Cities, States Wrestle With Data Center Costs

Many state and local governments are housing critical data in older facilities. It's a scenario that is inefficient and, in some cases, could be a disaster waiting to happen. But with budget crises afflicting all levels of government, can these local governments afford to move their IT operations into modern facilities?

It's a question that cropped up in two places this week, as politicians experienced sticker shock upon realizing that better data centers come with a pricetag.

In San Francisco, the city government is planning to migrate its primary data center from  its current location at 1 Market Street to 200 Paul Avenue, the carrier hotel operated by Digital Realty Trust (DLR).  A recent report by the Committee on Information and Technology  said a dispersed approach was wasteful and led to "duplicated support costs."

Consolidating into a more modern data center like 200 Paul - a data center hub whose tenants include United Layer, Telx and dozens of carriers -  comes at a price. It will cost 77 percent more per month to lease the new facility for a total of $1.93 million annually, an increase from the $1.09 million being paid to rent out the 1 Market St. location, the Examiner reports, citing a report from a city budget analyst.

Meanwhile, rates at a new $300 million state data center in Washington are prompting questions from state agencies, according to Oregon Public Broadcasting. Current state lease rates average $20 per square foot. The cost at the new data center complex is nearly double that at $35 per square foot, and projected to rise to almost $44 by 2014.

"Initially there's a sticker shock," said Stan Marshburn, deputy director of the governor's budget office. "Opening the door, it's a brand new building the cost of the brand new building is a lot. Over thirty years the building will be a reasonable cost for the taxpayers to pay for an office space."

Local politics and data center projects often don't mix well, as we've previously noted. We’ve seen data center projects become embroiled in political battles over whether to build new facilities, where to put those data centers (i.e. in which legislator's district), who to hire to operate them, and whether to offer tax incentives to establish a state as a destination for development.

In an era where state budget crises are becoming annual rituals, the day of data center reckoning can't be postponed forever. I'm reminded of the old industry chestnut about the data center manager who had no budget until the day after the data center crashed - at which point funding suddenly materialized to fix whatever was broken.