New York Site Edges Bristol In Competition For Yahoo! Data Center

BRISTOL, Va. – Wind fell from the sails of city leaders this week under the news that Internet giant Yahoo! selected a New York site over the Twin City for a new data center.

For the past year, city and state leaders have been trying to lure the Sunnyvale, Calif.-based firm to a planned business park adjacent to Sugar Hollow Park, said Doug Weberling, chairman of the city’s Economic Development Committee.

Earlier this week, they got the bad news.

“We did everything we could legally do in Virginia to bring them to Bristol,” Weberling said. “We were pleased to be in their first 20 [prospective sites] and it was an accomplishment to be in the final two, but New York gave them things we couldn’t.”

The $150 million data center will be built in Lockport, N.Y., just outside Buffalo, company officials announced during a Tuesday news conference. The facility is expected to create 125 jobs paying $65,000 to $75,000 a year, according to a company news statement.

New York state officials agreed to provide significant discounts on 10 megawatts of low-cost hydroelectric power for the first phase of construction and discounts on an additional 15 megawatts for the second phase, according to the statement.

The deal is expected to save the company up to $810,000 per job created over the life of the subsidy – depending on power rates – or about $100 million over 15 years, according to one estimate.
Such concessions aren’t permitted here.

“We do not have the option of free electricity for anyone,” BVU President Wes Rosenbalm said. “The rate structure is set by TVA and it varies based on usage. TVA is a very willing partner and will help us, but we can’t do that.”

In addition, the town of Lockport agreed to waive property taxes for 10 years on the planned six-building, 190,000-square-foot facility. Property taxes would be phased in gradually during the subsequent 10 years. In addition, the company will receive a sales tax exemption on all equipment purchases.

Yahoo! will pay $450,000 to buy 30 acres at the New York site, according to the statement. Twin City officials had offered to give the company 30 acres at the Sugar Hollow site, Weberling said.

“Certainly we’re disappointed, but there are some things we could not and would not do,” Mayor Jim Rector said. “Incentive packages are an important part of landing a business like this, but you’ve got to be able to recoup your incentive within 10 years and you’ve got to consider the effect on your existing businesses.”

Rector said the electric rates available in Bristol were lower than those charged in New York but the city couldn’t compete when they offered the deep discounts.

Jerry Brown, the city’s director of economic development, said the effort to recruit Yahoo! was an investment.

“This was good for us. It’s like a dress rehearsal. We’d love to have had it, but we’re much better prepared for the next one,” Brown said. “We were one of their final two [choices].”

Factors such as BVU’s fiber-optic technology, a viable workforce, the relatively isolated location of the planned business park and the climate all played a factor, Brown said.

“One of the big factors was the average humidity level and [small] number of days above 90 degrees,” Brown said. “They want to do a new concept where, instead of chillers, they use outside air to cool their [computer] servers, so they were looking for a cool climate with lower humidity.”

Rector said city officials are currently courting other possible tenants for the new business park.

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