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Data center eyes Duluth for expanded operations

A new data center soon may bring jobs and valuable technological infrastructure to Duluth Heights. VISI Inc. has chosen Duluth as the preferred site for its first operations center outside of the Twin Cities, to be built at an estimated cost of $...

A new data center soon may bring jobs and valuable technological infrastructure to Duluth Heights.

VISI Inc. has chosen Duluth as the preferred site for its first operations center outside of the Twin Cities, to be built at an estimated cost of $18 million to $19 million. But VISI CEO Mike Sowada said his company, which provides secure space for its clients' computer data, will need help to bring its plans to fruition.

On Monday, the Duluth City Council is expected to vote on whether to aid the business by offering it Job Opportunity Building Zone incentives. The council will take up a resolution proposing to remove 12.4 acres of Canadian National Railway Co. land in Morgan Park from the JOBZ program and transfer the designation to property located behind the Uniprise building off Rice Lake Road, where VISI wants to build a 50,000-square-foot facility.

The move would still leave more than 87 acres of JOBZ-designated property available for development in Morgan Park, said Heidi Timm-Bijold, a business development specialist for the city of Duluth.

The JOBZ program temporarily waives many taxes for companies that build in designated areas in need of economic development.

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Given the high cost of building a data center, Sowada said: "The JOBZ designation is absolutely critical for us." Without the assistance, he doubts VISI could afford to make the transition to a new market like Duluth.

If all goes well, VISI could commence operations in Duluth by the spring of 2009. Sowada said the proposed new facility would likely take 11 months to construct.

Should VISI's plans materialize, the company pledges to have at least 10 people on its payroll in Duluth within one year of opening a new facility. The company already employs about 60 people in the Twin Cities.

Sowada believes the data center could employ more than 20 people in the near future, assuming market conditions hold and VISI finds a sufficient supply of qualified workers in the area. The company expects employees in Duluth to earn between $27,000 and $80,000 per year, plus benefits.

Down the road, VISI hopes to enlarge its operations to 100,000 square feet, and it would have room to do so on the proposed site.

The company has found a major potential local client in SMDC Health System. Sowada said that in order to tackle a project of the magnitude proposed in Duluth, VISI needed an anchor customer the likes of SMDC.

VISI aims to draw much of its business from clients located within a 1½-hour drive of its facility in Duluth, but it also will offer backup protection of data for Twin Cities area clients. Sowada said that by backing up data in a remote location, such as Duluth, customers can reduce the risk of any catastrophic event wiping out vital information.

The company boasts annual revenues of about $11 million. Its clients include Caribou Coffee, Health Partners, Gander Mountain, Star Tribune, Lund Boats and PeopleNet Communications. While the majority of VISI's business comes from in state, Sowada said the company also has active clients in

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40 other states.

VISI's proposal to build a Duluth facility is a product of nine months work involving representatives of the city, Minnesota Power and the Area Partnership for Economic Expansion -- an economic development agency commonly known as APEX.

Nancy Norr, a regional development manager for Minnesota Power, said VISI's construction of a facility in Duluth could open doors for other local businesses.

"I've compared this project to opening an airport," she said. "The facility itself may not employ a lot of people, but as a data center it can provide the kind of high-tech infrastructure other companies need to grow."

Norr also expressed optimism that VISI's decision to enter the Duluth market could send a positive message to other technology companies looking to expand.

"It could serve as an avenue to attract other Twin Cities-based firms to locate some of their operations in the region, as well," she said.

Duluth's relatively

disaster-free reputation is one of the possible attractions for companies such as VISI that specialize in providing secure data management, according to Lisa Heyesen. She pointed out that Duluth rarely sees tornadoes and has no history of earthquakes, hurricanes or other catastrophic events that threaten other cities.

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Last year, Sisu Medical Solutions announced plans to open an internal data center on the same site now being eyed by VISI, but the company later decided to expand operations at its current location in downtown Duluth.

VISI also was attracted to the Duluth Heights site because it offers access to two separate electrical substations, providing redundancy that minimizes the risk of any disruption to operations. Even so, Sowada said, the company will have emergency battery and electrical generation equipment on standby at its facility.

"Our customers depend on us, and we cannot afford to lose power," he explained.

Peter Passi covers city government for the Duluth News Tribune. He joined the paper in April 2000, initially as a business reporter but has worked a number of beats through the years.
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