Data center site announced near Two Harbors

Talk about it

A 40-acre facility surrounded by 8-foot walls topped with barbed wire could be coming soon to the woods south of Valley Road, just a few miles west of Two Harbors.

It might look like a prison, but inside would actually be thousands of computers, storing data for technology giants like Google, AT&T, Hewlett Packard and Verizon.

“When marketing (a data center) to a client, they’re looking at a very discreet, non-descript building, hidden away from the public eye,” said I.T. Netcom President Shannon Kimball.

After an extensive two-month feasibility study funded by Lake County and business development groups, Kimball says his team has located a “prime location” to build a data center that could take advantage of the county’s high-speed fiber internet project and cool temperatures to keep storage costs down.

Data centers employ large computers that store information for companies or internet companies. They require massive cooling systems because of machines producing heat and backup systems to keep information flowing.

“It is loamy, it is sandy and it is perfect for building,” he told the county board Thursday. “We hit the mark and I think we even exceeded some of my expectations with the findings.”

The county is in the midst of major high-speed fiber installation project and attracting large companies to store data here has been one goal.

The campus would be located in the near Valley Road and Ives Road on the western edge of Lake County, near St. Louis County’s Alden Township. Kimball said it would be located in a wooded area out of view.

The project would call for four 20,000-square foot buildings, starting with one and adding the others as demand increases. Future expansion beyond that would have to be at another site due to a stream and tributary running through the area.

Once all four buildings were in place, the campus would provide about 70 high-paying technology jobs and 35 maintenance and security jobs.

Kimball estimates it would cost $65 million to clear land, build at least one access road and construct the first building.

Lake Country Power, which would stand to collect approximately $6.2 million annually from the first building alone, would build a substation in the area to fit the electrical needs of the high-power campus.

Kimball requested $130,000 to fund a year-long marketing campaign that would include maintaining a website and sending brochures to woo companies.

No official proposal has been made, but one option may be for the county and Lake Country Power to split that cost.

The Two Harbors Economic Development Authority approved the agreement with IT Netcom last fall to conduct the $46,000 feasibility study.

The Iron Range Resources and Rehabilitation Board pledged up to $23,000 in funds. The county board pledged up to $20,500 and THEDA itself contributed $2,500.

County board member Tom Clifford said he would be hesitant to to agree to the marketing funds.

“Before I agree to this, I’d like to find out what it would cost for others to market it,” he said. “If a venture capitalist is excited about it, why don’t they pay for marketing?”

Kimball said I.T. Netcom already has extensive information, some of which isn’t public, about the site and it makes sense for the county to stick with his company.

“I’m trying to stay involved with this project,” he said. “I want to see this through start to finish.”

Kimball hopes to secure funding from enough tenants to fill the first building in a year. It would then take about a year-and-a-half to build the campus and first building, allowing it to open as early as 2015.

“My hope is that the first client I meet occupies the first 20,000 square feet,” he said. “But that may be a little unrealistic.”

Funding from the Minnesota Department of Employment and Economic Development and the Iron Range Resources and Rehabilitation Board may also be possible in the future.

“If we can use some grants, it’s better than using someone else’s money,” board member Paul Bergman said.

If any company wants to use an entire 20,000-foot facility, Kimball would sell the project or building to that company. Otherwise, I.T. Netcom would lease out the space in a fashion similar to apartment buildings.

Although Lake Superior has previously been mentioned as a cooling mechanism, the facility would use natural air. During the winter months, cool air from outdoors can be vented in and during the summer, a system similar to air conditioning can be used.

At the urging of commissioners, Kimball left open the possibility of using water from wells that will be drilled on the campus.

Kimball said three other land plots in the county were considered before settling on the location of Valley Road.

An in-city location north of Pamida in Two Harbors was nixed because of the rail lines in the area. A rural location near the Two Harbors airport was scrapped because the campus would interfere with flight paths. Another rural location south of Stanley Road wasn’t possible due to wetland issues.

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