City weighing a $4.8M incentives package

The Colorado Springs City Council will consider today whether to offer Hewlett-Packard Co. up to $4.8 million in incentives to build a $260 million data center on its campus on the city's northwest side.

The California-based technology giant plans to begin construction next month on the first phase of the 185,000-square-foot data center and complete the third and final phase by early 2012, according to a memorandum to the council about the project.

Council members will consider tax rebates designed to keep 125 "high-paying jobs" at an adjacent data center that would be replaced by the new building. The project also would create 10 jobs within five years, the memo said.

HP wants to build a "next-generation" data center to replace the current 15-year-old facility, which provides information technology, billing and customer data services to DirecTV and other clients.

HP considered Colorado Springs and several other cities, according to the memo. Among the alternatives HP studied was consolidating data center operations in other HP locations, the memo said.

HP's new data center would be more automated than the company's existing centers, meaning it could run around-the-clock without human control and be "more adaptable to changing business needs," an HP spokeswoman said.

Under the agreement expected to be approved by the council, the city would rebate all sales tax and use tax paid on building materials for the project plus up to 90 percent of the business personal property tax payments made by the company for 10 years.

Those payments are forecast to total $4.8 million, or 18 percent of the revenue the city expects to realize from the project and 1.8 percent of the $260 million HP expects to spend on building and equipping the center.

The Gazette first reported last month that HP was seeking city approval, which has not yet been granted, to build the data center at its three-building, 1.1-million-square-foot complex at 301 S. Rockrimmon Blvd.

The HP data center "could be the catalyst project that positions Colorado Springs as a premier location for a highly sought-after industry," according to the proposed resolution the council will consider today.

Data centers typically house hundreds of computer servers that operate everything from corporate Web sites to a company's internal computer network and programs. They often include backup facilities that could be needed to recover from a natural disaster.

The centers use massive amounts of power - HP's alone will use 42 megawatts, or 4 percent of the city's electrical generating capacity - and typically include backup power systems.

The HP project would be the largest and most costly data center in the Springs area and the fourth major data center opened or expanded in the Springs since 2006.

Verizon Wireless is converting a former semiconductor plant off Garden of the Gods Road into a data center that will open early next year, while FedEx Corp. moved into an expanded data center in Northgate last year and Progressive Corp. opened a data center in the same area in 2006.

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The HP project would be the largest and most costly data center in the Springs area and the fourth major data center opened or expanded in the Springs since 2006.