Yahoo announced plans to expand its already massive data center campus in a rural Central Washington town. The 300,000-square-foot expansion in Quincy, home to one of the largest data center clusters in the US, will effectively double Yahoo’s data center capacity there.
As a provider of digital media content and other web services, Yahoo, like its competitors, has to constantly expand its data center capacity to make sure it has the infrastructure in place to support new products and services and a growing user base.
Yahoo is using its unique Computing Coop data center design for the expansion, Mike Coleman, the company’s senior director of data center operations, said in an email. The shape of Yahoo data centers built using this design resembles shape of a chicken coop, hence the name. In fact, when the company first introduced the design about five years ago, it was called the Yahoo Chicken Coop but later renamed.
The shape maximizes the use of outside air for cooling and minimizes the need for electrical fans to pull air into the building. The coop was also designed to shrink the time it takes to bring new data center capacity online.
The announcement follows the launch of a massive Yahoo data center expansion in Lockport, New York. Lockport is a newer, East Coast counterpart to Yahoo’s Quincy campus. The company launched its first data center there – it was also the first place where Yahoo used the Computing Coop design – in 2010. It has since stuck with the design, using it, with slight modifications, for subsequent expansion.
Its other big US data center campus is in Omaha, Nebraska. Yahoo also owns and operates a data center in Singapore and leases space in numerous other US and international facilities.
Tax Breaks Fuel Data Center Construction
Earlier this year, state lawmakers approved an extension of tax breaks for data center operators which were set to expire. Companies that operate data centers in rural areas of the state are exempt from sales tax on purchases of IT and supporting infrastructure equipment.
“One of the reasons we decided to expand our data center in Quincy was because of the attractive rural tax incentives offered by Washington State,” Coleman said.
The state started providing tax exemptions for data centers in 2010, but the exemptions expired the following year. Washington Research Council, an economic development think tank, said the expiration resulted in a shift of data center construction to other states until the exemption was reinstated in 2012.
WRC estimated in a 2013 report, its latest on the subject, that companies had built about 2.5 million square feet of data center space in Central Washington between 2006, when data center construction in the region took off, and 2013. About 2 million square feet of that space was in Quincy, whose population is about 7,000.
Between 2006 and 2013, Yahoo, Microsoft, Sabey, Intuit, Dell, Server Farm Realty, and Vantage built data centers in the region, ranging from mid-size (Yahoo’s 45,000-square-foot facility in Wenatchee) to mega-scale (Microsoft’s 500-square-foot data center in Quincy).
What States Get in Return for Tax Breaks
States use tax incentives to attract data center projects as they do to attract other industries. A recent analysis by the Associated Press found that states issued about $1.5 billion in tax breaks for data center projects over the past 10 years. Data center tax breaks, however, have been controversial, because data centers aren’t massive job creators.
Making a “conservative” estimate, WRC said the 12 data centers built in Central Washington between 2006 and 2013 created about 480 direct jobs. Data centers also create indirect jobs, such as landscaping, maintenance, and security. The most important types of indirect jobs they create are through purchases of electric power and water, according to the organization.
The report identifies numerous other indirect jobs that result from data center operations, which are more difficult to tie directly to data center projects, such as higher demand for services like restaurants, healthcare, and education.
Data centers, like other commercial or industrial construction projects, beef up the local tax base. Quincy, for example, grew its assessed value from $260 million in 2006 to $1 billion in 2009, despite a downward trend in residential property value in the state, according to WRC.
It’s Not All about Tax Breaks in Central Washington
Central Washington has other attractive attributes for data centers in addition to tax breaks. It is in a geologically stable area, and the climate is conducive to using outside air for free cooling, John Sabey, president at Sabey Data Centers, a major Seattle data center developer and provider, said.
There is also an abundance of hydro power, which, at about $0.025 per kWh, comes at some of the lowest rates in the “developed world,” he said.
Sabey’s Quincy data center is next door to Yahoo’s campus there. Its customers in Quincy include large banks, large technology companies, a movie studio, and a major Content Delivery Network provider, among others, Sabey said.
Coleman also said tax incentives were only one of the reasons Yahoo chose to expand in Quincy. Climate and affordable clean energy were important factors in the decision, as well as access to a skilled workforce.