With Friday’s announcement that Fidelity Investments will build a $200 million data center in Papillion, the total invested in Omaha-Council Bluffs metro area data centers is estimated at between $1.5 billion and $2 billion.
The investments have come from companies such as Google, Yahoo, Cabela’s, PayPal, First Data, ConAgra Foods, Union Pacific, CoSentry and First National Bank — all corporations whose success depends on processing, transporting, storing and securing massive amounts of digital information.
But the Fidelity deal marks the first time a corporation has launched a project taking advantage of a new state law, passed as LB 1118, to create an additional tier of Nebraska Advantage incentives for large data center projects. And because of the new law, the development may mark the first of many, industry analysts and state and economic development officials say.
Gov. Dave Heineman said having Fidelity Investments use the new incentive “helps us set the bar for other quality companies” weighing locations for future data centers.
Data centers generally do not provide a lot of jobs — Fidelity talks of 30 to 35 — but they are well-paying jobs, and state and local governments covet the property taxes from such projects.
In recent years, the discrepancy between states that do offer incentives for data center projects and those that do not has been stark, with perhaps the best example playing out between Oregon and Washington state, said Kelly Morgan, an analyst for 451 Research, a firm that specializes in business technology, cloud computing and data centers.
Earlier this year, the Washington Legislature passed tax exemptions for new data center projects that were similar to incentives the state once offered that expired in 2011.
Before the expiration, Morgan said, Quincy, Wash., was a hotbed for data centers, securing projects from companies such as Yahoo, Microsoft and other technology firms. But once the tax breaks ended, Quincy and the rest of the state saw the pipeline of projects dry up and migrate south to Oregon, where there is no sales tax.
“These kind of incentives are very helpful,” Morgan said. “There’s a fine line between the benefits given out and what’s coming in, but I think they do make a difference.”
The incentives agreed to by the City of Papillion, Sarpy County and the Nebraska Department of Economic Development include:
» Refunds on all sales and use taxes paid on the property.
» A 10 percent investment tax credit.
» Property tax exemptions for the next 10 years.
» Lower sewer connection fees of $500,000, a reduction of $260,000 in fees waived by the City of Papillion.
» And $2.9 million in road construction approved by Sarpy County that will pave a one-mile stretch of 114th Street at Cornhusker Road and a quarter-mile stretch of Cornhusker Road around the project site.
Since planning for the Fidelity project started roughly two years ago, more than 85 economic development employees from the state, Greater Omaha Chamber of Commerce, City of Papillion, Sarpy County and other economic development groups helped in securing the project, known previously only by the code name “Project Photon.”
At the onset of the project, officials were required to sign nondisclosure agreements that banned them from revealing Fidelity as the company behind the data center, making the project planning that much more difficult, said David Brown, president and CEO of the Greater Omaha Chamber of Commerce.
Additional challenges involved coordinating lobbying efforts in the Nebraska Legislature to make sure the Nebraska Advantage Act was amended to apply to the project and considering the pros and cons of “several” metro-area sites.
“It was a very complicated project, really,” Brown said. “The more we have of these, though, the more people are going to be interested in building data centers here.”
In addition to the Omaha-area plots of land, Fidelity had multiple site options, including renovating some of its own existing data centers, company spokeswoman Jenny Engle said.
One factor in choosing the Papillion site: It allows the company flexibility to build to its specifications and to accommodate future growth, said Steve Scullen, president of corporate operations for Fidelity, a global financial services firm.
Fidelity said the data center will be environmentally friendly, with construction designs that will have as little impact on the land as possible. The company plans to design and build according to Leadership in Energy and Environmental Design, or LEED, standards.
“Omaha was the most attractive option for us,” Engle said, adding that the Nebraska Advantage incentives “certainly made the state an attractive location.”
The Omaha area’s “affordable and reliable” power infrastructure, low utility costs and positive business climate were also important factors in Fidelity’s decision, Engle said.
“OPPD’s nationally competitive rate structure and recognized quality of service were crucial in our combined efforts to attract this project,” Brown said. OPPD officials who worked on the project were not available for comment Friday.
Papillion Mayor David Black said the project and associated westward expansion of the city’s sewer infrastructure are significant to attracting more growth.
“This extends our infrastructure to areas we didn’t serve, and (Fidelity) helped pioneer that cost,” Black said.
The Fidelity project joins other data centers attracted to Sarpy County, including Yahoo, Cabela’s and CoSentry locations at the Southroads Technology Center and Midlands Data Center.
Metrowide, the Fidelity project is smaller than Google’s $600 million and $300 million data centers in Council Bluffs and Yahoo’s $100 million center in La Vista, but it is expected to be larger than others, including the 80,000-square-foot Scott Technology Center, which was renovated this year.
A second, larger data center looking at Nebraska, dubbed “Project Edge,” is on hold, according to those involved in the recruitment process. That $1.2 billion project, rumored to be Facebook, was looking at a site near Kearney, Neb., as well as sites in Iowa.
Despite the delays tied to that project, Adam Haeder, the chief information officer of the not-for-profit AIM Institute, said there’s no sign of data center projects slowing down.
“Every time Apple sells an iPad, that’s a corner of a data center,” he said. “It’s an exciting time to be in IT, and the Omaha area has proven to be a magnet for these kind of companies.”
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