With sights set on $1B Apple server farm, NC approves changes

Posted:
in General Discussion edited January 2014
North Carolina lawmakers debated for less than a minute on Monday before approving changes to the state's corporate tax laws designed to lure Apple and a $1 billion server farm project to one of their rural communities.



The Associated Press reports that the state Senate voted 40 - 8 in favor of the move following last-minute pleas from republicans who urged that the bill be rejected on grounds that it unfairly favors big businesses over small, localized companies.



Apple declined to comment on the matter but Gov. Beverly Perdue is expected to sign the bill into law quickly in hopes that the Mac and iPhone maker will respond "within days" with an official commitment to begin building a $1 billon server farm in the backyard of one of the state's struggling counties.



The bill was structured to give a single company -- identified last month as Apple -- a tax break of up to $46 million over the next 10 years, assuming that company reaches its $1 billion investment target within nine years of beginning the project, provides health insurance for its local employees, meets a wage standard, and foregoes other state grants or tax breaks.



Should Apple's server farm remain active for three decades, corporate tax breaks could exceed $300 million, according to estimates outlined by North Carolina's legislature. The project is expected to create hundreds of construction jobs during a year-long construction effort and employee roughly 100 when the site initially opens for business.



Server farms, more commonly referred to as data centers, are sprawling, climate-controlled computer facilities designed to process massive volumes of data that come and go via thick internet pipes. As such, they typically consume large amounts of power, and in some cases, water.



For its part, Apple has reportedly been considering two sites in western North Carolina to house the server farm, which is expected to support the staggering growth of its iTunes and App Store digital download services: Catawba and Cleveland counties, both of which have unemployment rates north of 15 percent.



However, a report published Monday by Data Center Knowledge singled out Catawba as frontrunner, saying its an "all but done" deal that Apple will choose the county over rival Cleveland County. The Cupertino-based company is even reported to have earmarked a specific piece of land for the project.



Catawba County officials have reportedly been touting several sites off Route 321 for their fiber and power infrastructure in an effort to market those locations as viable data center lots. One site is a 183-acre tract in Maiden*known as Catawba Data*Park, which may*suit Apple’s reported desire for a multi-facility campus*setting.
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Comments

  • Reply 1 of 68
    chronsterchronster Posts: 1,894member
    Those 8 do make a good point about favoring "big businesses over small, localized companies."
  • Reply 2 of 68
    Are you suggesting that some other "small local" company was competing with Apple to spend $1B in North Carolina to build a server farm?
  • Reply 3 of 68
    ivladivlad Posts: 737member
    yay for Skynet!
  • Reply 4 of 68
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by chronster View Post


    Those 8 do make a good point about favoring "big businesses over small, localized companies."



    The ideology to make everything equal and offer no special favours is great, but it's irrational to expect such things and in this case would hurt smaller businesses. Even in the consumer market we expect discounts the more we spend (eg: 'buy 2 get 1 free' and 'spend more than x-amount to get an additional 10% off'). This is just a "spend $1B over 10 years and get $4.6M back each year."



    The truth is that this will bring a lot of additional income to the state for at least a decade, increase jobs and support many small businesses who might be bitching today but will be happy when they land the lucritive Apple contract to build or service whatever.
  • Reply 5 of 68
    jroyjroy Posts: 27member
    Quote:
    Originally Posted by jeffmac7101 View Post


    Are you suggesting that some other "small local" company was competing with Apple to spend $1B in North Carolina to build a server farm?



    I'm pleased to see that there appears to be some diversity among Republican legislators. Not sure what the "small, local companies" are that could invest that much in their state, but as far as I can tell in many states and nationally, Republican legislators usually shower the very biggest of big businesses with tax breaks, bend or remove any rules that hamper their ability to profit at everyone else's expense, etc. Hey, the previous national administration even let some big corporate representatives re-write federal rules for their own benefit. Seems to me that many small businesses have gotten trampled by big businesses favored by legislators of both parties. Maybe things are different in North Carolina?



    In any case, I hope that the state and local taxes generated by the jobs produced by the new data center directly and indirectly will exceed the tax break received by Apple. I'm glad to see a set of fairly tough conditions on the tax breaks. In New Jersey and New York, tax breaks to businesses have often been provided with no performance requirements. So a business may get a huge tax break, then leave town a few years later, and get to keep all its tax breaks without their employees having generated the income to the local town or state.
  • Reply 6 of 68
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by JRoy View Post


    I'm pleased to see that there appears to be some diversity among Republican legislators. Not sure what the "small, local companies" are that could invest that much in their state, but as far as I can tell in many states and nationally, Republican legislators usually shower the very biggest of big businesses with tax breaks, bend or remove any rules that hamper their ability to profit at everyone else's expense, etc. Hey, the previous national administration even let some big corporate representatives re-write federal rules for their own benefit. Seems to me that many small businesses have gotten trampled by big businesses favored by legislators of both parties. Maybe things are different in North Carolina?



    In any case, I hope that the state and local taxes generated by the jobs produced by the new data center directly and indirectly will exceed the tax break received by Apple. I'm glad to see a set of fairly tough conditions on the tax breaks. In New Jersey and New York, tax breaks to businesses have often been provided with no performance requirements. So a business may get a huge tax break, then leave town a few years later, and get to keep all its tax breaks without their employees having generated the income to the local town or state.



    You bring up two excellent points.
  • Reply 7 of 68
    chronsterchronster Posts: 1,894member
    I suppose on this scale, it seems to be better to go with large business. I work with small company that does this sort of thing. What I notice is that we can adjust to what our customers want far quicker than a large company like Apple would. Communication is better and approval for major decisions doesn't need to go through a long drawn out process.



    On the other hand, with a one BILLION dollar server farm, perhaps a large business IS better due to the fact that this will take a long time whereas small businesses tend to work with contracts that last half as long.



    Either way, this will create more jobs in the area, which in turn will help the economy there. I don't think Apple will be able to offer the same benefits as small business, but still, in this economy a job is a job.
  • Reply 8 of 68
    Quote:
    Originally Posted by iVlad View Post


    yay for Skynet!



    and 165 miles from the Apple built System G Supercomputer at Virginia Tech -http://www.vtnews.vt.edu/story.php?relyear=2008&itemno=745
  • Reply 9 of 68
    constable odoconstable odo Posts: 1,041member
    I thought Apple's data center/server farm was going to be something special. Now I hear that RIM is building one that's even larger in Atlanta and will have double the number of employees as Apple. I doubt it will have double the capacity of storage, though. No matter what Apple does, RIM is managing to go it one better. RIM isn't exactly collapsing due to the threat of the iPhone as was widely predicted. Being a much smaller company, RIM can take Apple head -on and that's pretty amazing. RIM must be stealing market share from Nokia very quickly.
  • Reply 10 of 68
    ksecksec Posts: 1,494member
    I totally do not understand. How is Akamai put into context? What is the need for all these extra servers?
  • Reply 11 of 68
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by ksec View Post


    I totally do not understand. How is Akamai put into context? What is the need for all these extra servers?



    Apple hasn't stated the specific need, but everything points to iTunes Store, App Store, MobileMe and Push Notifications all growing drastically.
  • Reply 12 of 68
    chronsterchronster Posts: 1,894member
    Quote:
    Originally Posted by Constable Odo View Post


    I thought Apple's data center/server farm was going to be something special. Now I hear that RIM is building one that's even larger in Atlanta and will have double the number of employees as Apple. I doubt it will have double the capacity of storage, though. No matter what Apple does, RIM is managing to go it one better. RIM isn't exactly collapsing due to the threat of the iPhone as was widely predicted. Being a much smaller company, RIM can take Apple head -on and that's pretty amazing. RIM must be stealing market share from Nokia very quickly.



    You tend to build up a nice little financial reserve when you're around as long as they've been, doing as well as they have. The iphone in 2 years isn't going to completely undo everything RIM has done in the past eight years or so.
  • Reply 13 of 68
    elrothelroth Posts: 1,201member
    Don't forget that North Carolina gave Dell and (I believe) IBM tax breaks that were north of $200 million or so. I don't know how those deals worked out for the state.



    I'm curious as to why Apple wouldn't want to go to a colder place for a huge server farm. Google has some in the Pacific Northwest.
  • Reply 14 of 68
    maestro64maestro64 Posts: 4,233member
    Yes some construction workers will make some money for a year, and maybe a few locals will be hired to man the complex. After that not local companies will make much money off a facility like this except the local power company. May a local restaurant or two might make a few dollars too. I highly doubt the state will see its return on investment on a facility like this.
  • Reply 15 of 68
    justflybobjustflybob Posts: 1,337member
    Quote:
    Originally Posted by solipsism View Post


    Apple hasn't stated the specific need, but everything points to iTunes Store, App Store, MobileMe and Push Notifications all growing drastically.



    I haven't really been following this too closely, so forgive me if this question is redundant.



    Has there been any discussion or thought at all of Apple providing fast, high quality, low cost data serving for apps on the iPhone that use and need such services?



    Just a thought...
  • Reply 16 of 68
    mstonemstone Posts: 11,510member
    Working there is going to be like working on the space station. People used to working in a sophisticated urban like the Bay Area will crazy living in rural NC.
  • Reply 17 of 68
    buzdotsbuzdots Posts: 444member
    Quote:
    Originally Posted by Maestro64 View Post


    Yes some construction workers will make some money for a year, and maybe a few locals will be hired to man the complex. After that not local companies will make much money off a facility like this except the local power company. May a local restaurant or two might make a few dollars too. I highly doubt the state will see its return on investment on a facility like this.



    Do what?



    Even if they bring in construction work from elsewhere, they will have to sleep, eat, shop and vacation in North Carolina. This centralized location is a long drive if you are a construction worker in another state. It is also less than a 1/2 hour drive from one of the more affluent areas in that part of the state - Lake Norman. And only about 45 minutes from Charlotte.



    Also, plenty of professional talent to man the operation once it is done - or buy those multi-million dollar homes on the lake...



    Let those "Bay Area" residents stay where they are, they are far to superior to come east anyway.
  • Reply 18 of 68
    al_bundyal_bundy Posts: 1,525member
    Quote:
    Originally Posted by Maestro64 View Post


    Yes some construction workers will make some money for a year, and maybe a few locals will be hired to man the complex. After that not local companies will make much money off a facility like this except the local power company. May a local restaurant or two might make a few dollars too. I highly doubt the state will see its return on investment on a facility like this.



    what investment? NC is giving apple a bunch of tax breaks to move there. if apple goes somewhere else then NC won't get any tax revenue from the business that Apple will generate



    not like NC is going to write apple a $1 billion check. Apple just doesn't want to pay property taxes, or have them greatly reduced
  • Reply 19 of 68
    Quote:
    Originally Posted by elroth View Post


    Don't forget that North Carolina gave Dell and (I believe) IBM tax breaks that were north of $200 million or so. I don't know how those deals worked out for the state.



    I'm curious as to why Apple wouldn't want to go to a colder place for a huge server farm. Google has some in the Pacific Northwest.



    Winston Salem NC (where I live) gave Dell incentives based on meeting employment numbers, which they did in '06 & '07. They did not in '08 & '09. They will not receive their tax break for those years.



    Tax breaks as incentives are not the same as a check written to the company. Mayor Joines (Winston Salem mayor) did a good of tying the incentives to employment. If Dell does not meet their goals they don't get the breaks. Worst case scenario is they close up shop and Winston has a state of the art manufacturing facility to lure another manufacturer. Someone will pay property taxes on this building even if it is vacant.



    The high water mark for employment at the plant was 1400 and has bee cut by around 250. So we have over 1100 people employed for calendar years '08 & '09 and "we" are not on the hook for relieving Dell of their tax liability.



    Seems like its still a good deal to me.
  • Reply 20 of 68
    al_bundyal_bundy Posts: 1,525member
    Quote:
    Originally Posted by Constable Odo View Post


    I thought Apple's data center/server farm was going to be something special. Now I hear that RIM is building one that's even larger in Atlanta and will have double the number of employees as Apple. I doubt it will have double the capacity of storage, though. No matter what Apple does, RIM is managing to go it one better. RIM isn't exactly collapsing due to the threat of the iPhone as was widely predicted. Being a much smaller company, RIM can take Apple head -on and that's pretty amazing. RIM must be stealing market share from Nokia very quickly.



    RIM needs to invest some money to improve their OS so it can run on better hardware and they are working to improve AppWorld. BB has a lot of apps, but you have to search around the internet to find them



    otherwise there is nothing stopping anyone from making a phone with the same or better hardware than what is in the iphone. not like apple invented any of the hardware in it. it's all in the software
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