Some alert readers on the new Page County blog site found a recent article out of Roanoke about the negotiations that surrounded the announcement that Microsoft would be investing $500 million in a data center in Mecklenburg, Virginia. It turns out that the town of Christianburg, Virginia was also considered, but events conspired against that town’s bid. All of this is chronicled in an article titled, “Christianburg’s Miss Brings Pricey Lessons,” located at http://www.roanoke.com/news/nrv/wb/269714.
This article says that the figures aren’t official, but were gathered a review of emails and other communications regarding Christianburg’s pursuit of that deal suggests that “While the county grappled with finding money for basic services such as education, the localities offered to forgo $62 million to $117 million in taxes to attract the facility.” Typically, these deals involve upfront cash, discounts on land and utilities infrastructure, and rebates on tax payments.
What we do know about the eventual deal is that Microsoft will receive upfront payments of $2.1 million from the state, another $4.8 million from the tobacco related community revitalization money, state sales tax exemptions, $50,000 in state hiring and training benefits, $2 million in real estate, $3.95 million for local water and sewer connections, and a 20-year rebate on personal property taxes – the first three years of this benefit were valued at $12 million. All of this for a company whose June 2010 balance sheet shows current assets of $56 billion, including more than $5.5 billion in cash on hand.
Leaving aside for a minute questions about how the Page County data center will bring nearly 100 good paying job to the county, while the Microsoft operation, a 4th generation facility (Page County’s is a 3rd generation facility) will bring 50 jobs estimated at $50,000 annually, imagine how these benefits would impact established businesses in the county that have to pay local taxes. According to this article, the state expects that it would break even on the project by 2021 – but due to the personal property tax waiver, the county would still be paying for these jobs on into the 2030 decade!
Then there are other benefits at the Mecklenburg location: the high-wattage electricity is in place, there is premium broadband already built, other utilities (water and sewer) are ready, and the site is located next to a US highway. If these are the features of a location that Microsoft values, it leaves the suggestion that Page County’s Project Clover site is acceptable open to question. We currently don’t have these assets to offer; they will have to be built.
Christianburg’s story doesn’t end well – we know that Mecklenburg was eventually selected, for one thing. Apparently, during the finalization of the discussions, a small sink hole opened up at the selected site, and the site engineering that would be required to offset these risks were estimated to cost up to $30 million. Christianburg is in karst terrain, just as Page County is. The sink hole will make this site a challenge to market to other businesses.
Using these figures, it’s easy to say that turning down Fibrowatt was an excellent move on the part of our board of supervisors, since it would have required us to compete on these financial terms, with a broader impact to our quality of life, for fewer jobs that probably wouldn’t have paid as well.
But I would also like to find some kind of encouragement for Page County in its pursuit of this kind of industry and those much needed jobs, something I’ve heard referred to as “Page 2.0”. I have limited insight into whether we could make some of the required investments to attract outside business, and the marketing emphasis on the Project Clover land as a potential site seems to miss the mark.
The whole thing has to start with a plan, though – and for now, that is not something we have from current EDA leadership. Our board of supervisors would do well to consider that as the terms for some current EDA members are coming to an end – lengthy service is much appreciated, but at last, it’s simply time for a change in leadership.
The new Page County blog site is http://pagecountyblog.com/, and of course, my past posts on this topic can be found by clicking the Page County Data Center, Fibrowatt, Project Clover, or Page County EDA labels at the end of this post.
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