Quincy Cashes in on the Cloud

Data center building plans by companies such as Dell, Microsoft, Yahoo, and Google are helping small rural towns cut deficits

By Rachael King

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Inside a white metal fence laced with barbed wire on the outskirts of Quincy, in central Washington state, a construction crew maneuvers excavators that scoop up giant piles of earth. Just beyond the site, green shoots of wheat are beginning to sprout as rain drizzles overhead on a recent late-April morning.

Holder Construction is three weeks into the creation of a 350,000-square-foot building that will house thousands of servers capable of storing data and delivering software and other computing tasks. Dell (DELL), the computer maker behind the project, is spending $1 billion in two years to erect data centers around the world. It joins such companies as Microsoft (MSFT), Yahoo! (YHOO), Intuit (INTU), and Sabey that have purchased land in Quincy to build data centers to capitalize on the boom in demand for computing provided via the Internet, over the so-called cloud.

The biggest names in technology are building a digital, 21st century equivalent of the railroad. And just as some cities benefited disproportionately from the location of rail lines and stations a century and a half ago, small towns in rural America are angling to cash in on the boom this time around.

Bucking a Downtrend

Municipalities like Quincy are becoming increasingly sophisticated about how to use tax breaks and other incentives to attract construction. The stakes for small towns are higher still after the recession led to a surge in joblessness and left many cities and states in the red. According to a late 2010 report from the National League of Cities, 87 percent of city finance officers nationwide say their cities were worse off in 2010 than in 2009. Financial pressures are forcing 79 percent of cities to lay off workers and 69 percent to delay or cancel capital infrastructure projects, the report says.

Quincy officials say the data center building boom is helping them buck the trend. Real estate prices are rising, and tax revenue surged to $2.24 million last year, from $700,000 in 2005, according to City Administrator Tim Snead. Quincy recently spent $1 million on a new library and $75,000 for a new museum parking lot. It repaved 60 percent of the streets, bought a hook-and-ladder truck for the fire department, and erected an edifice for such services as the management of parks and water.

The city, which boasts a population of 6,750, has cut property taxes for residents because there's a larger base of tax payers in town, says Curt Morris, a commissioner at the Port of Quincy. "It's been good for our little town," he says. Morris says that Dell bought 80 acres for $3.6 million. "It's drastically increased the assessed property value and has given money to the city, which has used it smartly to upgrade sewers, plants, and wire lines," says Morris, whose family has lived in Quincy since the early 1900s.

Grant County, where Quincy is located, is benefiting too. The value of the county's land rose to $9.1 billion in 2011, from $4.6 billion in 2006. "Normally the county grows by about $500 million each year," says Laure Grammer, Grant County assessor. "Because of all the new development, our county has been growing by over $1 billion each year."

Mounting Competition

The swelling coffers have yet to translate into lower joblessness for the city of Quincy. Its unemployment rate rose to 12.9 percent in January, from 8.8 percent in 2008, a byproduct of the recession and the loss of jobs during winter months, according to the Bureau of Labor Statistics.