The city will provide Wal-Mart and Agilent Technologies a combined $2.3 million in incentives to build new data centers in Colorado Springs under a pair of economic development agreements the City Council unanimously approved Tuesday.
The incentives for both companies are performance-based and will be made in the form of rebates in business personal property taxes, which city officials have long talked about eliminating, as well as sales-and-use tax rebates on construction materials.
“We never write a check,” said Bob Cope, principal analyst in the city’s Economic Development Division.
“It’s a return of a portion of what the company provides to the city government, and it’s always a net gain for the city government – 100 percent of the time.”
Mayor-elect Steve Bach said he had not been briefed on the agreements but that he was “really happy” about Wal-Mart and Agilent considering Colorado Springs. Going forward, he said, the city needs to come up with an overall strategic plan for economic development that involves various stakeholders, from business leaders to residents.
“With respect to writing a check to a company to move here, I’m not in favor of that,” Bach said.
“As to providing some tax abatement that has a stimulating effect to create jobs that pay back many-fold more, I’m open to that, but I need to understand more about it,” he said. “There has to be a return on that investment, so to speak. In the ideal world, long-term, hopefully our business climate will be so great here that that’s not even a consideration.”
Wal-Mart, which holds the No. 1 spot on the list of Fortune 500 companies, is considering building a 163,000-square-foot data center with a “planned expansion” to about 208,000 square feet in five years. The proposed facility would be built on 24 acres southeast of InterQuest and Voyager parkways on the city’s far north side.
The city’s incentive package for Wal-Mart is valued at $1.7 million.
“I really feel like this incentive package for the Wal-Mart data center, it could be a tipping point for our community,” interim City Manager Steve Cox said.
“It’s the largest corporation in the world and to have them pick Colorado Springs for one of their major operations, I just think that’s significant,” he said.
Construction costs for the new data center are estimated at $100 million, and initially, the data center would need 20 to 40 full-time employees with annual salaries of $30,000 to $70,000. Wal-Mart would also purchase equipment and machinery totaling $50 million to $100 million.
The incentive package for Agilent, a spinoff of the Hewlett-Packard Co., is valued at $626,000.
Agilent, which manufactures test and measurement equipment sold worldwide, plans to add a data center and technology center within existing structures on property it owns along Garden of the Gods Road in northwest Colorado Springs.
The data center would be about 20,000 square feet and the technology center would be about 35,000 square feet.
An economic impact analysis showed that Agilent’s economic impact over 15 years would be an estimated $711 million.
The company’s investment in construction and personal property would be $121 million over 15 years. In addition, Agilent would add 131 new full-time employees with average annual salaries of $74,000.
“This is how we grow our city and keep our children here so there are jobs for them when they graduate from college and want to come back home,” Councilman Bernie Herpin said.