From the outside, they are innocuous, bland structures a row of six shipping containers gussied up with a few doors and vents.
But to the City of Umatilla, the data storage units currently being installed on Beach Access Road by Vadata (an Amazon.com subsidiary) are a potential bonanza.
There could indeed be gold in them thar containers.
Data centers are popping up all over the nation as computer companies and their customers need more and more storage space. Nearby, Google has a large facility in The Dalles; Yahoo has built a center in Quincy, Wash.; and Amazon has the land and warehouse for another two facilities in Boardman.
Now, Vadata is busily working toward opening the center in Umatilla, which will begin with six modules.
Whats been interesting to me has been the reaction from officials. Its been almost as bland as the data center containers themselves.
Certainly, Umatilla City Council members have seemed nonplussed. While they did vote to annex the land for the data center in return for Vadata agreeing to pay for installation of sewer and water lines, a couple members have privately admitted they arent actually sure what kind of benefits the center will produce.
Equally interesting has been the reaction in other circles. A Hermiston city official told me early this spring, Data centers really just dont produce enough jobs. Its not the kind of economic activity were interested in.
And therein lies the problem: most people judge new businesses by the jobs produced, and the newest generation of data centers dont employ many people. An Amazon representative told Umatillas City Council that it would require only a handful of employees, ranging from on-site tech folks to security guards.
But people who turn their noses up at data centers evidently dont stop to consider the tax implications and what they could mean for the cities involved.
At a recent symposium in Seattle, Amazon official James Hamilton said the estimated cost of a data center is about $11 million per megawatt.
At a presentation to the Umatilla Planning Commission this spring, an Amazon representative said the company plans to start with a 1.5 megawatt facility, with the potential to build out to a 20-megawatt facililty.
And finally, the City of Umatillas current property tax rate is $2.9191 per $1,000 (not including bonds).
So what do those numbers mean?
Using Amazons figures, the 1.5-megawatt facility will probably be worth about $16 million. If the company moves ahead and expands up to 20 megawatts, that bumps the value up to about $220 million. (As an aside, the entire City of Umatillas current assessed value is about $136 million.)
With Umatillas current tax rate, that means the 1.5-megawatt facility will generate more than $46,000 in property taxes for the city from the beginning.
Bump the facility up to a 20-megawatt facility, and the property value would be roughly $220 million. Convert that number into taxes, and its an annual payment of $640,000 a number that would more than double Umatillas current property tax revenue.
Suddenly, the fact that the new facility will generate only a handful of jobs doesnt seem like such a drawback. Rather, because the data center will not demand much from the city in ways of service but will provide a very healthy tax check, its easy to see why regions across America are actively recruiting the centers.
The Tennessee Valley Authority is one of those entities trying to lure data centers. The TVA last year hired Deloitte Consulting to identify and evaluate potential sites for the recruitment process.
Data centers provide highly skilled, good-paying job opportunities, said John Bradley, senior vice president for TVA Economic Development. TVAs goal is to help make the region more competitive in attracting and retaining these types of industries and the economic benefits associated with them.
In Umatillas case, the presence of a large data center, one in the 8- to 10-megawatt range, would provide enough income that the city would likely be able to increase services and reduce tax and bond rates (feel free to tell me the last time you heard of that happening anywhere).
An 11-megawatt center would virtually double the citys tax revenue while barely putting a dent in required city services.
Meanwhile, Amazon will also be paying Umatilla a franchise fee for the power it uses and data centers use enormous amounts of power.
Thats why Ive been chuckling when I hear officials of other cities discount the data centers as a substantial economic benefit, and its why jobs should never be the only measuring stick.
The little irony here is that Amazon virtually knocked on Umatillas door for this one. Im not sure Umatilla City Council members and Port of Umatilla officials even now recognize the benefits the data center could produce.
But if I were in their shoes, Id start doing some math and I wouldnt wait for another knock on the door.
Id be out actively recruiting more of those centers. That kind of revenue isnt easy to generate even in the best of times.
In case youre wondering, heres how Amazon rep Ian Wrightson described what data centers do in a presentation to the Umatilla City Council: We put servers, which are just rows of computers, in these data centers and then people basically rent computer time to store (information).
Simply, its the cloud.
Amazon, by the way, has submitted plans to build a similar six-module facility at the Port of Morrow, and is also reportedly resuming work at its original Boardman site, where construction started in 2009.
Plans for the original Boardman site a more traditional warehouse data center were for a 116,700 square-foot facility that would be worth approximately $100 million. Plans for the Umatilla site include the potential for expansion to 150,000 square feet.
And finally, two things that had me scratching my head this week:
One, a letter to the editor from Hermiston resident John Phillips, a World War II vet who spent 22 years serving his country in the U.S. Navy.
Phillips takes care of 11 graves at the Hermiston cemetery, including one reserved for himself. He visits the sites every day and twice in the last few weeks, someone has stolen the U.S. flags hes placed on his headstone.
I cant figure out why people would just take them, Phillips said. Theres a whole box of used flags out there that are there for the taking. I dont know why theyd take them from my headstone.
Good question. Maybe someone out there has the answer.
Two, the seventh arrest of 18-year-old Dylan Lieght Thomas in the last three months. This time, Thomas was hit with eight charges, including assault, theft and hit-and-run.
The good news is he was actually still in jail a few days after his arrest. The bad news is it took seven arrests.
Know of something we need to be reporting? A piece of news youd like to see in the Herald? Drop me a note at email@example.com or call me at 541-564-4533.