HomeMy WebLinkAboutA029 - Staff presentation on Lightedge Data Center Project & request to negotiate a lease of the Airport PropertyITEM #:31
DEPT:ADMIN
June 23, 2026
Staff Report
REQUEST FROM LIGHTEDGE TO CONSIDER DATA CENTER DEVELOPMENT ON
AIRPORT PROPERTY
BACKGROUND:
On May 12, the City Council referred to staff a letter from Lightedge, requesting to negotiate
with City staff for the development of a new co-location data center on City-owned property at
the James Hermann Banning Ames Municipal Airport. A staff report in response to that letter
was provided to the City Council. The background of that report is duplicated below in this
document along with additional information related to the topic.
On June 16, the City Council directed that the following actions would take place with regard to
the proposed development:
1. At the June 23 City Council meeting, the Council would receive a staff
presentation regarding the Lightedge proposal. At this meeting, there would be no
public input. Staff would explain the proposal and its impacts and Lightedge may
have a representative answer questions. No decisions will be made at that
meeting.
2. A special meeting will be held on the evening of June 30 as a Council listening session
about data centers. There would be no action, but the community would be invited to
attend to speak about data centers generally or the Lightedge project specifically.
3. A memo has been requested from the City Attorney for the July 14 meeting describing
the legal means that the City has to limit the construction of data centers.
TEXT OF JUNE 16 STAFF REPORT:
On May 12, 2026, the City Council referred to staff a letter from Lightedge, requesting to
“negotiate” with City staff for the development of a new colocation data center at the James
Herman Banning Ames Municipal Airport. This type of data center is smaller regional scale
facility compared to “hyperscaler” multi-building campuses serving national and international
companies. The company is based in Des Moines. It provides data center services for clients
across a variety of industries, in facilities throughout the central portion of the country.
Lightedge is interested in constructing a facility of approximately 100,000 square feet within
Ames. Lightedge envisions initially constructing the entire building shell and approximately
10% of its ultimate buildout of servers. A second phase would expand the buildout inside the
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building to approximately 25% of the building’s ultimate server capacity. The third and final
phase would be based upon demand and see the remaining capacity inside the building
occupied by servers.
Lightedge is interested in developing the data center on an area of City controlled property
containing approximately 10.86 acres on Aviation Way, directly west of the property occupied
by the Sigler Companies. This area is currently farmed, but is shown within the 2020 Airport
Master Plan as land that could be used for non-aeronautical uses. This area would be
compatible with the type of industrial use associated with operating a data center facility.
Federal Aviation Administration (FAA) Impacts:
Although it is possible to either sell or lease Airport property for a non-aviation use, it
is preferred to enter into a long-term lease. A sale of Airport property initiates a lengthy
process of federal approval. In contrast, a long-term lease requires a less substantial approval
process. In addition, leasing airport land for non-aeronautical uses allows the land to
earn revenue for the Airport, as well as serve the interests of civil aviation by making
the Airport as self-sustaining as possible.
According to the Airport Master Plan, prior to pursuing a ground lease with a commercial
operator for non-aeronautical purposes, the City must formally request the FAA release the
land in question from its federal obligations. A land use change must also be approved by the
FAA. The proceeds derived from the land use change must be used exclusively for the benefit
of the airport. They may not be used for a non-airport purpose, and they cannot be diverted to
the airport sponsor ’s general fund or for general economic development unrelated to the
airport.
LEASE CONSIDERATIONS:
The City previously leased the land currently occupied by Sigler Companies. That lease was
entered into in 1997 and continued to 2022, when the City sold the land to Mulmac, LLC. That
lease contained provisions to ensure compliance with FAA regulations, and a rent rate
schedule on a per-acre basis that provided supplemental operating income to the Airport. City
staff believes that lease would serve as a useful model for a lease with Lightedge, if it was to
be pursued.
ELECTRIC UTILITY ISSUES:
The proposed data center would be in the Ames Municipal Electric System’s service territory.
While the data center would create new revenue for the utility, there are upfront costs and
service challenges that would need to be addressed to support the use. With unique
upgrades to serve this one use, there would be costs to Lightedge for the infrastructure
in order to not burden electric ratepayers.
Staff has been informed that it is anticipated that the first phase of the project would result in
up to 3 MW of electrical demand. The second phase would follow shortly thereafter and utilize
6 MW. The ultimate buildout of the project would demand 25 MW. The full buildout is
estimated to occur in approximately 10 years.
The proposed electrical utilization impacts several facets of the Electric Utility: 1) Electrical
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Capacity, 2) Distribution/transmission network and infrastructure, and 3) Electric rates and
charges.
ELECTRICAL CAPACITY:
As reported to the City Council at the April 21, 2026 workshop, the utility is a participant in the
Midcontinent Independent System Operator (MISO) Regional Transmission Organization.
MISO requires that a participant utility maintains enough firm electrical generating capacity to
meet 109% of the peak day demand averaged over the previous five years. Independent of
this data center project, current projections anticipate demand to grow 1% per year.
The City and Iowa State's 5-year average coincident peak demand for Planning Year 2025-26
is 148.8 MW. The “coincident peak" is the peak demand of a utility at the time the MISO region
is peaking. When the 9% reserve margin is included, plus accounting for losses, the City/ISU
combined total peak demand is measured at 166.3 MW.
The combination of Ames and ISU's generation assets and PPAs result in 165.5 MW of
generation, which is 99.5% of the required capacity. By developing the Ames Municipal
Energy Center (AMEC), another 54 MW of capacity is planned to be installed. However,
this is expected to be a replacement for the increasingly unreliable Unit 7 (33 MW), for a
net gain of 21 MW to provide for some growth capacity within the service territory.
The adopted electric rates include assumptions of the cost for providing electric capacity. In
the event that the Electric utility is unable to cover its historical peak demand with its
generating resources, the utility purchases the difference from a quarterly MISO auction
p r o ce s s. If the capacity to serve this customer from the auction is costlier than the costs
embedded in the adopted electric rates, it would be necessary for the customer to pay for the
d ifference. This arrangement would need to be further studied by the utility’s rate
consultant and then negotiated with the customer.
DISTRIBUTION/TRANSMISSION NETWORK AND INFRASTRUCTURE:
An electrical demand the size of what is proposed for the complete buildout is not able to be
served along Riverside Drive with the infrastructure currently in place. The distribution
equipment currently in place is estimated to be able to serve a demand of 3 MW.
For the ultimate buildout of the data center project, an extension of 69 kV transmission
is needed, along with a substation to step down the voltage. Three challenges exist
with providing these facilities in the proposed location:
1. There are no nearby high voltage transmission lines on the west side of the Airport. The
nearest lines are located on the east side of the Airport, along S. Duff Avenue.
2. Extending transmission lines is typically performed using overhead poles, which cannot
cross the airport or interfere with the takeoff and landing approaches. Although it is
technically possible to put transmission lines underground, this is challenging and costly.
There is currently no buried high voltage transmission infrastructure in Electric Services’
system.
3. A single transmission line to the customer does not provide a backup path in the event
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the line is damaged or must be taken out of service for maintenance. Therefore, a
double-circuit path is necessary.
Despite these challenges, staff’s preliminary opinion is that there are three potential
paths to provide transmission infrastructure to this site. The first would be to extend
overhead from the Duff Avenue 69 kV line to the eastern edge of the Airport, outside of the
restrictions for the approach and takeoff areas. The extended 69 kV lines would then be
buried under the Airport, emerging on the west side of the property where a new substation
would be constructed to serve the data center. The new 69 kV lines would be double-circuited
(six total conductors). The buried conductors would be very large and likely encased in
concrete. It may be possible to time the construction of this line with the anticipated
reconstruction of the main Airport runway, which would reduce the disturbance needed to
install the lines and associated structures.
The second option is similar to the first, but instead of extending 69 kV transmission lines
under the Airport, a substation would be built east of the Airport, and several 13.8 kV
distribution lines would be buried under the runways to connect to the new data center. This
approach relies on being able to site a substation on the east side of the Airport, either on
Airport property or on land adjacent. Although it involves potentially a greater number of
conductors to be buried under the Airport, burying 13.8 kV lines is
much more common and far less costly than burying 69 kV lines.
Alternatively, in a third approach, a new overhead line could potentially be extended south of
the Airport and up S. Riverside Road. Overhead line is significantly less costly per-mile
compared to underground transmission line. This approach suffers from several challenges,
however. It would require a greater length of line compared to cutting directly under the
Airport. Additionally, it would need to be engineered to meet the clearances of the approach
path for the main Airport runway. Finally, a significant hurdle is the fact that this line would
need to extend outside the City’s corporate limits. This path triggers a lengthy approval
process subject to the Iowa Utilities Commission’s review.
Separately from the 165.5 MW of electricity that can be produced by the Electric utility locally
(including purchased power agreements), the utility has the ability to import energy from three
separate transmission lines. Even with one line down, the capability exists to serve at least
two times the historical peak demand of the utility.
ELECTRIC RATES AND CHARGES:
Once direction is provided as to the location of the customer and the approach to
serving it, staff would rely on the Utility’s Excess Facilities Charge to ensure that the
data center alone pays for the improvements necessary to serve the site (e.g.,
transmission and distribution lines, transformers, substation, etc.). These costs would
need to be negotiated in an Excess Facilities Charge agreement.
OTHER UTILITIES/INFRASTRUCTURE:
The proposed development involves the use of a closed-loop cooling system, meaning
that substantial quantities of water are not required on a constant basis in order to cool
the equipment located within. Lightedge has told City staff that it anticipates using a
few thousand gallons of water to initially fill the cooling loop, but that subsequent
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usage will be only for typical domestic water needs. The cooling system uses a
refrigerant rather than relying on evaporation to perform the cooling.
The developer indicates that the property does not generate a substantial volume of vehicle
traffic. Fewer than 10 employees would be regularly working on site, with a total of
approximately 20 staff and visitors at any given time.
The site is zoned already as Planned Industrial (PI). Although the Zoning Ordinance does not
currently explicitly define a data center use, PI is currently a zone where such a use could be
located. Later this summer, City Council will consider a text amendment defining a data center
use and the appropriate zoning districts for such a use. Due to the location and size of this
facility, staff does not anticipate any compatibility issues.
ALTERNATIVE PROPERTIES:
Staff is aware that Lightedge is contemplating alternative properties within Ames for its project.
As noted by the Planning Director in a recent memo about 300 Airport Road (former Danfoss
operation) related to a requested change to allow industrial uses, it has been discussed as a
site for a data center as well. Currently the use is not permitted at this location by zoning.
From an electric utilities standpoint, this property is more readily servable than the Airport
property west of Sigler, since the electric transmission infrastructure would be: 1) able to
extend entirely overhead, and 2) need to be extended less than ¼ mile (as opposed to at least
one mile for the property west of Sigler. The former Danfoss property also has available
property for the siting of the necessary electrical substation.
However, this property may not be preferred by the developer due to the modifications
and/or expansion needed for it to serve its needs. From the City’s standpoint, this site
is relatively uncomplicated to serve with utilities, but its use would result in no
additional revenue to the Airport such as would exist with the property west of Sigler.
Another location being considered by the developer is property within the Dayton small-lot
industrial park (Bailey Avenue). The site is zoned General Industrial (GI), which would allow
for data centers. Additionally, the City's development agreement for the subdivision did not
limit development to specifically smaller sites and users and a data center would be
permissible.
Of the sites discussed in this report, this property is the most challenging to serve
electric a lly. The clearest path to provide electric transmission service involves obtaining
easements on private property through woodlands to the west. At least two private property
owners would need to consent to the easements necessary to extend this transmission line.
However, those properties are outside the City’s corporate limits, and therefore a lengthy
approval process involving the Iowa Utilities Commission would be triggered. In addition, this
site will not generate much-needed revenue for the Airport.
STAFF COMMENTS:
Lightedge is actively trying to facilitate a project to meet regional customers’ needs within
central Iowa. Lightedge desires to have control of a site in the next few months to proceed with
a project. The overall implementation of the project and needed infrastructure has long lead
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times and it is highly desirable to Lightedge to know if the City's property is in fact available so
they can proceed.
It is staff's opinion that, of the potential options, developing the 10-acre airport property would
be the least challenging for the utilities and the most effective option for the City Council to
direct the manner in which the facility affects others. The lease agreement would provide an
enforceable tool to establish limits regarding square footage, water consumption, noise, and
other expectations. This option also has substantial benefits to the Airport operations budget
and would create additional tax base for the City.
Staff's initial estimate for the cost to construct the electric infrastructure needed to develop at
the Airport is approximately $4 million in Phase 2, and approximately $12 million in Phase 3.
The electric infrastructure needed primarily includes underground wire, which is more reliable
and less costly to maintain compared to overhead lines. This minimizes expenses to the
Electric Utility in the long term. In addition, the electric infrastructure would be located on City
property or right-of-way, eliminating the need for acquisition of easements. Additionally, this
location allows for electric infrastructure to be improved west of the Airport, which would be
beneficial for other developments that may occur in that area in the future.
For the location at Bailey Avenue, staff's initial estimate is that serving Lightedge's Phase 2
electric needs would require approximately $8 million. This phase is also reliant on obtaining
an agreement with another utility to rebuild a portion of that utility's line, then installing Ames
Electric Services cables on that line. Phase 3 at this site requires approximately $20 million of
electric infrastructure, in addition to the acquisition of property rights and regulatory approvals
for the extension of this infrastructure. Much of the Phase 2 electric infrastructure becomes
redundant with the Phase 3 improvements. The electric lines for this site would be primarily
overhead, which results in the potential for increased maintenance costs to the Electric utility
compared to underground lines.
Additionally, as a private site, the City would not have a lease agreement at Bailey Avenue.
This results in a lessened ability for the City to place contractual obligations or limitations on
the project, such as constraints on water consumption, noise, light, etc. For either site, the
manner in which Lightedge would be charged for the electrical infrastructure, the electric
capacity, and the electric consumption would be determined through an excess facilities
agreement. It is important to note that prior to each phase, Lightedge would need to meet with
Electric staff to review electrical needs, timing, and costs to provide the requested level of
service. Electric Services will need several years to engineer, design, procure materials and
build infrastructure to accommodate phases 2 and 3.
Staff will provide graphics that illustrate the electric infrastructure approaches of the various
sites at the June 23 meeting.
It should be noted that there has not been any request for a property tax abatement or
TIF incentive for the project, nor would staff support such an incentive for the project.
This means that the new valuation of the building would generate additional property
tax revenue for all tax entities, including the City, Ames Community School district, and
the County.
Staff believes that the development challenges at the Airport site can be resolved in a timely
and cost-effective fashion to:
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1. Meet Lightedge’s needs,
2. Protect the Electric Utility’s and customers’ interests, and
3. Avoid impacts to the Water Utility’s resources (Note that as proposed the facility is
primarily air cooled it does not rely upon substantial water usage for cooling).
The City Council has identified three specific steps it wishes to take before proceeding any
further: 1) receiving a presentation regarding this report, 2) holding a listening session with
residents on June 30 to better understand the comments and concerns regarding this
prospect and data centers generally, and 3) receiving a memo report the City Attorney at the
July 14 meeting describing the legal means that the City has to limit the construction of data
centers.
Once these three actions take place, the City Council must then decide if it wishes to
further entertain the Lightedge proposal to negotiate a lease of Airport property. This
involves:
1. Authorizing staff to negotiate a lease of real estate and to facilitate any FAA or other
governmental studies or approvals necessary for the development,
2. Authorizing staff to negotiate an excess facilities charge to recoup the costs of extending
electrical infrastructure to the development, and
3. Directing staff to work with the City’s electric rate consultant to develop an appropriate
rate classification for the data center that would account for the electrical capacity
required and avoid cost impacts to other electric utility customers.
Alternatively, if the City Council elects to not proceed with a lease negotiation for City
property, then assuming Lightedge secures properly zoned private property upon
which to construct its development, staff would still proceed with the tasks identified in
items 2 and 3 above (the excess facilities agreement negotiation and the rate
classification preparation).
ATTACHMENT(S):
M. McDaniel - Request for Development.pdf
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May 7, 2025
Dear Ames City Council Members,
I am writing on behalf of Lightedge to request the opportunity to negotiate with the City of Ames
on the development of a new colocation data center at the Ames Regional Airport.
Lightedge is a Des Moines-based company with over 30 years of experience delivering secure,
reliable IT infrastructure. We serve more than 1,400 customers with a team of over 400
employees and operate data centers across Minnesota, Iowa, Nebraska, Missouri, and Texas. Our
clients span healthcare, financial services, technology, consumer packaged goods, and
manufacturing. These are industries where the stakes are high and where system reliability is not
optional.
Our business is built around the companies that anchor regional economies. We work with local
and regional enterprises in heavily regulated environments, helping them manage complex IT
infrastructure and navigate demanding audit and compliance requirements. We handle mission
critical IBM and VMware platforms, and cloud connectivity under one roof, so our clients do not
have to juggle a dozen vendor relationships to keep their operations running. The business
leaders we work with are not shopping for more technology vendors. They want fewer, local
relationships, more accountability, and a partner they can count on. That is what Lightedge
offers, and it is the kind of support the businesses investing in Ames deserve to have close by.
Ames is a natural fit for our next facility. We already serve a dozen customers in the Iowa State
University Research Park, and we have watched this community grow into a serious technology
hub. The energy infrastructure is strong, property valuations are competitive, and the city has a
clear commitment to business growth. Add in the proximity to our existing Altoona operations
and the broader Des Moines market, and the case for building here is straightforward.
The facility itself would be a single-story, slab-on-grade building designed for efficiency and
long-term sustainability. We plan to use air-cooled chillers with high-efficiency fans to manage
heat, a design that keeps noise low, eliminates daily water consumption for cooling, and uses
environmentally responsible refrigerants. We would also incorporate economizer functionality to
take advantage of Iowa's cooler temperatures and reduce energy consumption further.
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From a community standpoint, we think this project is a good deal for Ames. It generates tax
revenue without adding demand for housing, schools, or other population-driven services. More
importantly, it puts modern digital infrastructure in place for the companies already here and for
the ones considering a move to Ames. Businesses making significant investments in this city
should have the infrastructure to support them. We also plan to invest in STEM (Science,
Technology, Engineering and Mathematics) education partnerships with local schools, because
we believe a project like this should connect to the next generation of people who will work in
this industry.
We would welcome the chance to sit down with the city and relevant stakeholders to discuss this
further. We are confident this can be a lasting, productive partnership for the Ames community.
Thank you for your consideration.
Sincerely,
Rob Carter
Chief Executive Officer
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