September 15, 2015
The late American journalist Mignon McLaughlin once said, “The excesses of love soon pass, but its insufficiencies torment us forever”. Although she never resided in Hillsboro, Oregon, her take on the fleeting nature of love seems to aptly describe the current state of the city’s data center relationships. For those of you who follow these things, you may remember that Hillsboro was the destination de jour for data center companies just a few years ago. Digital Realty, ViaWest and Fortune, among others, fell hard the area’s charms—along with its tax abatements–and city’s leaders seemed to share in this infatuation, but the “bloom” appears to be “off the rose” as they say.
The driving force that brought this emerging schism to light is the city’s plan to develop a new enterprise zone to attract businesses to its sparsely inhabited northern confines. Pitched as an “urban renewal” initiative—apparently the concept of irony is the first casualty of revenue generation plans since the area designated to become the new enterprise zone is made up of green fields and unused farmland—civic leaders propose to turn these “blighted” areas into a thriving metropolis of new companies and jobs that would add “significant value to the income taxes in the state”. So far so good, but since the scheme requires that the revenues that fund the local schools be frozen so any increases over the current levels can be used to fund the development costs of the proposed zone, folks are getting a little picky about what type of companies they want to invite to the party.
Since it takes only slightly more employees to run a data center than it does members of troop 354 to sell Girl Scout cookies in front of the local grocery store, the savvy members of the Hillsboro school board have realized that the only way they are going to get some extra cash from an area populated by companies that won’t be paying taxes anytime soon is to find those with a lot of workers who will. Thus, “data centers” are now ranked somewhere below “new Taco Bell” on the Chamber of Commerce’s list of desirable alternatives to un-furrowed corn fields. You can say “any business is better than a vacant lot” all you want, but no one wants to tell an unruly mob of parents that the district can’t afford to buy new uniforms for the band this year.
Fortunately for providers still seeking to acquire a Hillsboro mailing address, the plan for the new enterprise zone is to adopt a “large lot, single-user” strategy with lot sizes ranging from 50 to 100 acres. No matter how you look at things, with land parcels that big there aren’t a lot of businesses you can put there, and people can eat only so much fast food. Members of the school board weren’t too keen on this part of the plan but were reassured that the city wouldn’t be marketing these opportunities to data center firms. However, they did acknowledge that a “few more might come”– probably those with an attached Taco Bell to boost the employee volume.
If you’re like me, I think you’ll agree that it’s always sad to see a good relationship go bad. Some of you may be saying, “But Hillsboro and data centers seemed so right for each other”, and I would agree, but obviously this unilateral alienation has been building for a while now. It’s kind of like those Hollywood divorces that you read about except no one has to worry about who gets the kids. In the end, however, I think that the data center industry will not find itself to be persona non grata within the confines of Hillsboro. Deep affection may be downgraded to mutual respect, but both parties realize they need each other. Data center providers crave the climate and geography, and the good folks of Hillsboro know that to rebuff such an ardent suitor is a mistake when they have so many other fish in the sea to choose from. In other words, Hillsboro may have lost that “loving feeling” but they’ll still be willing to go steady.