Apple, Facebook put Prineville on the map

Central Oregon small town the latest data center hot spot

Apple and Facebook this week each filed plans to expand data center operations in Prineville, Ore., a little community that's on its way to becoming one of the largest data center locations in U.S.

Once their data centers are completed, Apple and Facebook combined will have created some 1.2 million square feet of data center space. Both companies own enough land in Prineville to expand well beyond that.

How did Prineville, with a population of less than 10,000, attract Apple and Facebook? And does Prineville really benefit from data centers, which aren't big employers?

Apple this week submitted a master plan to "slowly build over time" up to 500,000 square feet of space, said Joshua Smith, Prineville's senior planner. Apple is nearing completion of a 10,000 square-foot data center facility on a 160 acre parcel it owns.

Facebook was in Prineville first, building what became a 334,000 square foot data center in 2010, and it has been finishing work on a companion facility, which is estimated at about 360,000 square feet by local officials. Facebook owns about 120 acres of land.

This week Facebook filed plans to build another 60,000 square foot facility, although it isn't clear whether it will be used as a data center.

Considering the amount of land that the two companies own, and the ever growing demand for data center space, "it would not be surprising if there was more than or close to two million square feet in data center space between the two companies," said Jason Carr, who heads the Prineville office of Economic Development for Central Oregon (EDCO), a non-profit group that spearheads development efforts for local governments.

Local economic development officials say they have a number of things working in their favor. There's plenty of reliable electricity because of major trunk lines in the region. The power costs are relatively low, at roughly 5.5 cents a kWh. There's available land, and the climate -- dry, arid and cool at night -- is ideal for data center systems.

The tax breaks are generous as well. Apple and Facebook are getting 15-year tax exemptions that apply to buildings and equipment but not to land. The state has no sales taxes on equipment. The tax system "was designed to favor large capital investment," said Roger Lee, the executive director of EDCO.

Offsetting the tax exemption is a power franchise fee, which is based on the power bill that Facebook pays. About 5% of that monthly power bill goes to the city of Prineville, Carr said. "The city right now is seeing about $60,000 per month of additional revenue coming into the city coffers through that franchise fee," he said.

The city also charges a "community fee," levied in lieu of taxes. The fee was attached to the 15-year exemption to help cover the cost of public services. Facebook will pay about $110,000 and Apple, $140,000 annually, Carr said. The companies are also paying for some public utility improvements.

Data centers aren't large employers, and that will be true in Prineville as well. Facebook employs about 60 at its data center but that may rise to nearly 100, once it completes all its building. Apple may eventually employ roughly an equal amount, estimate local officials.

Facebook has involved itself in the community, making money available for numerous local projects and in the schools as well.

Oregon's infrastructure has drawn other large data center operators, notably Google. Other areas of the country, such as parts of North Carolina have also turned into data center locations for companies such as Apple and Facebook.

Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His e-mail address is

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Copyright © 2012 IDG Communications, Inc.

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