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

First let me say, if he’ll stop talking about the how the “incentives were critical” so will I.

MySA.com: Business

Incentives were critical in persuading Microsoft to build its second data center in San Antonio, said Mario Hernandez, president of the Economic Development Foundation, which has been working with the company for nearly a year. The first will open next month in Quincy, Wash.

Apparently incentives weren’t critical for Quincy, Washington. So if you’re going to make comparisons, at least do it with North Carolina. Given how much their spending on Google, we look brilliant.

Now I understand that this will make Microsoft CPS’s largest customer and that in general, it’s a good thing to attract big customers. If you have a big customer, you can guarantee revenue on which to base future investments. You might gain efficiencies by being able to deliver your product to just one site rather than ten. You might only need to design one version of your product rather than three or four to accommodate a larger number of smaller customers. So I do get it.

What I would like to know is what does CPS get out this by having Microsoft as it’s largest customer? According to David Marquez, the appeal of the Microsoft deal is the capital investment.

MySA.com: Business

“This is kind of an unusual abatement for us,” said David Marquez, the county’s economic development director. “The job creation number is low, but the capital investment number is high.”

How so? Isn’t CPS actually paying the costs from it’s special fund? How will these investments pay off for CPS and/or San Antonio rate payers?

Technorati Tags: Microsoft Data Center, San Antonio, San Antonio Data Center, Economic Incentives, CPS, City Public Serivce, Mario Hernandez, David Marquez, Bexar County Commissioners