Wooing business away

  • By Jerry Cornfield Herald Writer
  • Wednesday, June 1, 2011 12:01am
  • Local News

OLYMPIA — Add an iPod Touch to the tools other states are using to recruit Washington businesses.

Virginia’s governor used one to reach out and tap high-tech businessman John Sabey last week just as Washington leaders pulled their hand away from the Seattle entrepreneur.

The iPod Touc

h arrived at Sabey Corp. offices hours before Washington lawmakers, on the final day of the special session, balked at extending a tax break the company sought for expanding its business of building data centers.

“We thought it was very ironic,” said Sabey, president of Sabey Data Center Prop

erties. “On the day we got spiked by the Legislature, the state of Virginia is sending us goodies telling us, basically, they’d like us to do business in their state.”

Carrie Cantrell, Virginia’s deputy secretary of commerce and trade, confirmed the state sent the recruitment package as part of an ongoing campaign to attract data center firms. She wouldn’t say if the timing of this particular delivery was planned or a coincidence.

David Sabey, John’s father and renowned commercial real estate guru, received the package on the outside of which is written, “The governor of Virginia requests five minutes of your time.”

Inside was the iPod Touch preloaded with a video message from Virginia Gov. Bob McDonnell extolling the virtues of operating in his state.

“That’s pretty aggressive,” said state Sen. Steve Hobbs, D-Lake Stevens, a supporter of the tax break and one of several state lawmakers who heard about the package.

Gov. Chris Gregoire on Tuesday veered away from commenting on McDonnell’s tactic, focusing instead on her disappointment the bill didn’t pass.

“I’ve been a proponent of data centers from the beginning,” she said, adding that she knew of other companies in addition to Sabey that were ready to break ground had the tax break been approved.

Data centers are essentially where gobs of servers are used to process, store and transfer information online. With surging volumes of information and online transacting, the demand for these centers is growing and states are actively competing for them.

Last year, Washington’s Legislature passed a bill to lure construction of centers in rural counties. It allowed firms to forgo paying sales tax on the electrical equipment and servers used in the buildings.

Seven projects were undertaken as a result; Sabey’s firm launched work in East Wenatchee and Quincy.

But the law had a limited life span, with the tax break available only until July 1, 2011. This year’s bill sought to keep the tax break going another three years.

As a result, the flurry of activity will be muted and the state will be at a bit of a competitive disadvantage, according to John Sabey.

He said his firm had been exploring opportunities in Virginia well before the package arrived. If they make a deal, he might drop by McDonnell’s office to say hello.

At the same time, he’s hoping Washington lawmakers revive the tax break bill in 2012.

Hobbs and Gregoire hope so too.

“I certainly hope we do something,” Hobbs said.

“If we’re not aggressive enough we could lose out on these high-tech businesses.”

McDonnell is not the first governor to attempt to lure a Washington-based company.

Idaho Gov. Butch Otter sent a “love letter” to Washington businesses in March 2010 extolling his state’s economic climate. Texas Gov. Rick Perry wrote a handful of corporate executives in October as Washington voters considered an income tax measure. Perry’s missive noted Texas had no income tax and no interest in getting one.

Each of those overtures evoked a bring-it-on response from Gregoire, who expressed confidence Washington firms wouldn’t bite. In replying to Otter, she hinted at trying to lure companies from his state but apparently didn’t try anything as brash as a letter.

Earlier this year, she went out of her way to not publicly trash such tactics.

“I’m not going to criticize any of my colleagues,” she said in February at the National Governor’s Association meeting. “Anybody who wants to come to Washington state is welcome. I’m not out trying to steal companies from my colleagues.”

Gregoire, this year’s NGA chairwoman, went on to say each state’s future economic development hinges on them competing globally not “stealing from someplace else” in this country.

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.

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