Yahoo Chooses Lockport, Maybe

18 Jun


It would appear that Yahoo! has made a site selection for their proposed datacenter in Western New York and they have chosen the best of the three options, Lockport, NY.

Yahoo (YHOO) has filed plans for a $150 million data center in Lockport, New York and hopes to begin work in August building a 190,000 square foot server farm. Officials in Lockport announced Yahoo’s interest after the company filed site plans with the city planning board. Lockport is about 25 miles northeast of Buffalo, NY.

Yahoo has told local media the Lockport location is “not a done deal” and the company is still considering other states. Yahoo’s board has yet to approve the proposal, and the company is apparently debating whether to buy or lease the site. But the filing of site plans suggests that a decision is all but done but can’t be finalized until a pending package of tax breaks is approved.

The company has filed site plans for a 30-acre parcel along Route 270. Yahoo also considered sites in nearby towns of Pembroke and Cambria, and had previously scouted locations in Virginia and eastern Canada.

Yahoo! has not given a full commitment to the project as doing so would cut off negotiating leverage with New York authorities as well as their fallback options.  Once the final package of tax breaks and power grants from NYPA are formalized, Yahoo’s board of directors will most likely approve the deal.  We got a closer look at the design of the datacenter and some additional details from the site plans submitted to the Lockport planning board today.

Drawings of the proposed site were provided as part of the presentation. Looking overhead, the data center lays diagonally across the site and consists of 10 separate sections connected by hallways. In between section five and six will be a central office building. The first phase, which is five sections and the central office building, will make up about 108,000 of the 190,000-square-foot project. While there is no official timetable, Noteboom said the goal was to have both phases completed in two years.

The Buffalo News added some detail regarding the number of jobs that Yahoo! expects to create with this datacenter project.

Yahoo! executive Scott Noteboom also clarified the job impact, saying the data center would create 75 jobs, not the 125 that Gov. David A. Paterson claimed last month. “I don’t know where that came from,”

The State Power Authority granted 15 megawatts of low-cost hydropower to Yahoo! for 15 years.

As usual, a politician tries to exaggerate the details of a pending agreement in order to improve the press coverage.  Last month, Jim Heaney of The Buffalo News did the math on the total number of subsidies granted to Yahoo! and came to the following conclusion:

The Internet giant would build a $150 million server farm that would employ 125 people in exchange for deeply discounted hydropower generated at the Niagara Power Project in Lewiston. The discounts would save Yahoo! an estimated $101.2 million over the 15 years, according to News calculations that use the authority’s cost assumptions.

That works out to $809,940 per job.

With the updated job numbers provided by Yahoo!, New York State would be spending roughly $1.35MM per job created or $90,000 per job, per year.  That’s a lot of corporate welfare.

As I described last month, if a datacenter project of this scope is properly sited and planned, it can have a positive multiplier effect on the local economy.  Yahoo! is building these regional datacenters to support their plans in the cloud computing space and the potential for independent application development firms and support industry is quite lucrative with this business model.

Placing the datacenter in Lockport, away from the academic clusters and other related industry limits the potential for spinoff, such as it is.  While Lockport is a much better choice than Pembroke or Cambria, I wonder why New York State did not encourage Yahoo! to locate its facility in the urban core of Buffalo or Niagara Falls or even Amherst.  Oh, wait…I know!  It’s because we don’t have a plan.  Practicing ad hoc economic development is no way to go through life, guys.  Here’s a lesson for local leaders, if you’re going to give away over $1MM in incentives per job created, you have the responsibility and right to dictate some of the criteria for site selection.

Since there is no way to segue smoothly into the geeky portion of this post, I’ll just switch gears.  One of the highlights of the proposed datacenter project was buried in the site planning details.

The first phase includes office space and six prefabricated metal pods stuffed with computer hardware, each equipped with a diesel- powered emergency generator. Phase 2 calls for six more computer pods, identical to the others.

For a little context to readers who might scratch their heads when reading about computer “pods”, the article refers to a fairly new development in datacenter architecture which is standard modular shipping containers modified to act as mobile datacenters.  Here’s a video that shows a “pod” of this type which is manufactured by Sun Microsystems.

These shipping containers are a revolution in design which afford a company the ability to rapidly expand their computing footprint at a relatively low cost without the need for constant and costly expansion to building infrastructure.  Several manufacturers make similar products including HP and APC.  However you slice it, this part of the project IS exciting for a datacenter nerd like me.

6 Responses to “Yahoo Chooses Lockport, Maybe”

  1. Matt June 19, 2009 at 1:35 pm #

    how about the Sedita court building after the new courthouse is finished? seems like a better locale for Yahoo in the region.

  2. Brian Castner June 19, 2009 at 1:35 pm #

    Let me play devil’s advocate for a second. . .

    The whole point of the low cost power program with the NYPA is to hand over large quantities of power for industries that are power intensive, to lure them to within 30 mi of NF. 40 years ago, those industries were also labor intensive, so hundreds or thousands of jobs would be created, and things looked great. Now, nearly every industry is more efficient, and even heavy manufacturing uses robotics and processes that reduces the labor load. This is exasperated by data and info driven industries, like Yahoo. Deals like Globe Materials, with 400 jobs, are going the way of the dinosaur. If we are going to encourage new, innovative industries, like IT, medical, research, etc, the incentive per job number is going to look awful.

    I have no problem with the subsidies. I do have a problem with the siting. How did Yahoo even come up with Lockport?! Though Lockport is better than Pembroke. What IDA, or politican, answered the phone when Yahoo called, and said “You want to go to Lockport.” Why no peep from Buffalo or Amherst? We clearly have no plan, of which industries we want to put where, across the state. But if all Yahoo needs is 190K sf and a T1 line, can’t they get that lots of places?

  3. mike hudson June 19, 2009 at 5:04 pm #

    the city of lockport and its environs are simply a better place to live for many people than downtown niagara falls or buffalo. i’d live there myself if it wasn’t 30 miles away from where i work. unlike the falls and buffalo, it actually has a public school system you can send your kids to without worrying about their physical safety. there are upscale homes for management and lots of cheap housing for the proles, and real estate prices are well under those of buffalo and certainly amherst. the canal is beautiful, it’s a few minutes away from lake ontario, and deep woods, fields & streams abound for those so inclined.

    i can’t believe that a company like yahoo had this imposed on them by some government agency. if people are against this because they are against corporate welfare, they have a point. but those who are saying it should have been in one of our more urban areas seem to me to be a case of sour grapes.

    be happy for the people of lockport!

  4. marc June 19, 2009 at 6:22 pm #

    If your a regionalist, who cares where the thing is located? Almost 1MM per job is purely ridiculous

  5. Brian Castner June 19, 2009 at 8:14 pm #

    I’m a regionalist, and a disliker of sprawl. I am happy for Lockport. I am unhappy that this facility is not located near other high tech centers, not located in a place id’d for collaboration, not located near UB or another university, and is in a place where 3/4 of the folks who work there will drive from Buffalo or NF to get to work.


  1. Economic Development — Buffalo Style « Will There Ever Be a Rainbow? - June 19, 2009

    […] course, even when they focus on their mission, they manage to muck it up.  Buffalo Geek points out that the much-discussed deal to lure a Yahoo data center to the area would deliver only 75 jobs — not the 125 that the politicians trumpeted — while its location in Lockport would […]

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