Apple came to NC almost a decade ago. Here's how it changed one community.

Apple considering NC’s RTP for new center

Computer giant Apple is actively considering locating some of its operations in North Carolina's Research Triangle Park.
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Computer giant Apple is actively considering locating some of its operations in North Carolina's Research Triangle Park.

For the past decade, Apple has been quietly digging into North Carolina's foothills.

The internet giant has helped create a data center corridor that has attracted other companies and bolstered the economy in Maiden, the Catawba County town where it set up operations in 2009, as well as in nearby Rutherford, Cleveland and Caldwell counties.

Now, the company is once again looking at the state — this time the Research Triangle area — for a possible fourth campus with thousands of jobs and billions of dollars in investments, and state lawmakers in their recent session passed incentives legislation designed to seal the deal.

There are many who are opposed to public incentives for private industry. And there are neighbors of Apple’s Maiden operation and others who are skeptical of Apple's actual benefit to the community. But Catawba County’s manager Mick Berry says there isn't much to argue about, especially in his small community, 170 miles west of the state capital.

"There was a couple hundred acres sitting there with only farm value and not generating any jobs," Berry said in an interview last month. "Now it's our single biggest taxpayer, generating revenue to the county of almost $1.5 million and employing 400 or 500 people. It was as close to a no-brainer as you get in this business."

Apple didn't confirm those employment numbers. When it announced the data center it said it would spend $1 billion and create 50 direct jobs and 150 indirect jobs. Data centers, which are simply networks of computer servers that store, process and distribute data, are typically not huge employers. But county officials say the company has far surpassed its original estimates, with nearly $5 billion invested at the site so far and at least 400 regular employees and permanent contractors on-site.

Berry and Maiden Town Manager Todd Herms can easily tick off other examples of what Apple has meant to the community.

▪ The tech company has increased the tax base in Maiden, which has allowed the community of 3,000 to build a new city hall and fire station, and the county to install a major water line.

▪ Catawba County is starting an education and economic development initiative to train tech workers and place them in internships paid for by Apple tax proceeds.

▪ Between 2009 and 2011, at a time when other municipalities in Catawba had to increase property taxes, some by as much as 12 cents on every $100 of valuation, Maiden twice lowered its rate for a total reduction of 2 cents on the $100. Maiden currently has the lowest property tax rate in the county.

And that tax base continues to grow. Apple has two additional data centers — one $22 million project under construction now and another planned. It has also built three solar farms and a biogas fuel cell installation both inside and outside of the high-security fence that surrounds several hundred acres. Apple says the facility is its largest anywhere.

The company’s efforts go beyond Catawba County, too.

▪ It has worked with the Nicholas Institute for Environmental Policy Solutions at Duke University to develop the biogas market in North Carolina.

▪ It has been talking with Catawba County officials about building a renewable energy facility to convert methane to electricity at a county landfill.

Apple chooses to keep its name out of some of the programs that benefit the community, Berry said, keeping with its reputation for secrecy.

To help bring Apple to Catawba County, state lawmakers in 2009 passed legislation that amended the corporate income tax, which reduced Apple's tax bill by an estimated $46 million over a decade.

In addition, Catawba County provided incentives in the form of more tax breaks that returned half of the company's tax on property and 85 percent of its tax on business personal property, which covers equipment such as computer servers.

Apple paid $900,000 for the 127 acres where it built the first data center. The property has most recently been assessed at $168 million.

Apple's current county tax bill is $6.2 million, with $4.8 million of that returning to the company, which puts $1.3 million into the county's coffers. The original 10-year term of the county incentives package has been extended to 30 years as Apple has expanded the site.

Berry said Apple's contribution to the area goes beyond tax revenue. Apple, he said, has put Catawba and its neighboring counties on the radar of other companies looking to expand.

"When you have the world's largest corporation locate one of their highest-cost facilities in your community, that puts you on the map for a lot of things," Berry said.

While Google was the first to establish a data center in the region. Apple's data center was followed by Bed Bath & Beyond and Facebook. Regional economic developers are promoting several more such locations. Walt Disney and AT&T are other companies that have moved into the data center region.

Not everyone in Maiden loves Apple.

Some neighbors complained about the trees that were cut down and burned to make room for the data center, along with the noise when it was being built. Clearing has led to storm-water runoff onto their property, they say. They think Apple has been secretive and hasn't hired many local workers. Security is intense at the facility, they say. Helicopters fly in and out on a regular basis. Apple spent millions of dollars buying about a dozen houses that they tore down along with the trees to clear the land for the data centers.

The nearest residence is about one-quarter mile from the main building.

David Vosburgh, a retired construction worker, says he doesn't know anyone who has been hired there. He has lived in Maiden about 15 years, and says he unsuccessfully applied for a job at the data center.

"Something is going on over there that they don't want people knowing," Vosburgh said in an interview last month. "They're always building. They're very, very, very, very bad people. My opinion is they're terrible."

Some details of the Maiden center are publicly known, often emerging through regulatory filings. Apple did not respond to questions submitted by The News & Observer.

Late last year state environmental regulators cited the company for failing to properly document how it handles potentially hazardous material. In a settlement, Apple agreed to pay a $40,000 fine without admitting it had done anything wrong.

Department of Environmental Quality reports indicate there are computer server rooms, offices, maintenance and energy-generation areas. The mall-sized center is comprised of more than half a million square feet on several hundred acres.

The violations included failing to conduct a proper determination of spent fuel cell filter waste material, failing to file a report with the state's hazardous waste unit, failing to prepare a manifest for transporting hazardous waste, failing to offer hazardous waste to an EPA-identified transporter or disposal facility, and failing to pay several thousand dollars in annual fees required of companies that generate large amounts of hazardous waste.

State inspectors focused on Apple’s shredding computer hard drives and maintaining lead acid batteries. They also looked at fuel cells that convert natural gas into electricity with a catalyst to remove benzene and sulfur. The process produces a spent catalyst, which could contain high levels of benzene, that is transported to Texas, repackaged and then shipped elsewhere. Apple generated 44,000 pounds of the hazardous waste between 2014 and 2016, inspectors said.

Other records from that case indicate Apple operates the data center around the clock, but don’t disclose how many people work there.

Success can be hard to measure when it’s an analysis of something as obscure as a data center surrounded by a security gate.

The tax benefits have been obvious, and Catawba County's unemployment rate — like the rest of the state — has plunged since 2010 from 14.9 percent to the current 3.9 percent, compared to the statewide drop to 4.3 from 10.4 percent during the same period. In Catawba the employment gains can be attributed in part to the return of the furniture industry. Motor vehicle parts manufacturing, freight trucking, computer systems design, employment services and home health care are among the other industries that have had the fastest job growth over the past seven years, according to the Catawba County Economic Development Corporation.

But the economic growth isn't attracting an influx of new residents. Catawba County has seen a flat 2 percent increase in population and a 1 percent increase in housing, according to U.S. Census figures.

And while data centers are becoming increasingly popular around the country because of cloud computing, there is disagreement about whether the benefits to small towns are economic or political.

"For data centers, the impact on jobs is quite small," says Todd Cherry, economics professor and policy director at Appalachian State University. "Generally, given the typical incentive package, the centers do not employ many people, and the ripple effects are minimal."

Cherry said in an email last week he wasn't familiar with the details of the Maiden project, but that projects often receive incentive packages that offset much if not all of the increase in tax revenue that government receives. The hope is that big economic development projects create momentum for attracting other companies with less aggressive incentive packages.

Cherry said the benefits from landing major companies are sometimes more psychological and political than economic.

Tell that to Berry, the county manager. There were no negatives in the Apple data center, he says.

"I highly recommend it — take 'em if you can get 'em," he said. "Otherwise, send them to us."

Craig Jarvis: 919-829-4576, @CraigJ_NandO

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