Friday, October 9, 2009

Tax incentives Data Centers

When Incentives Don’t Work Out

October 9th, 2009 : Rich Miller

Tax incentives have become the table stakes in data center site location. The growing number of states offering incentives has expanded the geography of the data center industry, and made it difficult for local governments to win major projects without generous tax packages.The poster child for this movement has been the state of North Carolina, which has wielded tax breaks to bring two tech titans to virtually unknown small towns. In 2007 Google picked Lenoir, N.C. as the location for a $600 million data center, and earlier this year Apple Inc. chose Maiden, N.C. as the site of a $1 billion data storage site. Customized incentive packages were key factors in the decision process for both companies.

Dell Announces Plant Closing
But not all of the state’s incentives for tech firms have worked out. This week Dell Inc. announced that it is closing a computer manufacturing plant in Winston-Salem, and will pay back the incentives it has collected as part of a $280 million package of tax breaks used to sweeten the 2004 deal.

The incentives for Dell and Google attracted scrutiny as some North Carolina residents and legislators wondered whether these development deals would deliver on the promised benefits. Google has already told the state that it won’t meet the job creation criteria for a $4.7 million state grant for its data center project in Lenoir. The grant required the company to create 200 jobs in four years, but Google has slowed the pace of construction in Lenoir as part of a broader initiative to manage capital expenditures during the economic slowdown.

The Economy Takes Its Toll
North Carolina isn’t the ony state to see the economic crisis blunt the benefits of development deals. Iowa made headlines by winning projects for Google and Microsoft, but budgets cuts soon led Microsoft to apply the brakes on its plans to build a $500 million project in West Des Moines. Google has similarly postponed a $600 million project in Pryor, Oklahoma.

Tax incentives are designed to spur investment and create high-paying high-tech jobs. That doesn’t necessarily mean that the marquee name attached to the deal will be doing the hiring. Microsoft said this month that its new data center in Chicago will be staffed by 45 workers, but that only three or four of those workers will actually be full-time Microsoft employees, with the remainder working for vendor partners that provide site security and facility maintenance.

Closer Scrutiny Likely
When we last assessed the environment for data center incentives back in January, we noted that ”states lusting after data center projects will have plenty of time to track the progress of postponed projects and evaluate whether the math and politics of data center projects still add up to a win.”

The Dell plant closure and data center project slowdowns will prompt additional contemplation of the math behind these tax incentives, and that’s a good thing.

But in the economic development arena, data centers represent far more than bricks and mortar. They have become symbols of the new economy, a tangible sign that a community is making a successful transition to the digital economy. These aspirations are driven by politics as well as economics. Governors and local legislators understand the value of a press conference to announce a new project from Google, Microsoft or Apple. That aura will intensify as the Internet continues to transform our economy, and ensure that tax incentives for data center projects are here to stay.

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Underground Secure Data Center Operations

Technology based companies are building new data centers in old mines, caves, and bunkers to host computer equipment below the Earth's surface.

Underground Secure Data Center Operations have a upward trend.

Operations launched in inactive gypsum mines, caves, old abandoned coal mines, abandoned solid limestone mines, positioned deep below the bedrock mines, abandoned hydrogen bomb nuclear bunkers, bunkers deep underground and secure from disasters, both natural and man-made.

The facility have advantages over traditional data centers, such as increased security, lower cost, scalability and ideal environmental conditions. There economic model works, despite the proliferation of data center providers, thanks largely to the natural qualities inherent in the Underground Data Centers.

With 10,000, to to over a 1,000,000 square feet available, there is lots of space to be subdivided to accommodate the growth needs of clients. In addition, the Underground Data Centers has an unlimited supply of naturally cool, 50-degree air, providing the ideal temperature and humidity for computer equipment with minimal HVAC cost.

They are the most secure data centers in the world and unparalleled in terms of square footage, scalability and environmental control.

Yet, while the physical and cost benefits of being underground make them attractive, they have to also invested heavily in high-speed connectivity and redundant power and fiber systems to ensure there operations are not just secure, but also state-of-the-art.

There initially focused on providing disaster recovery solutions, and backup co-location services.

Clients lease space for their own servers, while other provides secure facilities, power and bandwidth. They offers redundant power sources and multiple high-speed Internet connections through OC connected to SONET ring linked to outside connectivity providers through redundant fiber cables.

Underground Data Centers company augments there core services to include disaster recovery solutions, call centers, NOC, wireless connectivity and more.

Strategic partnering with international, and national information technology company, enable them to offer technology solutions ranging from system design and implementation to the sale of software and equipment.

The natural qualities of the Underground Data Centers allow them to offer the best of both worlds premier services and security at highly competitive rates.

Underground Data Centers were established starting in 1990's but really came into there own after September 11 attacks in 2001 when there founders realized the former mines, and bunker offered optimal conditions for a data center. The mines, and bunkers offered superior environmental conditions for electronic equipment, almost invulnerable security and they located near power grids.

Adam Couture, a Mass.-based analyst for Gartner Inc. said Underground Data Centers could find a niche serving businesses that want to reduce vulnerability to any future attacks. Some Underground Data Centers fact sheet said that the Underground Data Center would protect the data center from a cruise missile explosion or plane crash.

Every company after September 11 attacks in 2001 are all going back and re-evaluating their business-continuity plans, This doesn't say everybody's changing them, but everybody's going back and revisiting them in the wake of what happened and the Underground Data Center may be just that.

Comparison chart: Underground data centers

Five facilities compared
Name InfoBunker, LLC The Bunker Montgomery Westland Cavern Technologies Iron Mountain The Underground
Location Des Moines, Iowa* Dover, UK Montgomery, Tex. Lenexa, Kan. Butler County, Penn.*
In business since 2006 1999 2007 2007 Opened by National Storage in 1954. Acquired by Iron Mountain 1998.
Security /access control Biometric; keypad; pan, tilt and zoom cameras; door event and camera logging CCTV, dogs, guards, fence Gated, with access control card, biometrics and a 24x7 security guard Security guard, biometric scan, smart card access and motion detection alarms 24-hour armed guards, visitor escorts, magnetometer, x-ray scanner, closed-circuit television, badge access and other physical and electronic measures for securing the mine's perimeter and vaults
Distance underground (feet) 50 100 60 125 220
Ceiling height in data center space (feet) 16 12 to 50 10 16 to 18 15 (10 feet from raised floor to dropped ceiling)
Original use Military communications bunker Royal Air Force military bunker Private bunker designed to survive a nuclear attack. Complex built in 1982 by Louis Kung (Nephew of Madam Chang Kai Shek) as a residence and headquarters for his oil company, including a secret, 40,000 square foot nuclear fallout shelter. The office building uses bulletproof glass on the first floor and reception area and 3-inch concrete walls with fold-down steel gun ports to protect the bunker 60 feet below. Limestone mine originally developed by an asphalt company that used the materials in road pavement Limestone mine
Total data center space (square feet) 34,000 50,000 28,000 plus 90,000 of office space in a hardened, above-ground building. 40,000 60,000
Total space in facility 65,000 60,000 28,000 3 million 145 acres developed; 1,000 acres total
Data center clients include Insurance company, telephone company, teaching hospital, financial services, e-commerce, security
monitoring/surveillance, veterinary, county government
Banking, mission critical Web applications, online trading NASA/T-Systems, Aker Solutions, Continental Airlines, Houston Chronicle, Express Jet Healthcare, insurance, universities, technology, manufacturing, professional services Marriott International Inc., Iron Mountain, three U.S. government agencies
Number of hosted primary or backup data centers 2 50+ 13 26 5
Services offered Leased data center space, disaster recovery space, wholesale bandwidth Fully managed platforms, partly managed platforms, co-location Disaster recovery/business continuity, co-location and managed services Data center space leasing, design, construction and management Data center leasing, design, construction and maintenance services
Distance from nearest large city Des Moines, about 45 miles* Canterbury, 10 miles; London, 60 miles Houston, 40 miles Kansas City, 15 miles Pittsburgh, 55 miles
Location of cooling system, includng cooling towers Underground Underground Above and below ground. All cooling towers above ground in secure facility. Air cooled systems located underground. Cooling towers located outside
Chillers located above ground to take advantage of "free cooling." Pumps located underground.
Location of generators and fuel tanks Underground Above ground and below ground Two below ground, four above ground. All fuel tanks buried topside. Underground Underground
*Declined to cite exact location/disatance for security reasons.