Begin forwarded message: > ne Tiny Town Becomes Internet-Age Power Point > By JIM CARLTON > March 7, 2007 > http://online.wsj.com/article/SB117323782744829194.html > > QUINCY, Wash. -- While much of the U.S. frets over a residential real- > estate slump, this small farming town on Washington State's plains > has the opposite worry: A boom-town economy is inflating housing > prices. > > Quincy has the Web to thank -- or to blame. The town's economic boom > began with the arrival of three high-profile neighbors: Microsoft > Corp., Yahoo Inc. and Intuit Inc. In 2006, the tech giants separately > announced plans to build new computer-data centers here. > > But while the new arrivals have brought prosperity, locals are > beginning to wonder how to handle what may be too much of a good > thing. Quincy is a town of 5,300 people and two traffic lights that, > until now, has typically seen only one to four new homes built a > year. Now, developers have filed plans for upwards of 1,000 new homes > and a strip mall that would include a hotel and the town's first > movie theater. Land prices have as much as quintupled over the past > year and apartment rents have jumped as much as 50%. > > Quincy's schools are becoming overcrowded and the overtaxed medical > services are under more strain. Some local farmers worry what will > become of the area's greatest economic asset and biggest business > lure: abundant cheap hydroelectric power. > > "The question is, 'Is there enough power to go around?' -- and we're > not going to know the answer to that for years," says Warren Morgan, > general manager of the local Double Diamond apple packing plant. > > A more troubling question: What if the boom doesn't last? The West is > filled with erstwhile boom towns that over-expanded during mining and > timber rushes in decades and centuries past. The tech industry has > fed boom-town economies in some Western states, only to pull out and > leave economic disarray. In next-door Oregon, a rush of computer > manufacturers into the state during the 1990s reversed course after > the industry started moving more jobs overseas. > > Quincy's quandary is one of the byproducts of the Internet age. Web > use is growing and more people are employing it to swap files such as > those for YouTube videos or online music. To cope with the increase > in traffic, Internet concerns like Yahoo and Microsoft are racing to > install new servers -- computers that store and relay large amounts > of information -- in warehouse-sized data centers that may contain > hundreds of servers. > > These tech concerns are finding that electricity is a fast-growing > portion of the cost of running those data centers, and to trim their > expenses they have turned to the Pacific Northwest. Power is cheaper > in the region because of the abundance of flowing water, especially > the Columbia River, which has many dams that hold back water for > hydroelectric plants. The rates run as low as two cents per kilowatt > hour, versus as high as nine cents for conventional power. > > Quincy is just one new hot spot in the region. Yahoo has built a data > center in Wenatchee, Wash. Google Inc., has built one in The Dalles, > Ore. A half-dozen other tech concerns have been in discussions with > officials along the Columbia River to put in more data centers. > > Northwest communities largely welcome the data centers. Many, like > Quincy, have had economies pegged almost exclusively to farming and > have been wanting to diversify. In the past, "when the farmers don't > do well, we all suffer," says Lisa Karstetter, executive director of > the Quincy Valley Chamber of Commerce. > > About two years ago, representatives of Microsoft and Yahoo began > scouting the Quincy area as a possible site for their data centers. > Quincy's local Grant County Public Utility District owns two dams on > the Columbia River, giving it a source of inexpensive power. And > Quincy is particularly attractive because it offers another critical > resource: fiber-optic cables that companies need to ship large > volumes of data around. The state passed legislation in 2000 that > promoted upgrades to telecommunications networks in rural areas of > Washington, spurring the Grant County Utility District to spend more > than $100 million laying the current fiber network. > > The tech giants tried to keep their plans quiet at first, in part so > as not to unduly raise expectations among locals in case they decided > to back out. But word got out. "Somebody saw Yahoo on my backpack, or > my purple [Yahoo] shirt," says Kevin Timmons, vice president of > operations for the Sunnyvale, Calif., company. > > In January 2006, Microsoft agreed to buy about 75 acres of farmland > from the Port of Quincy for about $1 million. Yahoo followed suit > soon after, acquiring 50 acres from the port for $500,000. Intuit in > November told Quincy officials of its plans to build a data center on > 68 acres of land in the same vicinity. > > Then the boom began. Quincy expanded its urban-growth zone to try and > accommodate the new development. Real-estate developers rushed in. > Officials of Entezar Development Group, Bellevue, Wash., say they > have sold out the first phase of 46 homes in a planned 134-home > subdivision. > > Company officials say they also expect to break ground later this > year on a commercial-retail development of more than one million > square feet that they say is expected to cost over $500 million. > "There's almost a gold fever around here," says David Lemon, regional > chief operating officer for the accounting and consulting firm of > LeMaster & Daniels. > > With as many as 1,000 new workers moving in, the town is crawling > with construction workers. The main drag, State Route 28, sees > traffic backups for the first time. "We're not used to waiting in > line for anything," says Pat Tobin, a local electrical contractor. > "If there are two people in front of you, you get mad." > > Quincy's infrastructure is stretched. The 29-bed Quincy Valley > Medical Center may have to spend between $18 million and $24 million > renovating or replacing its existing facility to help accommodate the > new demand from the boom as well as a surge in retirees and other new > arrivals in the surrounding area, says administrator Mehdi Merred. > "If the data centers were not coming in, I would downsize services > probably," Mr. Merred says. "But since they are coming in, I will > have to grow." > > With the first phase of Microsoft's data center complex set to open > in a few weeks with 40 or so employees, Quincy School District > officials are in the market to buy more land for new schools. But > that effort has been frustrated, so far, by the soaring price of > surrounding lots; land prices have quintupled from $6,000 an acre to > as much as $30,000 over the past year, says Roger Fox, the district > superintendent. > > In all, school officials say they may have to spend as much as $50 > million to expand to accommodate potentially hundreds of more > students. The investment, they acknowledge, could be put at risk if > the boom ends. "I feel like I'm rolling the dice some," says Mr. Fox. > > Farmers worry the data centers will eventually use up the power Grant > County is entitled to under its cheap contracts, forcing the farmers > and others to pay more for higher-priced power. Although officials of > the Grant County Utility District say they will be able to meet the > power needs, they add they might have to tap other sources -- > including buying more expensive power on the open market -- if many > more data centers come in. The costlier power could make Quincy less > attractive, putting a crimp on the boom. > > Still, many Quincy residents expect the prosperity to last once the > town gets used to the changes. "We're going to lose the little-town > atmosphere," says Nancy Richardson, owner of a shop called Pots and > Petals. "But this will set us up for the next 100 years." --~--~---------~--~----~------------~-------~--~----~ TELECOM-CITIES Current searchable archives (Feb. 1, 2006 to present) at http://www.mail-archive.com/[email protected]/ Old searchble archives at http://www.mail-archive.com/[email protected]/ -~----------~----~----~----~------~----~------~--~---
