Serving Boone, Blowing Rock, Banner Elk, and other towns of the North Carolina High Country | Founded 05-05-05

January 25, 2007 issue

Search Over! Google Said Yes!

Story by Kathleen McFadden

Two weeks ago, High Country Press reported that Google was considering establishing a data technology facility in Lenoir, and last Friday, the high-tech giant said yes to the deal, accepting the state’s offer of a $4.8 million Jobs Development Incentive Grant and additional incentives from the City of Lenoir and Caldwell County.

In the eight years since its beta debut in 1998, Google has become the Web’s preeminent search engine, eclipsing all the other early players, including WebCrawler, Lycos, Infoseek, AltaVista, Excite, Inktomi, and becoming so popular that the name of the company has entered the lexicon as verb.

National Public Radio reported last week that Google would construct an estimated $600 million data center in “a small mountain town,” and the folks in Lenoir couldn’t be happier.

That small mountain town has plenty to offer, including an extensive water and power infrastructure built to serve the furniture and textile industry, a community college that has already taken the lead in recruiting for the company, a nearby university and a workforce eager for jobs in an area of high unemployment that has been devastated by the loss of manufacturing jobs.

The Google deal has been in the works for months but until recently has been conducted in secrecy. Through the Caldwell County Economic Development Commission and an LLC set up for the purpose, Google optioned about 220 acres of land on Overlook Drive in July—part industrial and part residential—and bought out the 18 middle-class homeowners living at the site. Those homeowners were given until October to vacate their properties and were allowed to take anything in the homes that they wanted. The total land purchase price so far has been about $3.5 million, with more land options and purchases expected in the coming months.

According to a Lenoir News-Topic executive, Google paid fair market value for the homes—averaging between $70,000 and $80,000—and on Monday, the Lenoir Fire Department began controlled training burns of the homes. That exercise was suspended temporarily while liability issues were ironed out, but is expected to begin again soon.

The land has already been graded and Google officials indicated last Friday that they want to start construction as soon as possible. The construction phase is anticipated to create 400 to 500 jobs and take 12 to 18 months.

The initial building will be a one-story nondescript warehouse without a sign identifying it as a Google facility. Those present at last Friday’s meeting indicated that Google is highly protective of its trade secrets and would not even disclose the square footage of the planned building because its competitors could draw conclusions about the type and size of the planned data installations.

Google officials indicated that the company may begin initial interviews for staffing the facility as early as next October and will hire through Caldwell Community College & Technical Institute and the Employment Security Commission. Initially, the company expects to hire 100 people.

Company officials affirmed their intention to hire locally as much as possible, pointing out that although many jobs will require two- and four-year postsecondary degrees, the company will also have jobs for skilled tradesmen, included those experienced in HVAC and electrical systems, as well as those with experience on manufacturing lines.

According to info released about the deal, Google will create up to 210 jobs over the term of the grant and invest as much as $600 million.

The average annual salary at the data center is expected to be $48,300, about $20,000 more than the average salary in Caldwell County.

Associated employment will come from the company’s outsourcing of catering, security and landscaping jobs.

The deal has drawn some criticism for the incentives offered to the company.

Last month, the North Carolina Economic Investment Committee voted unanimously to award a 12-year Job Development Investment Grant to the company. For each year that the company meets the required performance targets, the state will provide a grant equal to 75 percent of the state personal income withholding taxes derived from the creation of new jobs. If the company creates all of the jobs called for under the agreement and sustains them for 12 years, Google could receive the maximum benefit of $4.8 million.

In addition, Caldwell County and the City of Lenoir granted the company a 100 percent waiver of business property taxes and an 80 percent waiver of real estate property taxes for the next 30 years.

While acknowledging that the incentives are generous, local officials pointed out that the town and county will receive jobs and investment in return compared to nothing if that land on Overlook Drive remained vacant.

So how on earth did Google find Lenoir?

Among the list of locations the state suggested to Google, Lenoir was attractive for a number of reasons. Its Tier I economic status—the most distressed ranking in the state’s five-level system—translated into a $12,500 tax credit per new job with a requirement to create at least five jobs, and a 7 percent tax credit for eligible business property expenditures. Lenoir’s robust utilities infrastructure designed to serve a 24/7 manufacturing base meant that Google would not have to construct a new grid to serve the facility. Land prices were reasonable—far lower than in Boone. And the area’s unemployment rate, currently at about 8 percent, is one of the highest in the state.