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Published: Jan 16, 2007 12:00 AM
Modified: Jan 16, 2007 05:40 AM

Google breaks may top $100M

Tax incentives aim to land Lenoir hub

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How the deal could add up for Google

Google could get more than $100 million in tax breaks and other incentives if it agrees to build in Lenoir. Here are how the incentives break down:

NORTH CAROLINA

Sales tax exemption. The General Assembly last year approved a measure eliminating sales taxes on electricity and certain purchases for data centers like the one Google is contemplating.

The exemption could mean that the state would forgo $89 million in tax revenue over 30 years, based on estimates provided by the Commerce Department to the legislature's Fiscal Research Division. The state has not identified any business prospects other than Google that could benefit from the change.

Investment grant. A Commerce committee last month approved a Job Development Investment Grant potentially worth $4.7 million. The company would have to create 168 jobs and invest at least $480 million before 2011 to get the full benefit.

Tax credits. Google can apply for tax credits that, assuming it creates 210 jobs, could exceed $2.6 million.

LENOIR AND CALDWELL COUNTY

Officials in the city and county have agreed to waive 100 percent of Google's business property taxes and 80 percent of real-estate taxes for 30 years. They have not provided an estimate on the cost of that provision.

(The General Assembly Fiscal Research Division, With Figures From the N.C. Department of Commerce)

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He's not convinced that Google will solve the problems that have plagued the community, but he's hopeful that it will begin a "reorienting" of the economy.

Lenoir's got the grid

Whether or not Google makes sense for Lenoir, Lenoir makes sense for Google.

The "server farm" that Google is considering would house hundreds, perhaps thousands, of computers to operate the search engine and support online maps, software and other products.

Each rack of servers can generate as much heat as a seven-foot-tall stack of toaster ovens, according to Vericenter, a Texas company that operates data centers nationwide. A center can have dozens of racks. Because a computer's performance deteriorates as it heats, air conditioning is crucial. For every $1 a company spends operating a computer, it must spend another $1 to cool it, according Vericenter.

Google, then, must put its data centers in places with robust power grids. Lenoir, with infrastructure to support furniture factories, is an ideal spot. And with so many plants now idle, the grid has excess capacity.

Duke Energy and the Caldwell County Economic Development Commission have bought about 150 acres and homes for a business park to accommodate Google. The Lenoir City Council rezoned the area to heavy industrial.

Winning, though, is not a given.

The company is considering a site near Charleston, S.C. for an operation similar to the one that Lenoir wants. About 520 acres have been purchased there. And the company reportedly is looking at an additional 477 acres near Columbia, S.C.

The South Carolina legislature approved a measure similar to the one in North Carolina waiving sales taxes on electricity and some purchases.

No information has been made public on other incentives South Carolina is considering.

Wherever Google builds, the facility will lead to change. But perhaps none more so than in Lenoir.

Server farms require "extremely, extremely skilled people," said Jennifer Z. Lozier, director of marketing for Vericenter. There are systems engineers, network engineers, security experts, environmental engineers. Those are not skills readily available in Caldwell County, but residents could find new jobs in construction, retail or real estate.

In northern Oregon, where Google is building a data center, hundreds of construction jobs were created. Local real estate prices jumped.

For Mike Dula, 34, of Lenoir any benefit is welcome. He runs his own painting business and has struggled to make ends meet.

"I'm excited about making more money," said Dula, a father of four who has another on the way. "If that's going to help, I think that's great."


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Staff writer Jonathan B. Cox can be reached at 836-4948 or jcox@newsobserver.com.
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