Microsoft picks Virginia over N.C. for data center

In July, North Carolina lawmakers approved a new package of economic incentives, including one aimed at attracting more data centers to the state.

The bill passed partly because officials were hoping to lure Microsoft, which was looking for a spot to build a massive data center.

But late last month, Virginia Gov. Bob McDonnell announced that Microsoft will invest up to $499 million to locate the data center in Southern Virginia. The project will only create about 50 new jobs, but still represents economic bragging rights for the state.

In choosing Virginia's Mecklenburg County, on the North Carolina border, Microsoft rejected sites in Texas, and in North Carolina's Cleveland and Alamance counties.

"Microsoft is a household name and securing this global project is a significant economic win for Virginia," McDonnell said in a prepared statement. "It will further bolster the Commonwealth's standing as a leader in the Information Technology sector, while creating new jobs for our citizens and spurring economic development throughout the region."

To win Microsoft, Virginia officials promised incentives worth nearly $7 million, and Mecklenburg officials will reimburse Microsoft nearly all its property taxes for 20 years.

Alamance County officials had been trying to lure Microsoft to the N.C. Industrial Center in Mebane, Mac Williams, the president of the Alamance County Area Chamber of Commerce, told the Burlington Times.

“If they’re going to Virginia over North Carolina, incentives played a big role,” Williams said.

Still, last summer's efforts by North Carolina lawmakers may not have been for naught. This state has increasingly become a destination for new data centers, as companies are drawn by the prospects of cheap land and electricity.

American Express is building one in Guilford County, and Apple's $1 billion data center in Maiden is expected to be running by early next year. Google opened its Lenoir data center in 2008. And Fidelity Investments is reportedly considering building one in Garner.

The state incentives bill provides data centers an exemption on the sales tax for machinery and electricity.