That has got me thinking, what should that return be? How will we measure it? And then it dawned on me. Rackspace is getting about the same amount in economic incentives (probably less) to move to Windsor Park Mall and it’s promising 3000 jobs in five years. Therefore, the Microsoft name should be worth about 3000 new jobs as well, shouldn’t it be?

Now I don’t know a lot about data centers but lets assume that the average data center employs 100 people. That would mean that 30 more data centers would need to relocate to San Antonio for us to get the expected return on investment on the Microsoft name.

Also, given that San Antonio was already attracting some data centers here, they can’t all be attributed to the Microsoft name. We’ll need some sort of percentage. How about we’ll give 75% of the new data centers to Microsoft’s credit? Let’s see, so that would mean we would actually need 40 data centers to move to San Antonio. In five years.

Oh, and one other thing, none of the new data centers can receive any local economic incentives otherwise that undermines the value of the Microsoft name.

So which do you think will end up bringing the most jobs to San Antonio, Microsoft or Rackspace? Vote in our poll on the right.

Technorati Tags: Rackspace, Windsor Park Mall, economic development, Microsoft, data center, Texas Enterprise Fund

MySA.com: Business

Under the deal, Windcrest will pay San Antonio for 30 years on the 221 acres it gave up. San Antonio is guaranteed to receive at least $4.1 million, but it could receive as much as $34.5 million in a split of property and sales taxes.

San Antonio gave Microsoft Corp. a 10-year, 100 percent tax abatement worth $20.7 million and voted to provide $5.2 million from the CPS Energy economic development fund for its $550 million data center in Westover Hills. But the only incentive the city provided to Rackspace was the boundary change.

In addition to the $22 million state grant, Rackspace is receiving incentives from Windcrest, including a 14-year tax abatement on the property.

Windcrest officials also are purchasing 111 acres south of the mall and plan to select a developer to create a $225 million mixed-used residential and retail complex.

Rackspace plans to invest $100 million in the Windsor Park Mall location. It also plans to move its 1,300 local employees to the mall and to hire 3,000 more employees with an average salary of $51,000 within the next five years.

So we give Microsoft $20 million for 75 jobs and nothing for a home-grown company that is planning to hire 3,000 more employees. Rackspace is adding executives as well.

Rackspace beefs up executive ranks – San Antonio Business Journal:

Rackspace hired Kiprian Miles, the former vice president and chief information officer of Golfsmith International, as the company’s new vice president of information technology.

The company also hired Thomas Hatton as Rackspace’s newly created vice president of talent development position.

How many executives is Microsoft sending here? Why do we believe that Microsoft is going to generate more economic development than Rackspace? Why is it the state can come up with money to keep Rackspace here and the city and county can’t. According to Nelson Wolff

MySA.com: Business

“It’s wonderful for Rackspace to make a statement that they would like to be the Dell of San Antonio,” Bexar County Judge Nelson Wolff said. “It shows their community spirit.”

Community spirit? The state coughed up $22 milllion to keep Rackspace in San Antonio. I suppose it is community spirit since Rackspace could have just as easily move to Dallas and still keep the state money.

This is typical San Antonio. Something developed locally couldn’t possibly be worth our money be it politicians or companies. But come up with a name like “Microsoft” and we’ll throw all kinds of money just for the honor of the company associating its name with San Antonio even though San Antonio was considered a prime data center location before Microsoft ever announced plans to build here.

I bet we could have paid Microsoft for the right to call it the “Microsoft Dome” and it would have cost us less.

Technorati Tags: Rackspace, Windsor Park Mall, economic development, Microsoft, data center, Nelson Wolff, Texas Enterprise Fund

San Antonio’s fastest-growing technology company, Rackspace Managed Hosting, might move its headquarters to the Windsor Park Mall.

Or it might move out of state.

Other states are actively recruiting Rackspace, which has 1,612 employees including 1,250 in San Antonio, said Lanham Napier, Rackspace’s chief executive officer.

So give them Windsor Park Mall already, it’s still cheaper than what we’ve given Microsoft. Unfortunately, I don’t think this is just about space.

MySA.com: Business

Napier said the question is whether Rackspace can make Windsor Park Mall the right long-term home. “For the next 5,000 Rackers, is San Antonio the best place to do that, or do we need to move to another talent market?”

Now what exactly does he mean by “talent market?” Could it be that during the 2005-2006 school year, the area’s largest institution of higher education, UTSA, produced a little more than 100 graduates with Bachelor’s or Masters in computer and information sciences? Could it be that San Antonio’s “low cost” of living isn’t enough to lure the needed talent to the city? Maybe they expect something more in terms of quality of life? So how is getting Microsoft to build a data center here going to keep Rackspace from leaving?

Technorati Tags: Rackspace, Windsor Park Mall, Lanham Napier, Microsoft, San Antonio, data center, economic incentives

San Antonio data center agrees to buy 100 percent renewable power – San Antonio Business Journal:

CityNAP became the first “green” data center in Texas by signing a new contract with CPS Energy to purchase all of its power from renewable wind-generated electric sources.

CityNAP is an Internet hub and data center that serves as a point of convergence for multiple fiber-optic networks. Through it, companies like AT&T Inc. (NYSE: T) and Time Warner Cable Inc. (NYSE: TWC) can access multiple communication networks.

Anyone else ever hear about CityNAP? This is an internet company that started last summer here in San Antonio. From the picture on it’s website I would guess it has only seven employees. But if the going rate for economic incentives for high tech jobs is a quarter of a million dollars, then CityNAP is worth at least a million and a half from the city.

Does CityNAP need the assistance? Who knows? But I’m pretty sure Microsoft didn’t need the money either and it’s getting it. What are we doing to encourage high tech businesses to develop and grow here? How many years will it be before CityNAP decides to move to Austin like Click Forensics?

Why is it that San Antonio seems more willing to spend gobs of money for a big, name, easy win that too often turns out to be temporary rather than invest money in existing, local talent? An inferiority complex? Actually, I think it’s easier for us to give money to people outside the city because spending it locally would run the risk of someone feeling like their not getting their “fair share” of the pie. So we give it to Bill Gates instead.

Technorati Tags: Microsoft, Data Center, CityNAP, CPS Energy, Frank Robles, San Antonio, Texas, Network Access Point

“When we come into a community, we invest in the community,” Microsoft’s Andrew Weiss told the court after the vote, saying the company plans to get involved in San Antonio philanthropy.

Yeah, I guess it’s cheaper than actually having to pay taxes.

MySA.com: Business

“This is a game changer for us,” said Mario Hernandez, president of the San Antonio Economic Development Foundation, which has worked on the project for almost a year. “This will really put us on the map — the Microsoft name alone.”

He probably has a point here. I’ve seen this story picked up by European and Asian newspapers not to mention every newspaper with a business section in the U.S. I don’t know if $36 million dollars could buy a comparable media campaign for San Antonio.

And here’s the real winner in all of this:

MySA.com: Business

Microsoft plans to begin construction on the project as soon as it finishes its contract with the city and county and closes on the land. That deal is expected to close within six weeks, said Charles Martin Wender, developer of Westover Hills. He declined to reveal the price.

Hopefully the legislature will pass a bill that would require the value of commercial real estate transactions to be made public. That way business can start paying their fair share of these economic incentives.

Technorati Tags: Microsoft Data Center, San Antonio Data Center, Economic incentives, Charles Wender, Andrew Weiss

MySA.com: David Hendricks

If the city did not receive this CPS Energy revenue, city property tax rates would be higher. Since 1942, CPS Energy revenue has contributed more than $3.4 billion to city coffers.

I really don’t follow the logic. According Hendricks, every CPS customer pays fourteen percent into the city’s annual fund.

MySA.com: David Hendricks

That eventually will defray the $20.7 million value of the city’s property tax abatement to Microsoft.

Uh, that means we’re paying to defray for the city’s tax abatement to Microsoft as well. Then there’s the following statement about offering aid to attract similar businesses:

MySA.com: David Hendricks

If a company can put up Microsoft-type numbers, the door is open.

The only “numbers” I’m familiar with are the 75 jobs, 425 short of the usual 500 required for such tax abatements, that has been promised by Microsoft. So does this mean any company can come in and offer 75 jobs and get a tax abatement from the city and infrastructure support from CPS? Of course not. What he means is that if a company with a big name comes in and offers 75 jobs we’ll bend over backwards for them it.

The pathetic funny thing is that the areas that are being help up as examples received the development for nothing.

MySA.com: Business

Unlike San Antonio, Quincy did not offer any incentives to lure Microsoft or any of the other data center companies there. Neither did the state.”It was nothing that we went out and recruited,” Connelly said.

In fact, the article emphasizes that the critical factor in locating such centers is the availability of inexpensive power.

And then there is the questions of why exactly does Westover Hills need any sort of economic incentive zones. Apparently we gave the Lowe’s data center a ten year tax abatement for 25 to 30 jobs. However, that number seems to have somehow inched up to be “up to one hundred jobs” for justifying the tax break. Do you think anyone will check in five years to see exactly how many people Lowe’s is employing in its data center?

I can see where this is going. In a few years we’ll be paying Google to let us put their name on the Alamo dome.  That way we don’t have to worry about investing in areas the contribute to our quality of life such as transportation planning and development, parks, libraries, soccer fields, the arts, educational opportunities, and the like. All we care about is name recognition, right?
Technorati Tags: Microsoft Data Center, San Antonio, San Antonio Data Center, Economic Development, Tax Abatement, David Hendricks

Web Host Industry Review | theWHIR Blogs : New Google Data Center to Receive $100 Million in Tax Benefits from North Carolina

I read about it on ValleyWag: Google is going to build a $600 million data center in Lenoir, North Carolina. WRAL reports that Google will receive $100 million in tax benefits over the next 30 years. That’s $500K for each of the 200 jobs that the data center is expected to create.

WRAL says North Carolina was going up against South Carolina for the Google project. Does that mean the rumored $750 million investment by “Maguro Enterprises” near the South Carolina coast isn’t related to Google? Or has the “high tech development project that needs access to lots of electricity” been shelved?

By the way, as a point of comparison, Rich Miller over at Data Center Knowledge says Microsoft’s tax abatement deal from San Antonio totals only $20.7 million. Microsoft plans to invest at least $550 million in the 470,000 square foot data center project; the facility is expected to create 75 jobs.

That’s still over a quarter of million dollars per job for San Antonio. And spare me the argument that we will develop “supplier” job similar to what is expected with Toyota. Do you really think Microsoft needs its servers manufactured locally?

As for the predicted increase in tax revenue expected to be generated, isn’t that going to be needed to fund demands that the data center will ultimately place on the city’s infrastructure? Then there is the fact that the 75 jobs is a “conservative” estimate. Go ahead and double it and what do you get? The whole point of data centers is that they can be managed remotely. All the “add-on” value remains in Redmond, Washington.

When will we start spending money on developing our own resources? It seems that San Antonio companies success despite the city.

E-Commerce News: Servers: Rackspace: A Study in Fanatical Customer Support

“We have remained true to that specialized offering, which has helped us to maintain profitability since February 2001,” Rackspace CTO John Engates told TechNewsWorld. “As a result, we are the fastest-growing managed hosting specialist in the world.”

Engates pegged that growth at 60 percent annually.

The firm has been steadily increasing the number of workers it hires to service an expanding customer base. Rackspace does not purchase other companies and absorb those workers, Engates said.

Technorati Tags: Microsoft, data center, San Antonio, Microsoft data center, Rackspace, North Carolina, Google, tax abatements, economic incentives