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City Council to consider incentives for Wal-Mart, Agilent

May 23, 2011

The Pikes Peak region would see more than $1 billion in increased economic activity over the next 15 years from a pair of significant projects being considered for Colorado Springs — construction of a Wal-Mart data center and the addition of data and technology centers at Agilent Technologies’ existing campus.

The City Council today will consider approval of economic incentive packages for the two companies that would total $2.3 million in the form of business personal property tax rebates and sales-and-use tax rebates.

El Paso County, Academy School District 20 and the state of Colorado also are offering incentives for Wal-Mart, while the county and state are involved in the Agilent project. The dollar value of the other incentives wasn’t available; the county and D-20 would offer tax rebates, while the state would provide job training funds and various tax credits.

Details of the Wal-Mart and Agilent projects were released late Monday by Springs officials after the City Council held a closed-door, executive session as part of its regular informal meeting.

Separate, 15-year economic development agreements between the city and Wal-Mart, and the city and Agilent, were added to the agenda of today’s formal council meeting. The council meets at 1 p.m. at City Hall, 107 N. Nevada Ave.

Mike Kazmierski, president and CEO of the Colorado Springs Regional Economic Development Corp., said the companies are expected to make final decisions in June.  

Both projects hold the possibility of hundreds of millions of dollars in economic impact at a fraction of community investment, he said. Not only is the dollar value of the incentives relatively small, but all incentives are performance based — neither Wal-Mart nor Agilent would receive anything until they make their investments, Kazmierski said.

“The city investment...might sound large to some people,” Kazmierski said. “But when you put it in context of what value those companies bring to our community over a long period of time, it’s dwarfed by the magnitude of the investment by the employers, and the pay and expenditures by the employees.”

The projects are at different stages:

• Wal-Mart, the world’s largest retailer and No. 1 on the Fortune 500 list of America’s biggest companies, is considering construction of a 163,000 square-foot data center — which might expand to 208,000 square feet in five years — on 24 acres southeast of InterQuest and Voyager parkways on the Springs’ far north side, city documents show.

A data center essentially is a warehouse of technology equipment and typically operates corporate websites and internal computer networks and programs.

The Wal-Mart data center would employ 20 to 40 full-time workers with salaries of $30,000 to $70,000, and the company’s initial construction cost would be about $100 million. The company also would purchase equipment and machinery totaling $50 million to $100 million.

Wages of Wal-Mart employees over 15 years, along with those from spin-off jobs and net city tax revenues over that time are expected to add another $181 million in economic impact, city officials say.

All told, the 15-year dollar value of Wal-Mart’s investment would be about $488 million.

Beyond the dollar value of the investment, city and local economic development officials say a data center built by the world’s largest retailer would put a spotlight on Colorado Springs and potentially lead to similar projects. The Springs is home to data centers operated by FedEx, Progressive Insurance, Verizon Wireless and Hewlett Packard.

If the city, county, D-20 and state approve their financial incentives, Wal-Mart “has indicated that the company would locate the data center in Colorado Springs,” according to a memo city staffers provided to council members.

The El Paso County Commission is expected to consider incentives at its meeting Thursday, while D-20 will consider its package next week, Kazmierski said. The state has signed off on its contribution, he said.

• California-based Agilent, meanwhile, was spun off from technology giant Hewlett-Packard in 1999; HP’s history in Colorado Springs dates to the early1960s. Today, Agilent manufactures test and measurement equipment in the Springs that’s sold worldwide.

The company occupies several buildings totaling about 555,000 square feet on 116 acres along Garden of the Gods Road, on the city’s northwest side, city officials say. Agilent is looking at adding 55,000 square feet for a new data center and technology center, both of which would be built within existing structures.

The company’s investment in new construction and personal property would be $121 million over 15 years and Agilent would add 131 new full-time employees with average annual salaries of $74,000.

All together, Agilent’s economic impact over 15 years would be an estimated $711 million, city officials say.

Local Agilent executives have launched an analysis related to the location and expansion of the data and technology centers, and “are attempting to build the strongest possible business case” for the Springs as a home for the facilities, city staffers say in a memo to council members. To boost the city’s chances, company officials requested a proposed financial incentives package from the Springs.

As the global tech bubble has burst over the last decade, however, and many companies have shipped jobs overseas, Agilent’s local workforce had dwindled to fewer than 500 from about 1,500.  But the addition of data and technology centers could help cement Agilent’s presence in the Springs, and to retain existing company jobs.

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