Data Centers, Locations and a (very) Brief Ohio Story

I read a couple of interesting articles on AreaDevelopment Online (http://www.areadevelopment.com/) this past week. The articles were: “What’s Important in the Data Center Location Decision” and “Bigger is Not Always Better: Finding the Right Community for a Business Location.” The former has six main points:

1.) There is a fast, rising need for data centers;
2.) The need for consistent electrical load is critical;
3.) Weather patterns and natural disaster potential are also critical location factors;
3.) Fiber optic connectivity is essential;
4.) Energy costs are a key factor in location (a definite advantage for Ohio muni electric communities);
5.) Energy needs may come from alternative sources;
6.) Like everyone else, data centers are looking for incentives.

In the latter article the key ideas are:

1.) RURAL areas are being noticed for having available labor (at lower rates), lower utility costs and lower tax costs;
2.) “Urban islands” surrounded by rural areas area also attractive for the above reasons plus having a sophisticated ED agency that understands its needs;
3.) Rural areas with nearby urban amenities are also included in this location mix.

This brings an interesting story. Recently, a data center was considering a location in 3 rural Ohio area: (1) rural NE Central Ohio; (2) Rural southeast Ohio and (3) rural western Ohio. The key here, being rural. All locations are relatively close to urban areas. The one community had the usual incentives on the table: building, tax incentives, low interest loans…this one even included local hotel chains offering lower room rates! A true community effort!  I was amazed that after reading these articles, here was the same situation playing out in three rural Ohio communities.

This is interesting for a couple of reasons.  I have been talking with city and village officials and county ED officials across Northern Ohio (north of I-70) over the past two months.  And the anecdotal evidence is … well … confusing.  Of course, the reductions in the LGF have people shaking and planing on reducing their remaining 2011 budgets and forecasting the same for 2012 budgets.  At the same time, about half of the communities seem to be holding their own financially and are even forecasting income tax rates at above their original forecasts.  Northwestern and Eastern Ohio seem to be the areas that are not quite feeling much of a recovery.  Western and Central Ohio seem to be holding their own.

Suburban areas are just as confusing and just as contradictory.  Regardless….the stories above from AreaDevelopment Online do hold a message for the rural communities – especially the stand alone community surrounded by agricultural areas.  They may wish to consider educating themselves on data centers and similar technological oriented companies and start ups and their locational needs.  This of course, means, having a handle on presentations that include tax rates, utility rates, discussion with local electric providers (IOU’s, rural co-ops, and muni electrics).

CDJ’s partners are available to assist communities and county ED agencies in preparing community information programs and incentive packages for these type of businesses.

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About Economic Development Data Services, Inc.

EDDS is a company focused on providing effective, efficient solutions for local governments in the areas of community and economic development and strategic planning. We offer the BARC - Business Assistance Recruitment Calculator - tool and website solutions in developing economic development websites. Our new website is www.econdevdataservices.com
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2 Responses to Data Centers, Locations and a (very) Brief Ohio Story

  1. Your comments are right on the money here! Liberty Township near Columbus has landed two data centers in the last five years and the electric and broadband availability are huge issues to the customer. What i did not foresee was the significance of some unlikley risk management factors in their decision making process. A Tier Three data center needs “uptime” and they mean 99.999% (plus) of time online,no excuses. I vividly recall the discussion (learning moment) with one THE national site selection staffer for one organization and he cited Ohio’s LOW RISKS as huge factors in the selection process. We all know about the low tornado incident and complete lack of hurrricanes, but I never gave a thought about the almost complete lack of underground gas deposits and the correlated risks for debilitating explosions. Ohio has some underground mines and potential explosion risks in some areas, but mostly we are a state void of that risk, a fact that knocked Pennsylvania out of one of the running for one of the aforementioned site selection processes and the $500M data center landed in our community. that selection has made several others pause long and hard to study why they made their choice to locate in Delaware County.

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