Company X Plans Oregon Data Center

prineville

The city of Prineville, Oregon is negotiating with a large, secretive company that wants to build a data center in its enterprise zone.

A "well-funded, well-known company" is negotiating to build a large data center in central Oregon, and the secrecy surrounding the negotiations has folks in the town of Prineville wondering who it might be. Officials in Prineville have been negotiating with Vitesse LLC, a company performing site selection for the unnamed end user that would build operate the data center, according to local media reports.

The site is several hours from an existing Google data center in The Dalles and a Boardman site where Amazon is said to be resuming construction on a major data center project. Like those projects, the process in Prineville has been cloaked in secrecy.

Google-Style Secrecy
"The only thing I could tell you is this is not unlike what the city of The Dalles went through when Google sited their data center in their community," Prineville City Manager Steve Forester told the Bend Bulletin. "A very similar process. They had a code name for an LLC that did their preliminary work with the city and the county, and it turned out to be Google. And up in Moses Lake, Washington — where they have several of these things — same pattern." Local economic development officials told the paper that a non-disclosure agreement prevents them from discussing the project.

Oregon business registration records indicate that Vitesse LLC was registered Oct 21 and shares a San Francisco address with the law firm Paul, Hastings, Janofksy & Walker. Attorneys with Paul, Hastings have data center site acquisition experience, including past engagements with large financial companies and Internet companies.

The proposed facility would be located near the Prineville Airport in an enterprise zone, which allows the city to waive property taxes for eligible projects. Tomorrow the Prineville City Council is scheduled to consider selling a 1-acre piece of property to Vitesse for $50,000, annex two adjacent properties to the city and approve a 15-year property tax exemption for the company that would operate the data center.

Oregon's Lure for Data Centers
The project is the latest indicator of the growing appeal of the northwest as a destination for companies seeking the lowest operating costs for their data centers. The region's abundant supply of affordable hydro power is a major factor in its appeal, as are tax incentives like the tax exemption being discussed in Prineville.

Who is the mystery user? The existing Google and Amazon projects in Oregon would seem to rule them out. But one possibility is Yahoo, which has publicly discussed the possibility of shifting some of its data center development to Oregon in the wake of a tax dispute with officials in Washington state, where the company built a large data center in Quincy.

Washington Repeals Tax Break
In late 2007 Washington State ruled that data centers aren't manufacturers and were no longer covered by a state sales tax break for manufacturing enterprises, and thus must pay a 7.9 percent tax on data center construction and equipment. This prompted protests from Microsoft and Yahoo, who said they had relied upon the tax break in their decision to build facilities in Quincy.

In a letter to legislators, Yahoo co-founder David Filo said the withdrawal of the sales tax incentive "swings the decision strongly in favor of freezing construction in Washington, and building instead in Oregon (which has no sales tax), as some of our competitors are already doing."

Microsoft subsequently migrated its Windows Azure cloud computing infrastructure from its data center in Quincy to another Microsoft facility in San Antonio.

Photo of Prineville, Oregon from wka via Flickr.