Comments on: Yahoo's Big Bet on the Cornhusker State

By: N.C. Votes on Incentives for Apple’s $1B Data Center

N.C. Votes on Incentives for Apple’s $1B Data Center — Wed, 27 May 2009 16:00:48 +0000

[...] on the bill today before sending the legislation to the governor. Now, I have some questions about incentives for data center projects, but my real question is, what is Apple doing building a billion-dollar data [...]

By: Jacque

Jacque — Sat, 25 Oct 2008 19:37:07 +0000

It’s not about the power or tax advantages. Its about latency. Colos built in states like Nebraska offer equal latency between east and west coasts. So, in the future, you don’t need both west coast and east coast colos, just one huge colo in the midwest.

By: austinandrew

austinandrew — Sat, 25 Oct 2008 02:49:51 +0000

I think it’s the property taxes…even after considering the incentives.

By: Stacey Higginbotham

Stacey Higginbotham — Fri, 24 Oct 2008 21:10:05 +0000

@Rich and Nickh, thanks for the perspectives, although could a municipal power company sell their extra capacity back to the grid? Nevada is a state with no income tax, and so the property taxes could be a good source of local revenue if abatements weren’t a huge part of any Yahoo deal. Regardless, Rick your point about “your mileage may vary” is likely the best answer to my question.

By: Rich Miller

Rich Miller — Fri, 24 Oct 2008 20:58:30 +0000

Om: It’s a great question. Here’s one version of the answer, from coverage of a new Nationwide data center in New Albany, Ohio:

The Nationwide facility would create just 40 jobs, but generate more than $470,000 in annual property and income taxes for the community, about $300,000 of which will go to the New Albany-Plain Local School District. “That certainly will be a source of revenue for us with the potential of not going back to the voters so frequently for operating money,” New Albany school board President Diana Goedeking told local media. “We understand that it will not create revenue for us immediately, but it will create a long-term funding and help maintain stability for the district.”

A key wrinkle in the deal: The locals gave Nationwide a 65 percent break on their real estate taxes, but since it was a $90 million project, the remaining taxes were enough to have a meaningful impact in the community.

There are some data center incentive deals that are making more sense than others … your milage may vary.

By: nickh

nickh — Fri, 24 Oct 2008 20:51:01 +0000

one more thing:

Mel says:
Hell, the state legislature even changed a law to allow power companies to not report large industrial customers’ power use.

Power consumption numbers for companies with large scale datacenters are a huge strategic secret, and publishing them would tip off competitors.

By: Nickh

Nickh — Fri, 24 Oct 2008 20:46:18 +0000

Two counterpoints.
While a datacenter consumes ton of power, usually, in small municipalities, there is an overabundance of generation capacity. The way power plants work, they either generate power at capacity or not at all. Small towns with municipal power plants (like La Vista, Nebraska) are great for datacenters when you find this output mismatch. if the plant generation capacity is say, 50 megawatts, and the town is using 2 megawatts, there is 48 megawatts of wasted power being generated. A datacenter will pay for this excess capacity consumption.
On the job front, while it may not be that many jobs, these are skilled jobs. You are talking union electricians, union plumbers, engineers, and techies. People who are going to work there are going to get training and skills much beyond what you could ever get in a call center. Call me crazy but in a small town of 16k, where the median household income, 100 jobs averaging $68k/y looks a lot better than the $25k/y call center people make.

By: Mel

Mel — Fri, 24 Oct 2008 20:10:41 +0000

I was the same way when Google announced their data center in my home state of Oklahoma. It was all over the news there and my parents and friends couldn’t wait to tell me about it.

My response was “so what”. They came for tax breaks, cheap land, and cheap power … that’s it. They won’t be bringing many jobs to the area (200 on the high, long-term end).

Hell, the state legislature even changed a law to allow power companies to not report large industrial customers’ power use.