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Google's Iowa data center smart move, experts say

By building new data centers in Iowa, Google gains access to cheap power, cheap land and an educated workforce.

Google Inc.'s plan to develop at least two data centers in Iowa is a smart choice for many reasons, data center site selection experts say.

Google's $600 million Iowa data center project is under construction on a 55-acre site at the Council Bluffs Industrial Foundation's new business park and is expected to open spring 2009. The two-building project includes the purchase of an abandoned industrial building, which will be retrofitted to suit Google's needs.

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The big question is why Council Buffs, Iowa, a town with a population of about 60,000? It just so happens that Iowa ranks in the top 10 most cost-effective places to build a data center in the U.S., according to studies by location consultants The Boyd Company, Inc., of Princeton, N.J. The ranking is based on factors, such as land and power costs, availability of local workforce with data security skills, airline service from national carriers, insulation from natural disasters and quality of life.

Iowa has a lot to offer organizations building a new data center, said Drue Reeves, vice president and research director at the Burton Group, an IT consulting firm. Among Iowa's virtues are:

  • Cheap land. Google Inc. bought 1,185 acres at this location and an option to purchase several more acres south of Council Bluffs. It has plenty of room to expand at a fraction of the cost of purchasing land in the San Francisco Bay area.
  • Plenty of reliable electricity.
  • Relative safety from natural disasters. While it's true that there's a threat of tornados and floods, Google's location is not in the 100-year flood plane and a direct hit from a tornado is unlikely. Also, Council Bluffs is an unlikely terrorist target.
  • A large, college-educated population. Nearby Omaha, Neb., has a population over of 400,000 and over 850,000 live in the greater metropolitan area, with several universities.
When you combine these with tax incentives, Iowa makes perfect sense, Reeves said.

Prairie lands, the Missouri River and Google

In addition to the land Google is building on now, it also invested in an extra 1,130 acres of land, giving the search engine company plenty of elbow room if it ever decides to build additional facilities.

"Companies want to buy more land than they need -- buffer acreage -- for future expansion and security reasons. Google bought more than 1,000 acres just in extra space. You can only buy that much land in the Midwest," said John Boyd Jr., a consultant with The Boyd Company.

As far as earthquakes, wildfires and hurricanes go, the only way Iowans see these sorts of natural disasters is by searching Google for them. It stands to reason that Google's facilities should be relatively safe, as well."There is no perfect location in terms of natural disasters, but the area of Iowa Google is in is pretty safe," Boyd said.

The new data center will staff about 200 employees, including experienced data center managers and Linux administrators.

Google is likely to have a deep talent pool to choose from, thanks to the Information Assurance Center at Iowa State University (ISU). The center is certified by the National Security Administration (NSA) and offers master's degrees in computer science, electrical and computer engineering, and operations and management information systems. "These types [NSA-certified] programs do drive where to build," Boyd said.

Potential employees will likely relocate to Iowa from out of state, as well. "If you are a Google employee and have the opportunity to move Midwest and buy a bigger house for less money than you could possibly buy on the East or West Coasts, you would probably do that," Boyd said.

Generally speaking, Iowans are a relatively educated bunch. In 2006, about 90% of Iowans graduated high school and about 25% of citizens had bachelor's degrees -- an average figure, according to U.S. Census Bureau data.

Google's tax breaks

Iowa's tax system was recently revamped to lure in computer-related businesses. The recently enacted statutory sales and property tax exemption for cooling systems, power infrastructure, generators, electricity and other equipment applies to companies, like Google, that invest at least $200 million in the state.

Google will benefit from a local property tax rebate through 2024. Despite any rebates, Google will still pay about $65 million in real property taxes over the next 15 years, the equivalent of the property tax collected annually from 3,771 homeowners in Iowa. Google also will pay an estimated $6 million in sales taxes in just the next two years from the purchase of building materials, hundreds of thousands of dollars per year in electricity franchise fees and income, payroll and other taxes when operating the facility.

Data centers a political hot button issue

Political leaders are getting hip to the idea that data centers are running out of space, require large amounts of cheap electricity, need protection from disasters and a large population pool from which to draw talent, Burton Group's Reeves said.

"Pennsylvania is also positioning (itself) as an alternative disaster recovery site for Wall Street companies," Reeves said. "Look for this trend to continue as 2008 political races begin to heat up. Gubernatorial, legislative and mayoral candidates will undoubtedly use these data center wins as major selling points on political agendas and position their states and municipalities as ideal data center localities."

During late 2006, Google reportedly looked at a number of localities across the Midwest, but would not disclose any specific sites or why they were dismissed. "Many factors contributed to the decision, including the strong infrastructure and the excellent team from Council Bluffs Industrial Foundation, the city of Council Bluffs and the Iowa Department of Economic Development who worked with us to make this possible," said Barry Schnitt, a Google spokesman.

Google energy

The electricity powering Google's Iowa data centers will come from MidAmerican Energy Holdings Co. Primarily a coal burning energy provider, MidAmerican does have a number of different generation sources on its grid, including renewable energy, Schnitt said.

MidAmerican owns wind-powered electric generation sources and has 695.5 megawatts of wind energy facilities in operation, under construction and under contract in Iowa. Also, pending approvals, MidAmerican Energy plans to add another 540 MW of wind energy in Iowa, equivalent to removing emissions from more than 682,000 vehicles, or 43%, of all the registered automobiles on the road in Iowa.

Google has also set out its strategy to help build a cleaner energy future. Last week, the company announced that it plans to be completely carbon neutral by 2008. "That's going to be tough, especially with this (Iowa) facility, since MidAmerican burns coal," Reeves said.

Google recently announced another project in nearby Pryor, Okla. Schnitt said Google is always looking for potential sites to host its infrastructure and expects to make more announcements in the future.

Let us know what you think about the story; e-mail: Bridget Botelho, News Writer

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