Site selector: Niobrara Energy Park’s development hampered by startup costs, low incentives

WELD COUNTY — The Niobrara Energy Park was supposed to be home to the biggest microgrid-powered data center in the world.
Harrison Resource Corp. president Craig Harrison described the 662-acre site as the “Fort Knox” of energy security, using an on-site natural gas and renewable energy sources with nearby power producers to provide as much as 400 megawatts of electricity to a major technology company.
Today, it’s still vacant, and the only public show of interest toward it is from NCMC Inc., the caretaker group behind North Colorado Medical Center. The company bought the entire park for $4.9 million earlier this month, or just more than $7,400 per acre, in what its executive director Jeff Carlson described as a real estate investment.
The future of the property remains a mystery. Carlson declined to say what NCMC’s board plans to do with the property other than it won’t build a hospital on the remote site, and Harrison told BizWest that he couldn’t speak about the property due to a non-disclosure agreement.
So if the Niobrara Energy Park has those built-in advantages, why has it remained barren in the four years since it hit the market?
Weld County Commissioner Sean Conway said he’s held multiple discussions with Harrison in the years after the commission granted Niobrara a special industrial zoning designation in 2011, and he believes that Colorado simply isn’t willing to provide enough incentives to compete against its neighbors.
That zoning designation won’t change now that NCMC owns the land.
Harrison told BizWest in 2013 that initial buildout of the park would cost $4.3 billion between setting up servers, energy components and the data center itself.
“It’s challenging in the sense because of its remoteness; it’s not near a major population center, and to develop the infrastructure, the roads, the backup systems, all of these things to make a viable business park, those costs are enormous,” Conway said.
Michael Rareshide, a partner at Dallas-based Site Selection Group focusing on data centers, told BizWest Colorado is close enough to California and has the tech industry already in place to entice a data center, and the Niobrara’s built-in renewable energy sources are a big plus for major tech companies.
That steep startup cost combined with Colorado’s relative lack of incentive support is a tough ask for any company, even a Fortune 500 tech player, Rareshide said, especially when cities in states like Utah, Arizona and Texas have more generous incentive packages up front.
“You’ve handicapped the large-scale data center guys already, because of a lot of these incentives [other states] give tend to be like, ‘We’ll abate your sales tax,’ and if the companies are going to spend $200 million, that’s millions of dollars of sales taxes they can save, just because they’re buying servers,” he said. “Why hurt the companies that way?”
Any company building a data center is looking to build and run it as efficiently as possible, and that will likely take any site in Colorado out of the running for a data center if it’s up against a high-incentive state, Rareshide said.
“Besides power costs, construction costs and the ability to ramp up quickly, those kinds of things, economic incentives are in the top 10 and probably in the top five,” he said. “… It just keeps you in the competition.”
Jill McGranahan, spokeswoman for the Colorado Office of Economic Development and International Trade, said the state’s policy requires any company seeking incentives to create 20 net jobs for at least a year before it can receive any tax credits.
She said the incentives are designed to make companies take on the risk of startup instead of using state dollars to underwrite it.
“All of our tax credits and incentives are performance-based,” she said. “They’re modest by comparison, and we do that so the cost is paid upfront by the companies and not by the taxpayers.”
Conway believes a data center is critical for Northern Colorado in the coming years and still views Niobrara as having as much economic potential as I-25’s construction for the region or Denver International Airport had for Denver.
“It will eventually get developed because it has land use designation as an industrial PUD, so that’s all in place. It just requires somebody to step up, I think, in terms of capitalization,” he said.

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