Apple Pays Off Lucky Landowners in Its Bid for NC Datacenter

Donnie and Kathy Fulbright of Maiden, North Carolina don’t know much about datacenters and streaming music, but they can certainly appreciate Apple Inc.’s growing push for supremacy in the internet services sector.  After building a 500,000-square-foot warehouse-like structure next door — likely to house servers — Apple decided to build a second data center next door and contacted the Fulbrights about purchasing their property.

At first the Fulbrights were reticent, rejecting Apple’s first two offers.  A persistent Apple finally made the offer sweet enough, agreeing to pay $1.7M USD for the 1-acre property.  That’s particularly exceptional given North Carolina’s depressed property values.  The couple were able to use their proceeds to buy a 39-acre property and build a 4,200-square-foot house, complete with an in-bedroom jacuzzi and manmade bass/koi pond.

The couple originally bought the land 30 years ago for $6,000.

For Apple, the acquisition is a relief and a vital piece to its new plan to make the North Carolina its data-center capitol.  Apple isn’t the only one looking to build up new capacity in small-town America.  Microsoft Corp., Facebook Inc. and Twitter Inc. are all building data centers in lightly populated areas as well.  Microsoft in August announced plans to build a $500M USD data center complex in neighboring rural Virginia.  

Apple is looking to beef up its data-serving capabilities to cope with increased App Store, iAd, and iTunes serving demands.  It also is reportedly eying an eventual entry into the world of streaming music.

Microsoft and other companies have created 3,100 jobs and brought $3.6B USD in capital into Virginia.  North Carolina, currently recovering after being struck particularly hard by the recent recession, is looking to follow in Virginia’s path to success.  To lure Apple in, the state government approved $46M USD in direct state tax cuts.  And Catawba county tax recordsreveal that county governments are also pitching in, cutting personal property taxes by 85 percent, and cutting Apple’s property taxes in half.

Apple’s properties in Catawba and Maiden are located about 35 miles northwest of Charlotte.  Lenoir, North Carolina, located about 70 miles northwest of Charlotte, is also getting its own data center — a $600M USD Google data center, lured by similar breaks.

The initiatives may pay off.  Apple says it may employ as many as 50 locals as IT workers at the data center, and another 250 people as maintenance and security.  And the construction will create 3,000 jobs.  That’s a big deal given that the state has an average unemployment rate of 9.7 percent, and Catawba has an average unemployment rate of 12.3 percent. 

To top it off, Maiden, which has an annual budget of $13.1M USD is projected to pull in $5.1M USD in tax revenue from Apple over the next 10 years, while neighboring Catawba, with an annual budget of $202.2M USD, is expected to pull in an additional $4.4M USD over the same time period.  That may not sound like much, but it could make a crucial difference for the cash-strapped municipalities.

Kitty Barnes, chairman of the Catawba County Board of Commissioners is bullish on the project, stating, “Names like Google and Apple indicate you’re in the 21st century and open for business, so we hope to propel this to something greater.”

But some aren’t so happy about it.  T.J. Rohr, a libertarian city councilman in Lenoir is outraged, commenting, “I have a problem with government giving large multinational corporations millions of dollars in handouts.”

Mr. Rohr admits that Google has been a relatively friendly neighbor, funding free Wi-Fi in the city’s downtown area and donating computers to schools, but he calls the tax cuts/breaks/incentives “a lazy way to recruit business”.