Following two years of planning and architecture changes, Bee Cave City Council agrees The Backyard developer Christopher Milam may have gotten the local project correct this time.

Milam, along with developer John Paul DeJoria, received a green light Dec. 14 from the City Council on revised project plans for a tract on Bee Cave Parkway between RR 620 and West Hwy. 71—adjacent to Bee Cave City Park.

Substantial changes were made to The Backyard planned development district, or PDD, approved in December 2014, including a trade-off of four movie/sound stages in favor of two data centers and a distributed energy center, or DEC, a power plant that will be used to provide energy to the entire project. The data centers will be colocation centers—data storage spaces shared by multiple users or companies within and outside of The Backyard.

“For southwest Travis County, there’s no data center of the type [Bee Cave] will offer, as far as a commercial enterprise,” former Mayor Pro Tem Steve Braasch said.

As the managing partner of a regional provider of network facilities and data centers, Braasch advocated for the project to Bee Cave City Council.

“We won’t be connected to Austin Energy for daily usage,” he said. “The power plant for this facility will be the DEC. When you look at the unique combination of elements for this project, it is the beginning of a trend.”

How a distributed energy center works

Braasch said the DEC portion of the project became possible after Texas Gas Service developed a gas transmission line on West Hwy. 71 to Lakeway and Bee Cave. Until that time, propane gas and electricity were the only fuel sources available in the area.

“When Texas Gas brought that fuel line down [West Hwy.] 71 across the street from the project, it brought a new dimension in options for [the area],” he said.

Using a generator, the DEC will turn about 35 percent of the natural gas it uses into electricity to fuel The Backyard complex, said Chris Whipple, Outlier Energy’s chief operating officer, the designer of the DEC and data centers. About 65 percent of the gas would ordinarily be lost in the atmosphere, he said.

However, with the type of plant created in Bee Cave, that 65 percent will be converted to serve the project’s air conditioning, water and heating needs, Whipple said.

“The project leverages a fuel source for clean power, creating a green facility,” Braasch said. “We’re actually recapturing the heat that is normally lost and converting it into a useful product.”

Gavin Dillingham, director of the U.S. Department of Energy Technical Assistance Partnership, said although the type of DEC proposed by Outlier—a self-contained energy system—will not be the first kind of microgrid, the idea is on the rise, especially on the country’s east and west coasts where power costs are higher. He said his grant-funded program, which promotes combined heat and power uses across Texas, Oklahoma and the Rocky Mountain states, provided the company with a positive review that determined the Bee Cave project would be economically feasible for Outlier.

“You are seeing a growing number of these microgrids because congestion rates are getting too high—there’s too much demand for power, and the charges go up,” Dillingham said. “Just with the growing population in Texas, people are looking at more microgrids for their reliability and power quality.”

He said hospitals, wastewater plants and infrastructure facilities are gravitating to microgrids because they are more economical.

Need for data centers in Central Texas

According to the Texas Governor’s Office, a majority of the state’s data centers are focused in the Dallas area where there are 80 colocation data centers as of Dec. 19. Houston is the next largest hub, with 38 data colocation centers, and Austin has 23 centers. However, no colocation centers exist in the western portions of Travis County, and only eight such centers exist in the San Antonio area.

“Right now there’s all this talk about ‘cloud storage’—that’s basically data storage and data centers that are used by all of our different apps, such as Facebook and LinkedIn,” Whipple said. “All of that information is ‘stored in the cloud,’ but really they are stored in a data center somewhere.”

He said the data centers are also used for enterprise storage.

“Companies have massive amounts of data that they use for their business processes,” Whipple said. “Generally, for enterprise storage, those companies want their data stored close to where their people are so they can control their own hardware, control the security, do updates.

“At The Backyard project, even though it is a colocation—multiple companies will be in there—it is also geared to be enterprise storage so the companies that are leasing out [office] space are also leasing data center space. For a good majority of clients [the developers] are talking to, that is the setup; they are buying or leasing office space and data center space so they can be colocated together.”

Whipple said the majority of enterprise data centers are actually stored inside company offices, taking up a lot of space and possibly forcing a business to add data centers in various locations around a city when one of its centers runs out of storage space.

“That’s why this is such an explosive market,” he said. “Everything we are doing uses data and is taking up rack space in a data center somewhere.”

Braasch said he has had interest in the proposed Bee Cave data center from Texas businesses whose owners see a benefit from centering the colocation facility in an entertainment-rich, suburban setting rather than the usual industrial environment in which most data centers are housed. He said a prospective customer told him the appeal of the proposed Bee Cave center would allow him to conduct business and then stay overnight to “have a nice meal and definitely check out who is playing at the music venue that evening.”

Dollars and sense

Data center creation can be a win-win for the developer and the municipality hosting the facility.

A 2015 state law provides an incentive to draw data centers to Texas with a sales tax exemption on specific equipment used in some centers, said Sam Taylor, deputy press secretary at the Office of the Governor.

The different pieces of equipment that go into a data center, including routers, are taxable items that produce revenue for the city, as is the building, which provides annual ad valorem, or property, tax revenue, Braasch said.

“A data center is a low-impact, low-employee count, low-footprint facility—yet it is high revenue,” he said of the proposal. “This is a good alternative, a good solution for the city of Bee Cave in exchange [for the previously proposed movie studios].”

The front of The Backyard

In addition to the two data centers and a distributive energy center, The Backyard’s amended plan includes an outdoor community garden center instead of the neighborhood splash pad and tennis courts in the original 2014 plan, project developer Christopher Milam said.

The amendment retains the original plans for outdoor music venues Live Oak Amphitheater and The Glenn at the Backyard, a 125-room hotel, parking garages and a hilltop garden as well as four office buildings. The hotel is now set to include a music recording studio on its ground floor.

The district also includes developer-funded plans for road improvements to Bee Cave Parkway and Willie Way, amounting to about $1.2 million.

However, the city’s Dec. 14 consent to the amended site plan for The Backyard was tempered by requiring the project to obtain access to West Hwy. 71 before city staff can issue a certificate of occupancy on any of the development’s planned structures. The project  as presented has only one entry and exit off Bee Cave Parkway.