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Apple building new downtown Reno facilities to support its iCloud data center

post #1 of 17
Thread Starter 
The struggling downtown of Reno, Nev., is about to get an infusion of investment when Apple begins construction of new support facilities to manage the iCloud data center now being built 20 miles away.

Downtown Reno


Apple in Reno



Apple initially opened its Braeburn Capital subsidiary in Reno in 2006, tasked with managing the company's rapidly growing pile of cash.

The company also operates a retail store in the Summit outdoor mall in the south end of Reno.

Apple's largest project in the area, however, is its new $1 billion iCloud data center that includes both a large, rural parcel of land within the nearby Reno Technology Park and plans to build new supporting facilities on the edge of downtown.

Will Apple turn off Reno's blight?



Reno's downtown is dominated by a string of major casinos, surrounded by a number of vacant older properties and lots of empty parking lots.

Efforts to enliven its downtown with a convention center, a regional transit facility, the Reno Aces baseball stadium and new condominium towers ran abruptly into an economic downturn that stalled further development.

Downtown Reno


Last year, the city, county and state worked together to approve a deal that welcomed Apple's investment with sales tax breaks (the state has no corporate taxes).

"This is the most significant economic news we've had in our region in over 15 years," proclaimed Greg Ferraro, the head of a public relations firm representing Apple at the meetings.

To earn those tax breaks, Apple agreed to not only build a new data center at the nearby RTP, but also develop supporting facilities for it within one of the most blighted areas of Reno's downtown named the Tessera District.

Reno's city government had earlier sought to lure in new development for Tessera by issuing STAR bonds backed by sales taxes, but several years later the area remained mostly empty lots and abandoned motels."This is the most significant economic news we've had in our region in over 15 years."

A few months after approving an incentives package for Apple, Reno's city council unanimously upheld a decision by the city's Planning Commission to deny a special use permit for a new strip club at Fifth and Eureka, a few blocks away from where Apple has plans to build.

Rejection of the strip club was noteworthy, given that downtown Reno is otherwise flush with adult entertainment, including the risqu? Wild Orchid club south of downtown. Local journalists agreed that the rejection was likely linked to the Apple deal.

How much public funds are going to Apple?



The local television station, KRNV News 4, aired a report in January complaining that "after scoring $89 million of your tax dollars for the promise of bringing more business to Northern Nevada, Apple may be running behind schedule on the project construction."

The first problem with the report is that Apple didn't "score" an amount of "your tax dollars." Instead, the state exempted the company from paying taxes on sales related to the project.

"Critics often incorrectly cite the use of taxpayer dollars as the incentive when, in reality, all we really offered Apple is a discount on the taxes they will pay for a period of time," stated Mike Kazmierski, the head of the Economic Development Authority of Western Nevada in a report by SFGate.

"So, they pay less in taxes, but we don't give them any taxpayer dollars. The other option is to not reduce the taxes we take from them and end up with 100 percent of nothing."


Where is Apple building in downtown Reno?



The TV station's "project behind despite tax breaks" story was also based on the assumption that Apple is backing a "light industrial" development slated for Fifth and Center, which remains an empty lot months after the project's approval.

Reno building


That lot and the project planned for it (pictured above) was first assumed to be Apple's project by Brian Duggan of the Reno Gazette Journal.

Given that it was expected that Apple would begin the first phase of construction in 2012, the TV station put two and two together and decided that, because the lot was still vacant, Apple's entire project was running behind schedule.

That assumption was not unlike the conclusions jumped to by national media outlets who have insisted that a reported change in iPhone 5 production orders or guesses about the cost escalations of Apple's planned Campus 2 project can be correctly interpreted by people who know nothing about global operations and project management.

Can't confirm or deny, must assume



However, it's not clear that the downtown site identified as belonging to Apple is in fact, Apple's planned operations center.

Duggan's report simply noted that, "officially, developers and city planning officials say they cannot confirm or deny if that tenant is Apple, Inc., which plans to build an assembly facility in downtown Reno."

He subsequently reached this conclusion on his own: "And that likely means one thing: The building pictured above is almost certainly going to be Apple's downtown facility that will assemble computer servers destined for Apple's data center located 11 miles east of Sparks (which is currently under construction)."

Why Apple would build a 15,000 square foot "light industrial" building in order to assemble computers for its data center fifteen miles away remains a mystery, particularly given the fact that no server assembly building was required for its operational Maiden, N.C. data center (pictured below).



Apple Maiden NC Data Center


Apple's data center in Maiden, NC



On top of that, Apple's first phase of construction began last fall at the RTP, resulting in the 20,000 square foot pilot facility AppleInsider exclusively broke news of earlier this spring (pictured below).

Apple Reno data center site


Surely, if Apple needs a large, permanent building to assemble servers for use in its data center now under construction, it would use the building it already has next door, not assemble the servers in downtown Reno and then drive them twenty miles for installation.

That means there's no evidence that Apple is behind schedule at all, and only a widely-held assumption that Apple is behind a project that has been approved but hasn't started yet.

It would appear that the operations facility Apple plans to situate in downtown Reno won't be needed until the data center is closer to being operational itself. That is supported by information AppleInsider has obtained pointing to a different location for Apple facilities in downtown Reno.
post #2 of 17

Apple can't keep up.

 

Look at this, building data center after datacenter while Samsung is paying for people to come to tech sites and troll (and a few must be here), building factories for more tanks and missiles, making offers people can't refuse all over the world, selling 600 dollars phones because of 30 ads, and making 7 billion in profit.

 

(Who cares that apple makes much more and all others lose money! Fanboys!)

post #3 of 17
I have to hand it to you, Daniel. You're doing an excellent job of pulling all the pieces together on this one. You also deserve respect for resisting the urge to use the grabber headline: "Apple Demands Reno Kill Strip Club."
post #4 of 17
I know nothing about computer assembly, but could this downtown Reno site be used for the manufacturing jobs Apple is bringing back to the US? If it is a clean enough facility to assemble servers (as rumored above), then it definitely is clean enough to build Mac minis or Mac Pros.
post #5 of 17
Quote:
Originally Posted by braeburned View Post

I know nothing about computer assembly, but could this downtown Reno site be used for the manufacturing jobs Apple is bringing back to the US? If it is a clean enough facility to assemble servers (as rumored above), then it definitely is clean enough to build Mac minis or Mac Pros.

Why would they do that?

post #6 of 17
Originally Posted by pedromartins View Post
Apple can't keep up.

 

Look at this, building data center after datacenter while Samsung is paying for people to come to tech sites and troll (and a few must be here), building factories for more tanks and missiles, making offers people can't refuse all over the world, selling 600 dollars phones because of 30 ads, and making 7 billion in profit.

 

(Who cares that apple makes much more and all others lose money! Fanboys!)

 

I'm not sure as to your intent in this post.


Originally Posted by braeburned View Post
I know nothing about computer assembly, but could this downtown Reno site be used for the manufacturing jobs Apple is bringing back to the US?

 

Highly doubtful. And you say "is bringing" as though it's fact.

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
Reply

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
Reply
post #7 of 17
Quote:
Originally Posted by Tallest Skil View Post

 

Highly doubtful. And you say "is bringing" as though it's fact.

 

Both Tim Cook and President Obama have said that Apple is going to bring some "manufacturing" jobs back to the U.S.    I had always assumed that it would mean nothing more than final assembly of the MacPro, since they don't sell that many of them.  

 

----

 

I also have to wonder whether Jobs would have supported the construction of an Apple facility in downtown Reno.   He once killed an Apple Store on either 14th street or 23rd street (I forget which) in Manhattan because when he visited the area, he thought it was too sleazy.    (Apple had also tried for a store near the Flatiron building, but abandoned the project after Community Board objections to the design.  They eventually wound up with a store at 14th street and 9th avenue).  Downtown Reno is pretty sleazy, even for a backoffice operation. 

post #8 of 17
Originally Posted by zoetmb View Post
Both Tim Cook and President Obama have said that Apple is going to bring some "manufacturing" jobs back to the U.S.    I had always assumed that it would mean nothing more than final assembly of the MacPro, since they don't sell that many of them.  

 

Heck, that's already done. My Mac Pro (2009) was "Assembled in USA".

 

Oh, and wasn't that handled when we started seeing the newest iMac design engraved with "something something USA"? Didn't that happen?

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
Reply

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
Reply
post #9 of 17
Will they be employing any actual Americans at the site? Hard to imagine Reno has the exact kind of engineers Apple will need. Either they move people in, train locals or bring in visa candidates. I wonder which.
post #10 of 17
Perhaps with the reduced sales tax for server's, not only can they build servers for the RTP, but they can build servers for Apple data centers in California and save the California sales tax? Don't know if that is legal/possible... Also, if the new site is building servers for other locations, keeping server assembly separate would reduce traffic in/out of the RTP data center improving security.
post #11 of 17
Quote:
Originally Posted by bwik View Post

Will they be employing any actual Americans at the site? Hard to imagine Reno has the exact kind of engineers Apple will need. Either they move people in, train locals or bring in visa candidates. I wonder which.

Well, as a technology worker in Reno, I take exception to your remark.  We have a fairly robust technology community here.

post #12 of 17
Quote:
Originally Posted by zoetmb View Post

 

Both Tim Cook and President Obama have said that Apple is going to bring some "manufacturing" jobs back to the U.S.    I had always assumed that it would mean nothing more than final assembly of the MacPro, since they don't sell that many of them.  

 

----

 

I also have to wonder whether Jobs would have supported the construction of an Apple facility in downtown Reno.   He once killed an Apple Store on either 14th street or 23rd street (I forget which) in Manhattan because when he visited the area, he thought it was too sleazy.    (Apple had also tried for a store near the Flatiron building, but abandoned the project after Community Board objections to the design.  They eventually wound up with a store at 14th street and 9th avenue).  Downtown Reno is pretty sleazy, even for a backoffice operation. 

 

An Apple "facility" has very different site location criteria than an Apple "store" would have.  The Apple Store locations are high profile, high visibility, high traffic, and high rent areas.  Aside from selling stuff, they are also intended to be architectural landmarks and image makers for the company. 

 

Apple's other facilities do not fit any of those criteria.  Just in northern California, Apple has their primary R&D operations in relatively generic buildings scattered around Cupertino; their server farm in Newark is about as anonymous as it gets and surrounded by industrial warehouses; their Elk Grove distribution facility is a nondescript building surrounded by tract houses and farmland; and their former manufacturing facility in Fremont (the original Mac plant) isn't exactly in a great area either. 

 

In actuality, I think downtown Reno would be a step up, if you're talking about a backoffice operation or fabrication facility.  The area has seen some urban gentrification and it has a good inventory of additional buildings that are ideal for gentrification.  Plus, a lot of new loft units were built along the Truckee River.  Apple locating in the downtown area would help fill the empty housing units downtown and give the area a decent economic boost. 

post #13 of 17
Quote:
Originally Posted by jdellnv View Post

Well, as a technology worker in Reno, I take exception to your remark.  We have a fairly robust technology community here.

A major office of IGT (International Game Technology), a S&P 500 company, is located in Reno.
post #14 of 17
Quote:
Originally Posted by jdellnv View Post

Well, as a technology worker in Reno, I take exception to your remark.  We have a fairly robust technology community here.

 

Good to hear!  Maybe you would take exception to the article's portrayal of Reno as a wasteland of abandoned motels where nothing happened for 15 years...  maybe that is just an AAPL savior narrative.  BTW looking forward to visiting your city one of these days.

post #15 of 17

I thought I read that they had to put the building downtown and stage the servers there to get a sales tax rate on the purchased equipment as part of the deal with Reno. If they buy the equipment from outside of Reno they don't get the deal. I could totally remember wrong as well.

post #16 of 17
Quote:
Originally Posted by bwik View Post

 

Good to hear!  Maybe you would take exception to the article's portrayal of Reno as a wasteland of abandoned motels where nothing happened for 15 years...  maybe that is just an AAPL savior narrative.  BTW looking forward to visiting your city one of these days.

I've grown tone deaf to the general portrayal of Reno.  Truth be told, there are still *lots* of shabby/abandoned motels in downtown, but there is also a lot of really good things happening here, and having Tahoe in your backyard doesn't hurt.  A summer evening in downtown Reno along the river walk or at an Aces game is just about perfect.

post #17 of 17
Quote:
Originally Posted by Phone-UI-Guy View Post

I thought I read that they had to put the building downtown and stage the servers there to get a sales tax rate on the purchased equipment as part of the deal with Reno. If they buy the equipment from outside of Reno they don't get the deal. I could totally remember wrong as well.

I think you are right.  That is also why I think they may be able to use the site to also build/stage servers for their California data centers at a significant discount (though don't know if that would be legal).

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