Data centers — the workhorses of the Internet economy and social media revolution — are the next high-tech cluster coming to Hillsboro.

by: HILLSBORO TRIBUNE PHOTO: CHASE ALLGOOD - Fortune Data Center CEO John Sheputis in a back-up battery power room in the company's new Hillsboro facility.

The city is already known as an international center of semiconductor manufacturing because of the presence such industry heavy hitters as Intel and TriQuint. It became a national leader in solar cell production when SolarWorld opened its plant there. And Genentech has added pharmaceutical to the city’s portfolio.

Now three data centers are either opening, under construction or in the works along Northwest Evergreen Parkway. Fortune Data Center is scheduled to open a facility at Cornelius Pass Road at the end of the month. Adobe Systems Inc., is building one just up the road. And Digital Realty Trust Inc. has announced it will build one in the area.

“We looked at a lot of locations both in and out of Oregon, and Hillsboro met our needs best,” John Sheputis, chief executive officer of Fortune Data Centers, said during a tour of his company’s new facility earlier this month.

Hillsboro Mayor Jerry Willey and Washington County Chair Andy Duyck are welcoming the data centers. The two leaders say they boost the city’s reputation as a growing high tech business hub, generate fees and property taxes to support government services, and pay higher-than-average wages to their employees.

Fortune’s new facility is in Etec System’s former manufacturing plant. It sat empty for years before Fortune bought it for around $7.9 million. Sheputis would not say exactly how much money his company has invested in the new data center, except to say that it was many times the purchase price.

During the tour, Sheputis pointed out what the investment bought. Much of the original clean room equipment has been converted into a massive air conditioner. Banks of equipment have been installed to manage and back up the electricity that will flow into the facility. Large diesel-powered backup generators have been installed outside next to cooling towers.

All of the improvements were done to service the two large rooms where companies will lease space for their servers and related computers.

“When you lease square footage in a data center, you’re really leasing a share of all the equipment that supports it, too,” says HILLSBORO TRIBUNE PHOTO: CHASE ALLGOOD - Sheputis shows where high-tech clients will lease secure serve space in the new data center. Multiple diesel-power generators are prepared to prove emergency power at the new Fortune Data Center.

Bringing in big bucks

Despite the timing, the question is not, why are so many data centers suddenly coming to Hillsboro? The question is, what took them so long?

Although it is no secret, few people outside the industry know that Hillsboro is a logical place to build data centers for several reasons. One is the fact that three major high-speed data cables from Asia run under the Pacific and terminate at a station in Hillsboro, around a half mile from the location of the new Fortune Data Center.

Those cables are the lifelines of the industry, and being close to them is a tremendous advantage to the companies that operate the data centers.

For example, latency, a measure of time delay, is currently 100 to 105 milliseconds per round trip when measured from San Francisco to Asia. They are only 84 to 87 milliseconds when measured from Fortune’s site in Hillsboro.

Another reason is the region’s relatively low electricity rates and the supply infrastructure built to accommodate Intel and other high-tech companies that located in Hillsboro years ago. One piece is the Sunset Reliability Center designed and built by Portland General Electric to meet the demanding requirements of semiconductor fabrication facilities, including those on Intel’s Ronler Acres site. It is served by three 115 KV transmission lines and includes two 28 MVA and three 50 MVA transformers to provide full redundancy to guarantee uninterrupted power.

The Fortune Data Center also sits next to the Bonneville Power Administration’s massive 500KV Keeler Substation along Highway 26 that receives and redistributes electricity from regional sources.

Oregon’s moderate climate is also an attraction, allowing the massive air conditioning units that cool data centers to be run less often than in hotter states, such as California.

And Hillsboro also offers economic incentives for construction and expansion of facilities engaged in commercial or retail transactions predominately using the Internet.

An Electronic Commerce Zone was added to the city’s North Industrial Enterprise Zone. It allows qualifying businesses a three to five year property tax abatement on new construction and equipment purchases. Hillsboro also provides incentives for hiring local workers and buying local goods and services.

The city’s Economic Development Department predicts that during the next three years, incentives will help generate $680 million in direct economic impact from data centers. An additional $1.5 million in system development charges are expected to be paid to the city to support infrastructure, and additional $700,000 a year is expected to be received through a 3.5 percent PGE franchise fee.

Then, after the tax abatements expire, the value of the investments will be added to the property tax rolls.

Portlands concerns

According to Forrester Research, data centers are predicted by grow by 80 percent by 2015 to support the ever-increasing demand for smart phones and other Cloud-based mobile devices. Roughly 170 data centers were built in the U.S. in 2010. By 2020, 454 data centers are expected to be built annually.

In June, the Northwest Power and Conservation Council issued an analysis that said data centers in the region need to continue improving their energy efficiencies. If not, they could be consuming two-thirds as much electricity as the Northwest aluminum industry did at its height in the 1980s. The Fortune Data Center has received a half-million dollar award from the Energy Trust of Oregon for its energy efficiency.

Data centers have been in the local news lately because large high-tech companies have been building them in Central Oregon. Facebook has two data centers in Prineville and is planning a third one. Amazon, Apple, Dell, Google, Microsoft and Yahoo have also invested in data centers in the area.

But data centers have also been built in the region. Portland is home to several of them that were built when dot-com companies were first catching fire in the mid-to-late 1990s. A number were based in empty warehouses and office buildings in part of town Portland’s City Council was trying to redevelop into mixed-use neighborhoods.

This concerned the council because data centers do not employ a lot of people or generate a lot of foot traffic. Worried that the data centers would disrupt the redevelopment plans, the council approved a policy in May 2001 requiring that half of their buildings be used for housing, offices or retail space.

Hillsboro does not have that problem because the new data centers are being located in commercial and industrial zones. In fact, both Willey and Duyck say the relatively low number of workers is a good thing. They do not significantly increase traffic in the area or stain the public school system, while still creating good-paying, short- and long-term jobs, the two leaders agree.

Existing data centers in Hillsboro are operated by Intel and VIAWest.

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