Hefty price tag for state data center

Taxpayers face a hefty bill for Washington’s oversized State Data Center project in Olympia, and the time to begin settling up has arrived.

Built as part of an office-building complex worth about $255 million, the high-tech center located a few blocks from the state Capitol hit a milestone recently when it began circulating data through servers for the first time.

But the project is seen by some as too grand. And in a time of tough state budgets, it now needs a $34.4 million subsidy to cover lease payments and some smaller project costs over the next two years, said Rob St. John, director of the Consolidated Technology Services agency created in 2011 to manage the Jefferson Street facility.

“CTS can’t shoulder the burden for this,” St. John told a legislative committee last week in a blunt assessment of the realities of a project that was built much larger than the state needs due to an apparent gross miscalculation of the state’s data-storage needs.

St. John said $25.1 million of the request is to cover debt service on the lease-to-own structure. His agency is moving data operations from sites it manages into one of the facility’s four large data halls.

But CTS has not been able to attract other paying tenants from the private sector or other governments to move in and defray the state’s debt.

St. John said he can’t just add costs to the rates that CTS charges other agencies using its data center services. That is because the rates would go so high that agencies could not afford to move gear into the center, or they might seek cheaper private-sector options.

With the invoices now landing at the Legislature, House Appropriations Committee chair Ross Hunter, D-Medina, said the state must pay up, while trying to find ways to lessen the burden on taxpayers.

“It’s a Taj Mahal. It’s way overbuilt. It is what it is,” Hunter said, regretting his own vote that helped the project go forward at a time “cloud” computing was rapidly reducing the need for a large data facility. “I think it was a bad capital budget decision (in 2009 to build it).”

In a search for revenue, CTS entered into an agreement last year with broker Jones Lang LaSalle Americas, which has a Seattle office, to help land a tenant. But Conan Lee, a senior vice president with the firm, said it has been slow going in an industry where major real estate deals are slow to ripen.

“I’m very confident about this data center. It is in my opinion the best quality data center in the state. It’s built to the best and highest standards. … But it will take time,” Lee said in an interview.

Meanwhile, as the data center bills come due, CTS is already bringing its new state-of-the-art facility online, which St. John reported to lawmakers as a milestone.

In a first phase that runs through June 2014, the agency has been transferring its own data storage and retrieval functions from Office Building 2 to the data center a few blocks away. The aging data cluster in OB 2 is considered at capacity and at risk of emergency shutdowns if heating-cooling systems fail. There was a shutdown caused by a campus power outage in 2011.

A big transfer of Washington State Patrol information systems into the data hall is scheduled as well.

St. John said CTS also is consolidating data centers in Thurston County as equipment wears out. This has shrunk the number of data-storage sites from about 42 to about 14 actual data centers.

A lot of consolidations are occurring “naturally,” as equipment wears out or agencies move. But because technology was marching ahead when data center plans were laid — and has not stopped — the state needs barely one of the four halls built.

One early critic of the State Data Center project was Rep. Reuven Carlyle, D-Seattle. Carlyle has a background in the software and cellphone industries. Shortly after voting for the capital budget that kicked off the project in his freshman year, he urged then-Gov. Chris Gregoire to halt the project, which she considered but ultimately refused to do after consulting her IT adviser.

But the weight of Carlyle’s argument did not land until after he maneuvered legislatively to have consultant firm Excipio look at the state’s actual computing-space needs. The Excipio team reported late in 2010 that only a fraction of the 50,000 square feet of data space — well less than one 12,500-square-foot hall — was needed in the near term.

Carlyle said the state now is in a situation where it needs to explore all alternatives for the three halls of surplus space. And that means lawmakers need “humility” to admit the size of the state’s error and to look at options that are outside the traditional thinking.

One idea mentioned during a recent legislative committee session was to move some of the state archives’ collections out of its cramped bomb-shelter site near the Capitol and into a secure data hall. St. John said that idea is not so far-fetched, saying CTS discussed that with former Secretary of State Sam Reed’s staff before the November election.

Another idea is to relocate a health and occupational-safety lab run by the Department of Labor and Industries. One idea mentioned by Carlyle is for the state to provide hosting services to cities, counties and even to serve as a data backup to other states.

Carlyle said the project’s clear failure is bringing change to an insular political culture in Olympia.

“The Olympia subculture can no longer submit requests for tens of millions of dollars for IT projects and have them rubber-stamped and moved through the process without an aggressive, rigorous examination,” he said.