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Landscaping the Cloud in Loudoun

Our analyses of the fiscal return on investment to counties from data centers are included in a fascinating Data Center Frontier article on the data center development around Ashburn.

“As a digital transformation sweeps the world, Internet infrastructure will become a more meaningful part of our cities and suburbs. As America’s largest digital crossroads, Ashburn represents the bleeding edge of that trend, a place where data centers filled with cloud servers are interspersed with malls and golf courses and townhouse developments.”

“Virginia has seen a strong return on its investment in data center incentives, according to an economic impact study by Mangum Economics, a Richmond-based research firm. For every dollar in county expenditures, the data center sector provided approximately $9.50 in tax revenue to Loudoun County, and approximately $4.30 in tax revenue to Prince William County, the study concluded.”

“‘Why not residential on top of a data center?’ said Bill McCarthy, an architect with Callison RTKL who works on data center design in Northern Virginia. That type of initiative, along with continued efforts to create less industrial building facades, could be important to the future integration of Internet infrastructure and both urban and suburban landscapes.”

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Apex Clean Energy Solar Facility Proposed for Campbell County

Tom Hart's article on the solar facility proposed for Campbell County by Apex Clean Energy mentions our economic analysis (starting on page 38 of the .pdf) of the economic and fiscal contribution that the facility would make to the county. 

We estimate that construction of the facility would create a one-time pulse of economic activity in Campbell County alone of 200 FTEs, $8.7 million in associated labor income, $20.5 million in additional economic output, and almost a total of $1 million in federal, state and local tax revenue. On an annual basis, operating the facility after it is constructed will create an estimated 4 FTEs, $185,000 in associated labor income, and $486,000 in additional economic output in the county over the 35 year life of the project.

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Comments on EPA and FDA Regulatory Plans

My opinion on EPA's proposal to base their regulatory decisions on transparent science has been published by The Regulatory Review"Science and Democratic Policy in a Data-Driven World". Bipartisan and nonpartisan groups, including the most prestigious science journals, have recommended data access for years. Data transparency is the only way that citizens can keep a check on the effect of politics in regulatory decisions. Moreover, transparent science should be the rule at every regulatory agency and not just EPA.

My comment for the Regulatory Studies Center at George Washington University on a maximum limit on the nicotine content of cigarettes was submitted to FDA. FDA's approach has potential to make it easier to quit smoking, but it is unproven. So the agency should proceed with developing a nicotine standard for cigarettes, but at the same time it needs a comprehensive plan for access to nicotine in products that don't burn. And FDA should plan to learn from experience once any rule is in place and be ready to adjust the rule accordingly. The agency should also make the data from taxpayer-funded tobacco research available to the public.

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Offshore Oil & Natural Gas Activity's Impact on Hampton Roads

The American Petroleum Institute recently released our study of the potential economic and fiscal impact of offshore oil and natural gas activity on the Hampton Roads area of Virginia. Some highlights of the study include:

  • Almost 17,000 new direct, indirect and induced jobs would be created in the area twenty years after initial lease sales in industries such as construction, healthcare & social assistance, retail, hospitality, and real estate.
  • Oil and natural gas industry jobs pay above-average salaries and would account for $1 billion in new income in the region twenty years after initial lease sales.
  • 82 percent of the jobs created are projected to pay wages above the average for the region.
  • The average weekly salary for the oil and natural gas extraction industry is 60 percent above the regional average.

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Our Data Center Report in Virginia Business

James Leach, Corporate Vice President at RagingWire Data Centers, uses information from our recent report on data centers in his contribution to Virginia Business on what he calls the "Data Center Multiplier Effect." He cites our research showing that

  • every job in a Virginia data center creates two additional jobs in Virginia,
  • data centers accounted for 70% of total reported capital investment in Virginia in 2015, and
  • for every $1 that data centers use in public services, they pay about $8 in property taxes.

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New EPA Regulation Cites Zorn's Research

On Monday, April 30,2018, EPA proposed to regulate itself! The new policy would direct "EPA to ensure that the regulatory science underlying its actions is publicly available in a manner sufficient for independent validation." EPA cited the work of Randy Lutter (Frank Batten School of Leadership and Public Policy, University of Virginia) and our own David Zorn, who called for all federal regulatory agencies to do this. (See On the Benefits and Costs of Public Access to Data Used to Support Federal Policy Making, 2016) Most citizens probably are not aware how often their government imposes millions and billions of dollars of requirements on the economy without providing the evidence that the requirements are needed. Transparency is the hallmark of good science and good public policy. Hopefully, all other regulatory agencies will follow suit. Just post the data!

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Data Centers and the Virginia Economy

The Northern Virginia Technology Council (NVTC) today released our research report that shows that the data center industry strengthens and diversifies the economy and drives innovation in Virginia. The Economic and Fiscal Contribution that Data Centers Make to Virginia 2018 updates our original research published in January 2016. We are honored to work with the report's lead sponsors, including AWS, CloudHQ, Dominion Energy, Microsoft, Mid-Atlantic Broadband Communities Corp., and NxtVn. Supporting sponsors include Equinix; Facebook; Loudoun, VA Economic Development; Sabey Data Centers; and Visa.

The data center industry in 2016 for Virginia accounts for 43,000 jobs, $3.2 billion in labor income, and $10.2 billion in economic output. While much of this impact is in Northern Virginia, the sector’s impact is increasingly spreading to other regions of the state and this economic activity will likely be accelerated by new subsea cables linking Virginia Beach to Europe and South America. 

The industry is very sensitive to state tax policies. Virginia currently offers a sales tax exemption on equipment purchases to qualifying data centers through 2035. 

Other major findings:

  • Data centers pay wages more than twice the statewide, private-sector average.
  • Over the last five years, data centers have experienced employment and wage growth that is four times the statewide, private-sector average.
  • Additionally, the high wages in the industry have a disproportionate impact on state income tax revenue, by far the largest source of revenue for Virginia state government.
  • The pool of highly skilled workers the data center industry employs also feeds the talent pipeline for other fast growing, high wage industries.
  • In 2016, data centers made $2.6 billion in capital investments in Virginia and that investment was responsible for supporting 4,600 jobs, $254 million in labor income and $670 million in economic output in the state’s construction industry.
  • Data centers generate significant tax revenue for local governments. In Loudoun and Prince William Counties, for example, for every dollar spent in county expenditures related to the industry, it provided more than $8 in tax revenue. Data centers in Loudoun County and Prince William County allow those localities to draw $13.4 million less from the state general fund for school budgets.
  • Tax incentives are critical in the competition between states to attract data center investment.
  • Data centers have emerged as one of the driving forces in the development of renewable energy resources in Virginia.

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U.S. Increase in Existing Home Sales tempered by continual Supply Shortage

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Existing home sales increased by 0.2 percent to an annualized rate of 5.480 million in the month of October 2017, marking the largest increase in the previous 7 months.

 

The increase was concentrated in the Northeast, where sales increased by 4.2 percent following a surprise burst in the previous month of September. Sales in the South increased by 1.9 percent, showing that the region has begun to rebound after the destruction caused by Hurricane season. Sales in the West also increased, rising by 2.4 percent.

 

However, despite the increase in sales, the chronic shortage of houses is continuing to push prices up, beyond the reach of many first-time buyers and the annual rate for total exiting home sales was measured at negative 0.9 percent.  

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Mangum Economics' Report for the VCC on WTKR

Hampton Roads television station, WTKR, picked up on some of the information in our quarterly report for the Virginia Chamber of Commerce. Hampton Roads lost almost 10,000 jobs in the 12 months ending September 2017. That stands out because over the same period Virginia as a whole added 34,000 jobs. The Hampton Roads industries losing jobs were primarily tourism-related -- retail and lodging. If it was just a bad year for tourism because of weather concerns, then next year might be different. But if this is related to the increasing number of Virginia school districts opening before Labor Day, then the tourism jobs may not bounce back anytime soon. Regardless, it draws attention to the importance of having a diverse economy.

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Crude Oil Inventories Drop in the Week of Sept 29

U.S. crude oil inventories fell more than anticipated according to the latest EIA report, with oil refinery inputs averaging just over 16.0 million barrels per day during the week ending on the 29th of September. This marked a decrease of 145,000 barrels per day compared with the previous weeks average, with a substantial part of the decline attributed to the residual destructive effects of the recent Hurricane Harvey.

Refineries operated at 88.1% of their operational capacity, gasoline production increased by 1.6 million barrels to 218.9 million and distillate stores fell 2.6 million barrels to 135.4 million.

U.S. crude oil imports decreased by 213,000 barrels per day to an average of 7.2 million barrels, with the 4-week average calculated at 7.1 million barrels per day.

Demand remained level, with total products supplied over the last four weeks averaging 20.2 million barrels per day. Motor gasoline product supplied averaged 9.5 million barrels per day (a 1.3% yearly increase) while distillate fuel product supplied averaged over 4.0 million barrels per day (a 12% yearly increase). Jet fuel product supplied fell by 0.6% compared to the same period in the previous year.

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