Microsoft Corporation is establishing a new data center in San Antonio, Texas. Although the data center will employ only 75 people, it represents a large investment, nearly $1 billion. Before it secured the project, San Antonio had to compete with leading high-tech communities internationally as well as Tennessee, Washington and Texas. Microsoft also considered a possible expansion of one of Microsoft’s existing data centers.
City leaders found it difficult to apply traditional incentives to the Microsoft deal because the project did not meet the minimum requirement for job creation. However, the project’s substantial investment exceeded the minimum required for a tax break by nearly half a billion dollars. City leaders determined that the investment thus qualified the project for 10-year, 100 percent tax abatement worth nearly $20.7 million.
The Microsoft project was the first time San Antonio used its CPS Energy Community Infrastructure and Economic Development Fund, established by the City of San Antonio and CPS Energy, the city’s power utility. The fund was established as a means to enhance infrastructure for the benefit of economic development. Nearly $5.2 million from this fund was used to purchase five unique transformers for Microsoft’s use on-site. These transformers created the power infrastructure Microsoft required.
San Antonio was able to easily demonstrate it could meet many of Microsoft’s criteria, such as a high quality of life and reliable, affordable power and water. The city also satisfied Microsoft that the company would enjoy access to highly skilled information technology professionals, such as electronic engineers and programmers.
San Antonio proved to be one of the nation’s two best fiber-connected cities to Mexico, Central and South America, which is a growing market for the Web-service industry. San Antonio’s connectivity also provided independent access points to two major Internet providers, as San Antonio is home to AT&T and a major presence of Time Warner.