Google Builds Data Center in Small Town, North Carolina

Posted on in Blog

A Monthlong Magnification of Google: the Company, the Technologies, and the Extracurricular Activities

When a small town in western North Carolina, suffering from the loss of their primary local industry and growing unemployment rates, heard that a major tech company was looking for real estate in the area, the Mayor himself went above and beyond to bring jobs and money back into his town.

In 2005, Google, looking to build a $600 million dollar data center complex, showed up in North Carolina—in the form of a consultant working for an anonymous tech company—and the town of Lenoir, seeing an opportunity to recover from its economic struggle, quickly got in the negotiation game.

At the beginning of the negotiations, a 127-acre plot of land was on the table and Google didn’t raise any objections. But, not long into the process, Google demanded more land. Lenoir’s Mayor, David Barlow did much of the leg-work himself to give Google the deal they wanted so that Lenoir, population 17,000, could be the site of one of Google’s data centers. Mayor Barlow knocked on the doors of Lenoir residents, located long-lost heirs, and the city even paid for a divorce just to stitch together a 216-acre plot of land to satisfy Google. (1)

Google’s demands on the water supply in Lenoir were far beyond what the small town could handle, so Mayor Barlow offered Google the best deal the town could afford: the city would pay $24 million for upgrades to the municipal water system if Google would agree to stay in town long enough to justify the huge expense. Google finally agreed to pay $1.05 million toward the water system expansion but refused to lock itself into a minimum period of residency. (1)

In addition to local tax incentives, Google pushed for a bill in the North Carolina state legislature that would make server farms exempt from sales tax on the electricity they use. Following a threat from Google’s negotiator that without the exemption, “the project simply will not come to North Carolina,” the bill passed in July 2007. (1)

In Lenoir, Mayor Barlow was quick to respond to Google’s demands, doing his best to give them the incentives and provisions they were looking for. The mayor spent unpaid evenings and weekends putting together a deal Google could live with. All in all, a small town made big adjustments to accommodate a large company, hoping for tax money to boost the town’s suffering economy. The end result of all of these negotiations also included tax rebates expected to be $5.87 million off Google’s $6 million tax liability. Google’s negotiator points out that this gives Lenoir $130,000 they wouldn’t have otherwise. (1)

Certainly a multi-billion dollar corporation is not expected to save the small town of Lenoir just so it can build its data center there, but the events leading up to Google’s deal with Lenoir suggest that Google was not opposed to capitalizing on the struggles and weakness of a small town. (1)

Food For Thought
In late 2005, Google showed up in Lenoir. Today, Google is starting to integrate into the town as they construct and test their new data center facilities. The Lenoir project received state and local incentives totaling up to $165 million over 30 years, and Google is now “mixing with local civic groups and donating charity Christmas trees for a public display” to say ‘thanks.’ (2)

How far should state and local governments go to entice companies like Google to share their hometowns? Did Google get too aggressive in their negotiations in Lenoir and take advantage of a small town with economic hardships? Does Google have any responsibilities to help improve the communities where the company builds data centers and other Google locations?

According to Google’s Carolinas Operations Manager, Tom Jacobik, “We’re not here to save the town. We’re here to run a business.” (2)


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