|
High-tech firm purchases 520 acres
By Dan McCue
Staff Writer
It’s the economic development announcement former Berkeley County Supervisor Jim Rozier said he wished he could have made prior to the election.
But ask him the name of the high-tech company that has purchased nearly 520 acres adjacent to the Cooper River in Berkeley County, and Rozier remains mum.
“All I can say is we’ve hooked a good one, with a great future,” he said, explaining that a legally binding nondisclosure statement with the company prohibits him from identifying it.
Rozier said the county had been in talks with the as-yet unidentified company for two to three years, after contact was initiated by the S.C. Department of Commerce. He said the company plans to employ about 400 workers locally, with an initial payroll of $36 million.
“However, long before that, we’re going to see the creation of literally thousands of construction jobs,” Rozier said.
Several published reports suggest the company is Internet giant Google, and in a written statement e-mailed to the Charleston Regional Business Journal, Barry Schnitt, a spokesman for company, confirmed that Google is at least considering an expansion into Berkeley County.
“We are expanding our technology infrastructure to support the strong and growing demand for our services,” Schnitt wrote from the company’s Mountain View, Calif., headquarters. “As a result, we are evaluating a number of sites, including Goose Creek. We hope to have additional details to announce in the coming months.”
Site size suggests data center
Moves outside of its Silicon Valley base are not uncommon for Google, which houses its massive servers at more than 60 data centers located throughout the United States and in Europe, and has been on a buying binge that saw it acquire nine smaller tech entities in the past year, including YouTube, the popular free video sharing service.
Google currently has more than 6,000 employees worldwide with data centers located in Atlanta, Chapel Hill, N.C., and Washington, D.C.
Dustin Rector, vice president and senior analyst for Tier1Research, a Minneapolis-based firm that provides market research and analysis for the IT industry, said while 520 acres might seem like a tremendous amount of land for such an endeavor, he suspected Google might be adding a data center in the Charleston region to bolster its coverage of the Southeast.
“Such a large land purchase is a way of saying ‘we don’t want anyone around us,’ and would provide them with a firm footing in terms of securing the perimeter of their facility,” he said.
Rector, who recently completed an in-depth analysis of Google’s acquisition strategy, ruled out other possibilities, including the possible relocation of assets the company has acquired since it went public in 2003.
Since that time, Google has bought more than 25 companies, most of them small startups that had received little or no venture capital funding.
“Of all the companies they’ve bought, YouTube was probably the largest in terms of work force, with some 70 employees,” he said. “Most of their acquisitions have been more about acquiring talent than someone else’s customers. The thing they seem to want most is to continually affirm or reinvigorate the company’s entrepreneurial spirit.”
Other industry analysts said Google has been looking for a location for Google Checkout, which it introduced in June as a rival to PayPal, eBay’s online payment service.
They also indicated that such a facility would require a work force numbering in the hundreds to deal with quality control and other issues associated with the service.
But Google’s Schnitt shot down that suggestion stating that “the proposed expansion … doesn’t directly relate to Google Checkout.”
Land already purchased
Seeming to suggest that Google has gone well beyond the consideration of Berkeley County are recent developments before the county council.
In October, Berkeley County approved a tax incentive package for a development in the Mount Holly Commerce Park off U.S. Highway 52, which initially was identified as Project X and later, Project Y.
By the time the resolution reached the council, the name of the entity receiving the incentive package had been changed once again to Pyrite LLC.
Shortly thereafter, a newly formed entity named Maguro Enterprises LLC paid $17 million for 520 acres in the industrial park.
County Councilman William E. Crosby told the Business Journal that Maguro and Pyrite, the latter of which is the proper name for the mineral known as “fool’s gold,” are in fact one and the same.
“While the changing names might be confusing, in actuality what transpired is very straightforward and typical of an economic development deal intended to bring a new employer to the area,” Crosby said.
“In this case, the company that doesn’t want its identity revealed established an entity, Maguro, to simply purchase the land; it’s kind of like someone hiring a Realtor and having the land transaction carried out in the Realtor’s name. However, we’re not giving the incentive package to Maguro … we’re giving it to the company whose name can’t be revealed, so for the sake of the authorizing the package, the state and the supervisor and whoever else decided it would be called ‘Pyrite.’
“It’s an industry in which competition is fierce,” Crosby said of the secrecy. “It’s like Lowe’s and Home Depot, neither wants the other guy to have any idea what they’re doing.”
What does all this have to do with Google?
While secrecy is paramount to almost all economic development deals, at least until all the parties agree to talk, Google’s reputation for its lack of transparency to the outside world is almost legendary.
In this case, however, company precedent may help pierce the veil.
Two years ago, Google purchased land on the banks of the Columbia River outside The Dalles, Ore., and proceeded to build a facility replete with two computing centers, each of which was the size of a football field, according to an article in The New York Times.
Throughout the development of the project the company insisted local officials refer to it only as “Project 02,” and as recently as June, when the Times article appeared, officials including the city manager and city attorney declined to comment on who had built the facilities, citing confidentiality agreements.
Even after the buildings opened, the local chamber of commerce was rebuffed in its efforts to hold a ribbon-cutting ceremony to welcome the region’s newest large employer.
Rozier said such secrecy is perfectly understandable in the highly competitive world of high tech.
“It’s an industry where you never want the competition to know what you’re up to, that’s the edge they all rely on, and that’s why I’d never dream of violating our confidentiality agreement with the company we’re working with, “ he said. “If I did that, Berkeley County might never get another shot like it has now.”
Google’s requirements
History also explains why a Google or Yahoo or Microsoft would chose a location like Berkeley County for a new data center.
When the company formerly announced its intention to build a facility bringing 600 new engineering and support jobs to Arizona last year, Google senior director Douglas Merrill said the company wasn’t merely interested in what incentives it could garner, but rather had decided on a location rich in colleges and universities, and a on place known for its quality of life.
Both descriptions easily apply to the Lowcountry.
Crosby said as part of the incentive package, the company will pay a fee-in-lieu of property taxes.
Under current state guidelines, any company that invests at least $5 million in a new plant or expansion in South Carolina may negotiate with the county in which it is locating to pay a flat fee instead of the full amount of property taxes due.
The fee, which is negotiated for 20-year terms, can go as low as 6% of the assessed value of the property, as opposed to the 10.5% the company would normally pay, Crosby said.
The fee-in-lieu agreement also allows the company to lock into the current millage rate for 20 years.
Crosby didn’t know the exact details of the incentive package he voted to approve, citing a longstanding practice in Berkeley County of the supervisor being given free reign to work out economic development deals in collaboration with the state Department of Commerce, the Charleston Regional Development Alliance and the county’s economic development staff, he said.
However, he did say that he wouldn’t be at all surprised if it wasn’t similar to the package provided to Nucor Steel in 1995 when it announced it would build a facility in Berkeley County to produce hot-rolled and cold-rolled sheet steel.
According to a report prepared by the American Institute for International Steel Inc., an industry association and lobbying group, Nucor’s incentives included a 30-year cut in state property taxes, an investment tax credit and exemption from state sales tax on building materials.
Crosby said the Nucor deal contained considerable incentives not only because the company would employ hundreds, but also because several of Nucor’s suppliers were also expected to open facilities in the area.
The question now is, what sort of facility might the Internet search engine giant—a company analyst Rector described as “the U.S. Steel of (his) generation”—be bringing here in return.
“The problem with trying to describe what a Google data center might be like in Charleston is that there are no hard and fast metrics on them,” Rector said. “Projects like this were hush-hush to begin with, and since 9/11 they’ve been even more so,” Rector said.
The best he said he could offer was a generalized description.
“I think the best way to describe a data center would be to say that they are basically big server farms with facilities near by to house diesel generators in case their main source of power goes down,” Rector said. “In fact, it’s entirely possible that they are located near water, as was the case in Oregon and as sounds like the case near Charleston, so that they can generate at least some power of their own, lowering their power costs.
“One thing is certain,” Rector added. “If a data center is in fact coming your way, they are going to need a lot of brainpower, and that should really help bolster the region’s high-tech sector.”
Significant competition
But if the land purchase in the Mount Holly Commerce Park would seem to make Google’s entry into the Lowcountry a done deal, other developments cast the situation very much in doubt.
On Dec. 28, North Carolina officials approval a $4.8 million “Job Development Investment Grant” for Google should the company locate its server farm in Lenior, N.C.
In published reports, Deborah Barnes, a spokeswoman for the state’s commerce department, said the state is very hopeful the company would choose North Carolina.
“Offering the grant was a major hurdle that (Google) needed,” Barnes told the News and Observer in Raleigh.
North Carolina has been pressing hard to lure high-tech companies in recent months. Last summer, its General Assembly extended sales-tax cuts to apply to electricity and equipment for Internet companies.
Officials there believe Lenior is particularly attractive because it used to be the center of a now-languishing furniture manufacturing industry, and as a result, has a robust but largely untapped power grid that could be used to Google’s advantage.
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
Lindsay Danzell contributed to this report.
|
E-Mail This Article
Printer-Friendly Version