Quincy Update: Some Growth, No Starbucks Yet
Can data center clusters transform a rural town into a vibrant tech center? The Los Angeles Times provides an update on life in Quincy, the small farm town in Washington state that has become a case study for the economic development potential of data center projects. An excerpt:
For a town like Quincy, built on potatoes and apples, the arrival of high tech has proved an inspirational and a cautionary tale. With its two stoplights, four banks and almost 6,000 residents - two-thirds of them Latino, many of whom work the fields, orchards, vineyards and packing plants - Quincy seemed an unlikely destination for the likes of Intuit, or Microsoft and Yahoo, which also have built data centers in town. The median income ($35,000) and the median price of a home ($108,000) are far below the state medians. Unemployment is relatively high and education levels relatively low - typical of the divide between Washingtonians east of the Cascade Mountains and those west of them. Still, Quincy has done better than many small towns. Some believe the high-tech utilities - which town officials courted - will further transform it.The verdict thus far: business is booming for the hardware store, and a new shopping center is coming. But there's no sign of Starbucks yet. "It's like we're still waiting for something," said Aleeta Merred, executive director of the Quincy Valley Chamber of Commerce. "So far, we're not really seeing the growth we expected."
Posted by Rich Miller 
May 05, 2008 | Permalink | Newsletter
March 19, 2008
Washington State 'Server Farm' Tax Break Fails
Legislation in Washington state that would have restored a tax break for data centers won't be passed in 2008, leaving Microsoft (MSFT) and Yahoo (YHOO) to mull the future of their plans to continue building in the state. Last month Microsoft and Yahoo halted construction on their multi-facility data center campuses in Quincy, Washington while state legislators debated the tax bill.
The tax package was drafted after the state ruled that data centers were no longer covered by a state sales tax break for manufacturing enterprises, and thus must pay a 7.9 percent tax on data center construction and equipment. Gov. Chris Gregoire requested an exemption in Senate Bill 6666, which would restore the exemption for data centers. The bill was caught up in tax politics, with media terming it a $1 billion tax break for high-tech giants.
"To be honest, we just didn't have time." Rep. Mike Armstrong, R-Wenatchee told local media. "We'll see what we can do for the next session," which begins in January 2009.
Posted by Rich Miller March 19, 2008 | Permalink | Newsletter
February 26, 2008
Ask.com and the Quincy Power Advantage
In our recent discussion of the uncertain future of Washington state's tax incentives for data centers, we wondered whether the tax breaks were big enough to bust the economic model that has drawn so many companies to build data centers in central Washington. The primary lure of Quincy and nearby towns is cheap hydro power from the Columbia River, which offers a significant savings compared to many traditional data center hubs.
Greg Fennewald, senior director of data center strategy for Ask.com, discussed the economics of power at last week's meeting of the Grant County Economic Development Council. Fennewald spoke about why his company decided to locate in Moses Lake, Washington, where it opened a new data center in December. The savings on electricity, he said, are "quite significant."
Posted by Rich Miller February 26, 2008 | Permalink | Newsletter
February 12, 2008
Microsoft, Yahoo Halt Quincy Projects
Microsoft and Yahoo have halted construction on their multi-facility data center campuses in Quincy, Washington while state legislators debate a tax break for data center projects, according to local media reports. Late last year Washington State attorney general Rob McKenna ruled that data centers were no longer covered by a state sales tax break for manufacturing enterprises, and thus must pay a 7.9 percent tax on data center construction and equipment. McKenna ruled that the data centers "do not produce a product which is sold to the companies' customers" and thus aren't manufacturers.
A story in today's Seattle Post-Intelligencer story, titled "High-tech giants seeking massive tax break," updates the story and takes a critical look at the tax breaks and the business case for data centers in eastern Washington.
Gov. Chris Gregoire requested an exemption in Senate Bill 6666, which would restore the exemption for data centers. In the meantime, the Internet titans have shelved plans for additional investment in Quincy, a small farm town that had 5,300 residents when it was selected for the Microsoft project. Yahoo, Ask.com, Intuit, Sabey Corp. and Base Partners have since announced projects in central Washington. Real estate prices have surged in Quincy, which the Washington post dubbed "the Klondike of the Internet era."
But perhaps not without tax breaks. Yahoo first suggested that it was rethinking the future of its Quincy data center during the project's opening in December. A blog post later emphasized Yahoo's commitment to the new site. But Yahoo co-founder David Filo was more direct in a letter to a state legislator.
"An unexpected requirement to pay sales tax will destroy the competitive advantage that led Yahoo to select Quincy as the location for our latest facility, and in fact swings the decision strongly in favor of freezing construction in Washington, and building instead in Oregon (which has no sales tax), as some of our competitors are already doing," Filo said in the letter to Senate Ways and Means Committee Chairwoman Margarita Prentice.
Posted by Rich Miller February 12, 2008 | Permalink | Newsletter
January 25, 2008
T-Mobile to Consolidate at Wenatchee Site
Executives of T-Mobile say they will consolidate their entire national data center network into a new 200,000 square foot facility being built by Sabey Corp. in central Washington state. The wireless company launched construction Thursday on the data center in East Wenatchee, Washington, which will be part of Sabey's Intergate.Columbia multi-tenant data center complex.
"When we grow, we will grow here," said T-Mobile’s Senior Vice President Robert Strickland, who added that he hopes to "begin operating at least a part of the new center by Thanksgiving." That would equal the 11 months it took Microsoft to open its facility in nearby Quincy, Washington.
Posted by Rich Miller January 25, 2008 | Permalink | Newsletter
January 06, 2008
Huge T-Mobile Lease at New Sabey Project
T-Mobile will lease 200,000 square feet of space at Intergate.Columbia, the Sabey Corp. data center project in East Wenatchee, Washington, according to local media. T-Mobile is the first tenant announced for the Sabey facility, which is projected to have a project cost of more than $100 million.
The primary T-Mobile' data center in Bothell, Washington was flooded last month when torrential rains hit the Seattle area. The outage knocked the T-mobile website offline and disrupted new customer activations nationwide. Bothell is more vulnerable to flooding than other data center hubs in the Seattle area. East Wenatchee is in an area of central Washington that has seen a boom in data centers since 2006, when Microsoft announced a major new facility in Quincy to support its new online services.
Posted by Rich Miller January 06, 2008 | Permalink | Newsletter
December 14, 2007
Yahoo Rethinking Expansion in Quincy
Yahoo is rethinking additional expansion in Quincy, the new data center hub in central Washington. On Dec, 3 Yahoo held a grand opening for its new 140,000 square foot facility in Quincy, which has attracted multiple data center projects with its abundant supply of cheap power from dams on the Columbia River. As the company showed off its new facility, Yahoo executives warned that its plans for additional expansion at the site are unclear after Washington State attorney general Rob McKenna ruled that data centers were not covered by a state tax break.
McKenna ruled that data centers don't qualify as manufacturing enterprises, and thus must pay a 7.9 percent tax on data center construction and equipment. McKenna found that data centers "do not produce a product which is sold to the companies' customers or used by the Internet companies as consumers or in manufacturing articles, substances or commodities," the attorney general said in the letter to State Sen. Janea Holmquist.
Posted by Rich Miller December 14, 2007 | Permalink | Newsletter
August 03, 2007
Still More Companies Eyeing Quincy
It looks like the data center boom in central Washington isn't likely to slow down anytime soon. Just a day after Base Partners announced plans for a 400,000 square foot data center campus in Quincy, officials at the Port of Quincy told the Seattle Times that Sabey Corp. is purchasing 39 acres at the port. We reported about Sabey's interest in the port of Quincy back in April.
Local economic development officials are indicating that there may be even more data center projects in the pipeline for the area. Terry Brewer, executive director of the Grant County Economic Development Council, told the Times that his organization has "responded to requests for information from more than a dozen clients and consultants representing clients who are researching sites for data centers."
Central Washington already has secured projects from Microsoft, Yahoo, Sabey Corp., Intuit and Ask.com which will add a total of nearly 2 million square feet of data center space in the area. The companies are lured by cheap hydroelectric power from the Columbia River, which is priced as low as 1.8 cents per kilowatt hour.
Posted by Rich Miller August 03, 2007 | Permalink | Newsletter
August 01, 2007
More Data Centers Coming to Quincy
There will be more data centers coming to Quincy, Washington, the small town whose cheap electricity is transforming it into a major hub in the Internet economy.
Base Partners Inc., a San-Francisco-based developer of data center properties, has acquired a 70-acre development site in Quincy, and plans to build up to 400,000 square feet of data centers for corporate users. The company plans a phased build-to-suit project of four data center facilities ranging from 50,000 to 200,000 square feet. Base Partners will offer tenants the option of using the latest energy efficiency technologies for their facilities.
"The abundant availability of low-cost hydroelectric power and fiber-optic lines as well as the region’s stable geological setting clearly make Quincy a prime data center location," said Base Partners’ Aaron Wright. “Power costs here are the lowest in the nation, equaling 1.8 cents per kilowatt hour, as compared to 12 cents per kilowatt hour in San Francisco and 6.2 cents per kilowatt hour on average in the U.S., resulting in significant savings to end users.”
Posted by Rich Miller August 01, 2007 | Permalink | Newsletter
July 12, 2007
Ask.com Confirms Moses Lake Facility
Search engine Ask.com, a unit of IAC (IACI), yesterday confirmed earlier reports that it will build a data center at the TITAN complex in Moses Lake, Washington. The project adds to the growing list of data centers in central Washington state, which already features data centers from Microsoft, Yahoo, Sabey Corp. and Intuit.
Unfortunately, the press release from Ask.com doesn't add much to what was already public about the project. The company says the new facility will be "eco-friendly" and provide additional computing power its new Ask3D feature, which combines images, video and music as well as links on a single results page.
Posted by Rich Miller July 12, 2007 | Permalink | Newsletter
April 25, 2007
Sabey Eyes Expansion in Quincy, Wash.
Data center developer Sabey Corp. is looking to expand its presence in central Washington, and has discussed purchasing land from the Port of Quincy, a large industrial park that is also home to Microsoft's huge new data center. Sabey is already building a 100,000 square foot data center in Wenatchee.
The Port of Quincy is holding a meeting tonight to get public comment on whether it should sell land to Sabey. "They've made an inquiry and we're trying to schedule a joint meeting between the commissioners and the Sabey group," Port Commissioner Brian Kuest told the Columbia Basin Herald. "We're not far enough along in the inquiry process to know exactly what Sabey's needs are."
Sabey says it is evaluating properties in the area and interested in discussing land values with property owners. It hasn't made any commitments as yet, but Sabey has made no secret of its interest in the area. "We see North Central Washington as a very logical extension of our data center business," Senior Vice President of Real Estate John Sabey said last August, when Sabey announced its Intergate.Columbia project. "We're a long-time Northwest family and a long-time Northwest company, and we're looking to be a part of East Wenatchee and the greater Wenatchee area for a long time as well."
Additional development by Sabey would continue the influx of huge data centers in central Washington, including projects by Microsoft, Yahoo, Ask.com and Intuit in addition to Sabey.
Posted by Rich Miller April 25, 2007 | Permalink | Newsletter
April 03, 2007
Data Centers Create Boom in Quincy
The small town of Quincy, Washington is being transformed by the arrival of a major data center from Microsoft, which just opened the 470,000 square foot first phase of a project that will eventually grow to 1.4 million square feet. Quincy is one of several central Washingon towns that have been chosen for huge data centers due to the availability of open land and cheap hydro power from dams on the Columbia River. Yahoo, Sabey Corp., Intuit and Ask.com also have construction projects in the area. But in assessing the economic impact of the data center boom, much of the attention has focused on Quincy, an agricultural town of 5,300 that is home to the largest of the new projects. A story in The Wenatchee World summarizes the recent developments:
As Quincy celebrates its centennial this weekend, local real estate agents say, prices on prime farmland within or near city limits have skyrocketed 10-fold since Microsoft bought its data center property early last year. In a city that normally sees three or four new homes built per year, city administrator Tim Snead estimates some 1,400 new homes could be built over the next few years. Work is expected to begin this summer on a 125-acre movie theater, hotel and business complex on what last year was a wheat field. ... Port and city officials estimate that data center and new home construction has flooded Quincy with 650 to 1,000 construction workers and subcontractors. Local businesses say the in flux has increased their sales by 25 percent or more.With data center site location decisions for the largest providers being increasingly drawn to rural areas with inexpensive power, we're likely to see more small towns experience economic revivals. That's why local government in North Carolina extended generous incentive plans to gain a commitment from Google for a $600 million project in Lenoir, N.C. It will be years before it will be possible to properly evaluate that deal. But the boom times in Quincy suggest that there are changes in store for Lenoir as well.
Posted by Rich Miller April 03, 2007 | Permalink | Newsletter
March 15, 2007
The Economic Impact of A Data Center
Much of the recent news coverage of Google's decision to locate a $600 million data center in Lenoir, N.C. has focused on the political debate about the lucrative economic package that helped lure Google to the state. Today's New York Times takes a closer look at the deal, exploring what it will mean for the town of Lenoir and its residents. This street-level analysis of the impact of the new Google facility site provides a reminder of why economic development officials are now paying much closer attention to the data center site location process.
Lenoir is a town in the Appalachian foothills with an economy that has been dominated by the furniture industry, which has been hit hard by slumping sales and competition from China.
The need for jobs, economic diversification and good news is dire. Lenoir’s furniture industry has been decimated by overseas competition, and the transformation has been swift. The unemployment rate went from one of the state’s lowest, 2.4 percent, in 2000, to 6.9 percent last year, after peaking at 9.8 percent in 2003. Some 5,000 furniture jobs have been lost. Many workers in their 40s and 50s, who raised families and paid mortgages on factory salaries, have had to go back to school. ... Google says it hopes laid-off furniture workers, most of whom never graduated from high school, will be among the 250 employees at two facilities on the 215-acre site, much of which was once a lumberyard.Jobs are always the yardstick by which economic development projects are measured. As a result, it has often been difficult to quantify the impact of major data center projects, as these facilities typically house more servers than employees.
Posted by Rich Miller March 15, 2007 | Permalink | Newsletter
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