State, County Incentives Kept AOL Building in VA
AOL Nationwide Data Center Consultation Assignment
Mike Sunnucks Staff Reporter
Being in America Online's home state, in the end, helped Prince William County in its successful recruitment of the Internet company's new $520 million technology center. But being near AOL's Dulles headquarters was probably the greatest obstacle. After a seven-month search, AOL (NYSE: AOL) purchased 25 acres of land in Manassas for the construction of a 220,000-square-foot operations center which could house more than 600 employees and $400 million worth of computer equipment. The Dulles-based company opted for the Prince William site over its closest competitor -- a location near Charlotte, N.C -- and several other sites including the Atlanta suburb of Smyrna. But before the final selection, Prince William officials needed to convince AOL that the Manassas location was not too close to its Loudoun County headquarters or other operations facilities in Reston and Tysons Corner. Virginia Gov. Jim Gilmore and county officials also needed to put together an incentive package that at least matched what the other finalist -- North Carolina -- was offering. High-tech and telecommunication-dependent companies such as AOL are often hesitant to locate key network facilities too close to one another. They want operational backups in case there is a telecommunications breakdown, utility overload or weather emergency that cripples other centers. "They wanted some spatial separation," said Mark Larsen, first vice president at CB Richard Ellis' Tysons Corner office, which represented AOL. However, Prince William benefited from being in AOL's home state where it has blossomed into a $3.3 billion company and has a good working relationship with local officials and Gilmore.
Backup power system
Larsen said AOL had lengthy screening criteria beyond its technological needs, ranging from weather risk to work force and tax issues. Those criteria eliminated many other jurisdictions considered in the nationwide search but kept Prince William in the running, he said.
Prince William officials were able to convince AOL the site they were looking at in Battlefield Business Park was technologically far enough away from its other facilities but still near its Dulles headquarters, said John Schofield, research and marketing director for the Prince William County Department of Economic Development. The Manassas site, off Interstate 66 near the Civil War battlefield, sits almost 20 miles from AOL's headquarters just north of Dulles Airport. AOL was impressed by how far the county and Richmond were willing to go to get the center, Schofield said. Prince William officials worked closely with the Northern Virginia Electric Cooperative to run two separate power routes into the site, ensuring a backup system. Schofield also credits area telecommunication vendors and Bell Atlantic with helping the Prince William bid to be competitive with Charlotte and dissuading AOL's spatial fears. Larsen agrees. "Their connectivity as it stands today is a little better than Prince William County," Larsen said referring to Charlotte. "But the [Northern Virginia] telecom vendors will get there."
Speedy approval process
The county also sped up the zoning and approval process to meet the company's tight timetable. AOL's whirlwind nationwide site selection began in August 1998 and culminated in March. That's pretty fast for picking a site of this magnitude, particulary considering it included land and environmental studies. AOL's business decisions requires speed to keep up its competitors and changes in the booming Internet industry, said company spokesman Andrew Weinstein. "The industry is going so quickly there is an accelerated timetable," Weinstein said. Larsen said the company was so keen on meeting its deadlines that it seriously considered purchasing land in both Prince William and Charlotte in case one plan fell through. But AOL's needs were fast-tracked, and Gov. Gilmore and the county came up with a hefty incentive package competitive with North Carolina's tax breaks for AOL. While North Carolina offered AOL a $28 million tax break over seven years, Gilmore and Prince William officials gave the company more than $19 million in up-front tax incentives and more than $7 million in annual state and local tax breaks.
The Prince William County Board of Supervisors slashed the county permitting fees and its tax on computer equipment. The county gave the company more than $1 million in economic development funds to help purchase and develop the Manassas site. Cutting the personal property tax on computers and peripheral equipment will save AOL more than $3.5 million annually and will benefit other high-tech companies in the county. Gilmore's backing of AOL-friendly legislation in Richmond, including banning unsolicited bulk e-mails, also helped Prince William's cause. Internet companies, such as AOL, lobbied hard for the ban saying bulk e-mails or spam clog their systems. Virginia high-tech companies have also been happy with Gilmore's appointment of a cabinet-level technology secretary, his chairmanship of a national commission on the electronic commerce and his stance against Internet taxes. "What Gov. Gilmore did was vital," Schofield said, referring to the incentives and his tech-friendly policies. "Had they not done what they did, we would not have been competitive with North Carolina."