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.