Ambitious development looms for Chaska

An ambitious development is on the horizon in Chaska, a payoff city officials have been looking for since the Hwy. 212 expansion linking Chaska and Eden Prairie gave Carver County its first-ever access to a freeway.

Up to 10 office and industrial buildings and a grocery store will go up in what is now a vast plot of farmland in the southwest corner of town.

"The northeast corner of our city is almost all industrial, but that was mostly built in the 1980s and 1990s, and it's basically full," said Kevin Ringwald, Chaska's director of planning and development. "We need to add some more opportunities to add new jobs."

The city expects to begin work next year on roads and utilities for the 60-acre Chaska Creek Business Park to be developed by The Opus Group at the corner of Hwy. 212 and County Road 10. And Chaska has actively marketed itself as an ideal spot for data centers that can bolster tax rolls and draw other businesses — a strategy that's also been employed by other metro communities such as Shakopee, Eagan and Woodbury.

The development "gives the southwest region a place that really doesn't exist currently, not just for Chaska, but for Chanhassen, Carver, Victoria," Ringwald said. "It gives people in those towns a place where they could work, hopefully closer to where they live."

A retail complex that would include the supermarket also is planned for the site and will be developed by Wayzata-based H. J. Development Inc. City Administrator Matt Podhrasky said a recent market study concluded Chaska could use another grocery store, especially to serve people traveling from the west on Hwy. 212.

When fully developed, the business park alone should boost the land's taxable value from about $2 million to about $100 million, according to Matt Rauenhorst, senior director of real estate development for Minnetonka-based Opus.

Rauenhorst said his firm had been looking for sites along the Hwy. 212 corridor for about four years, not long after the highway project was completed. While the freeway spurred their interest, Chaska's eager courtship of data centers is a "bonus," Rauenhorst said.

Although some large companies have their own data centers, other businesses use them to outsource their data storage needs, saving the cost of housing and maintaining their own equipment. Some companies use data centers to back up their in-house data storage operations.

Data centers have the kind of high-paying jobs cities crave. "The head count may not be high, but it's a pretty sophisticated workforce and an attractive demographic for any community," said Dan Peterson, a commercial broker who specializes in tech-oriented real estate at Colliers International. The employees at a new data center coming to Eagan will earn an average of $32.50 an hour.

Data centers also can help draw other employers to an area to be customers or simply take advantage of the infrastructure that comes with them, including large amounts of fiber-optic line.

Chaska has emerged as one of the metro area's most active recruiters of data centers, with four developed in the last few years. One is a $100 million facility built by UnitedHealth Group for its own needs. The others are third-party operators used by multiple tenants. The city also is marketing two other potential data center sites.

The city has used financial incentives to land data centers, like a $1.4 million tax abatement for Dallas-based Stream Data Centers, which built a facility that opened this summer.

Chaska owns and runs its own power company, which can reap substantial revenues from data centers because they use huge amounts of electricity. "It's a really big deal to for an electric utility to have a data center as a customer," Podhrasky said. The arrangement enables the city to offer discounts to big energy users, another lure for data centers.

Chaska isn't the only community offering public financing to land a data center. In June, Eagan approved financial incentives — an unusual step for the city — for DataBank Holdings of Dallas to redevelop part of an industrial building into a data center. Shakopee approved a tax abatement for Compass Datacenters, but the Dallas company withdrew its request for incentives after cutting the number of jobs the project would create.

In addition to financial help at the local level, data centers can qualify for state sales-tax breaks on equipment, software and energy use.

Samantha DiMaggio, Shakopee economic development coordinator, said that before Shutterfly Inc. decided to build a $60 million facility in the city, it checked with Compass to make sure it was coming to town. The California-based Internet firm wasn't planning to be a customer, but DiMaggio said it may have wanted to be nearby because data centers have great security measures.

"I tell my taxpayers data centers pay taxes and don't cost us a ton because they have their own security," she said. "They're probably watching their entire neighborhood."

Ringwald said there's a variety of reasons companies want to locate near a data center. "It really helps us sell this area to other high-tech employers."

Susan Feyder • 612-673-1723