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LENOIR - State and local governments could hand Google more than $100 million in tax breaks over the next 30 years.In exchange, the company that runs the world's largest search engine would build a hub in this foothills community for its massive international computer network and hire 210 people.The prospect has the area abuzz, even though many residents know little about the technology titan and are unsure who would work for it."People are expectant but hesitant," said Dinell Clark, who, with her family, recently opened a home furnishings store in downtown Lenoir. "What do we get for that 30-year generosity?"Google, which has not committed to a site in Lenoir, could bring $600 million in new investment, equal to half the city's tax base and more than 10 percent of Caldwell County's.But neither city nor county would reap riches in revenue. To win the facility, Lenoir and Caldwell County officials have agreed to waive 100 percent of Google's business property taxes and 80 percent of real-estate taxes for three decades.The state is waiving taxes, too. Last year, the General Assembly eliminated sales taxes on electricity and certain other expenses incurred to build and maintain operations like the one Google is contemplating. Department of Commerce officials have promised a separate grant, and Google can apply for additional tax credits.The cost of the state's concessions over 30 years could top $96 million. Local politicians will not publicly estimate the cost of their enticements, but the state and local incentives combined could easily exceed $100 million.Despite the benevolence, few, if any, of the 3,400 unemployed people in Caldwell County are likely to get the Google jobs. The positions probably will require specialized education and skills lacking in this blue-collar community."How can it possibly be worth it?" asked Jim Henson, a Lenoir native and single parent, who makes his living dismantling pieces of old furniture factories.Economic officials say the largess is needed because Google is considering rival sites in South Carolina and elsewhere. And Google is needed, they contend, as the foundation for a new economy that Lenoir must put in place to move forward.Leaders expect the Google name to lure other employers to the area, which has been devastated by manufacturing declines. It's a big gamble with an uncertain payoff that spotlights the rising price -- and risks -- of economic rejuvenation.Prosperity in cyclesFor generations, Lenoir was propped up by the furniture industry. Residents depended on the Broyhills, Bernhardts, Kincaids and other furniture families for economic well-being. The factory jobs were difficult and they didn't pay all that well, but they sustained thousands of workers.The furniture families pumped money back into the community, building golf courses, stores and other amenities."There was a time when it was booming. ... There were people creating jobs left and right," said Henson, whose mother worked in a furniture factory for 30 years.But as global competition led to consolidation and bankruptcies, plants closed or laid off workers.In the past two years, about 2,500 people in the county lost their jobs in the furniture industry.Empty factories and warehouses scar the city. At the mall recently, only seven stores were open.Boosters have worked to recapture some of the lost grandeur. Downtown Lenoir, named for a Revolutionary War figure, is going through a revitalization. Clark, owner of the home furnishings store Rococo Rionel, and her family renovated a building from 1879. Cynthia Hicks, proprietor of Abigail's Gifts, is preparing to move into a new space near the revamped city square. Even the hardware store has added local crafts to attract new clientele.A housing boom is making way for a new class of residents. High-end homes and gated communities are planned or under construction to attract retirees.Everywhere, though, the furniture influence remains -- a sign downtown welcomes visitors to "the furniture city" -- and its legacy is hard to escape.In Caldwell County, 66 percent of adults are high school graduates, according to census data, compared with 78 percent in the state overall.The unemployment rate is 8.4 percent. That's down slightly from a peak of 13.1 percent in July 2005 but far above the 1.8 percent recorded in July 1999. In December, furniture maker Broyhill said that it would put 390 more out of work.One hundred people a day seek assistance from the N.C. Employment Security Commission's office in Lenoir. But few new businesses fill the void. Vantage Foods, which processes fresh meats sold at grocers, will open a Lenoir plant by summer and create about 180 jobs. A Super Wal-Mart is planned in nearby Granite Falls.At Abigail's Gifts, Hicks hopes that Google will bring prosperity."The economic impact that this is going to have, I can't even fathom it," she said, raising and shaking her arms with excitement. "It is absolutely one of the best things that could happen."A Lenoir resident, she moved her store from Banner Elk about 18 months ago to cut down on commuting costs. Business has been growing, but Hicks said she isn't taking a paycheck.Google could change that, she thinks.With the company, she sees a more educated work force. Workers will make an average $48,000 a year, almost twice the county average. They'll demand nicer homes, restaurants and things, she figures.Their money will course through the local economy and to businesses like hers."You've got to start somewhere," Hicks said. "We're going to take every little accomplishment, because they all build."Jumping at the futureThe state's economic leaders are pushing communities like Lenoir to embrace companies that are likely to shape the future.Google is the world's most-used guide to the Internet, tracking and revealing all manner of information, from chicken recipes to the whereabouts of high-school exes. It has become a business and cultural force.With more than $11.86 billion in cash and a market value exceeding that of Boeing and Caterpillar combined, Google is a lucrative target for any business recruiter.If Google can be lured to Lenoir, leaders believe other high-tech companies, suppliers and businesses could follow.The logic is similar to that used in 2004 when the state recruited a Dell factory to Winston-Salem. North Carolina, city and county governments offered the computer manufacturer $280 million in enticements to get the operation.That deal was taken to court."It's mind-boggling that these kind of giveaways are taking place," said Bob Orr, a former N.C. Supreme Court justice who unsuccessfully sued to stop the Dell incentives. "There are a number of struggling businesses or people who would like to open a business who don't get this kind of break."In Lenoir, there has been much consternation about the way governments have dealt with Google and handled taxpayer money.The entire process has been secret, as is often the case in such projects. Aliases Tapaha Dynamics and Madras Integration were used to hide Google's identity.While broad terms of local incentives have been made public, the specifics are still unknown."There's a certain amount of resentment anytime your elected officials tell you, 'I'm sorry, I can't tell you how we're going to' " spend tax dollars, said George Bernhardt Jr., the sixth generation to run Bernhardt Seagle Hardware Store, which opened in 1829.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 gridWhether 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."
Staff writer Jonathan B. Cox can be reached at 836-4948 or jcox@newsobserver.com.
