longer seek a $9 million tax break from the city after the proposed deal raised questions among City Council members about water and energy usage.

CoreSite will still build the data center in the Elyria-Swansea neighborhood — but without striking the tax revenue return deal with the city, company spokeswoman Megan Ruszkowski confirmed in an email Wednesday. The statement left open the possibility that the company would ask for city support for future phases of the project.

The Denver-based company had applied for the incentive with the Denver Economic Development and Opportunity (DEDO) office. It negotiated a deal that would have returned to CoreSite half of all sales and use taxes associated with the new data center, up to $9 million.

“While this will have a meaningful impact on the project’s finances, CoreSite will move forward with phase 1 of the project,” Ruszkowski said. “CoreSite believes that it will demonstrate both the community benefits and the financial/economic benefits to the city.”

DEDO representatives presented the proposal to a council committee in August and were met with more than an hour of questions about the project’s impacts on the environment and the surrounding community. Council members questioned whether the city should incentivize a project that would use large quantities of water and power amid efforts to improve the efficiency of the city’s water and power use.

Once completed, the facility’s power needs would max out at between 65 and 75 megawatts — enough energy to power about 82,500 homes. The facility would also draw a maximum of 805,000 gallons of water a day to cool its systems. That’s the same as 16,100 Denverites’ average daily indoor water use.

The facility’s average daily water and power use, however, is expected to be far below the maximums, company representatives previously said. A typical CoreSite data center draws less than 50% of full capacity and has never had customers use a facility’s full capacity.

Council members on the Business, Arts, Workforce, Climate and Aviation Services Committee twice postponed voting on the deal, which needed the approval of the full council.

CoreSite will now focus on finalizing the site development plan, securing the building permit and building the first phase of the project, Ruszkowski said. The company bought the property at 5050 Race St., near the National Western Center, in 2022.

The new data center will be built in three phases. The first phase will be a 97,000-square-foot building with a maximum energy use of 18 megawatts. Once completed, the 15-acre campus will host three buildings.

CoreSite will continue to work with the city and the neighborhood on the project, Ruszkowski said. The company operates 28 data centers across the U.S., including two facilities in downtown Denver.

“CoreSite also believes the market will only get more competitive as time passes and anticipates city support will be crucial to future phases of development,” she said.

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