QUINCY - The City of Quincy is now leasing a water treatment plant from Microsoft for $10 per year.

The agreement is believed to be the first plant transfer from an industry to a municipality, according to Christian Belady, general manager of Microsoft's data center advanced development, on Thursday.

In exchange, Microsoft receives lower water rates from the city.

But a larger benefit is the water treatment service provided to other current and future companies in Quincy.

With phase 1 of the large-scale water project already done at Microsoft, the city has the foundation to develop a reverse osmosis water treatment plant and build phases 2 and 3 of its industrial water reclamation and reuse facility, explained Tim Snead, city administrator.

Snead said he expects work to start on phase 2 of the project in early spring of 2012.

Phase 2 involves extending pipeline to the east end of town.

He explained that phase 1 piping at Microsoft was built with state money, but Microsoft spent $6 million to $7 million to build a demineralization plant, which the city is now leasing.

It is why the company is receiving a reduced water rate from the city, he explained.

With the city leasing the plant, water for all of Quincy's data centers will be treated and in time include Columbia Colstor, he said.

The city must have a solution in place by 2015 to handle discharge from the industrial treatment plant, Mayor Jim Hemberry told the Columbia Basin Herald.

The discharge now goes into the U.S. Bureau of Reclamation's canal, which stops when the permit expires.

Belady talked about the company's history in Grant County.

In 2007, Microsoft built its first data center in Quincy. This year, the company broke ground on its "next generation data center" on May 10, Belady said.

He commented about the renewable power available locally.

Microsoft is using air side economization at its facility for cooling, which "in our world means we opened up the windows, he said.

A small amount of water is used on hot days.

As a result there are much greater gains in efficiency, from a power and water perspective.

"As a result, we think our carbon footprint will be substantially less as well," he said. "I really look to this agreement as a great example that we'll try to replicate."

The facility helps to reuse water, treat it and leverage it for much broader uses.

"Your big industry here is food processing plants," he said. "There's a lot of water coming out of those."

Belady said the company is making a larger commitment by transferring its water treatment plant operations to Quincy.

Doing so helps support the foundation of Quincy.

The city can lease the plant for 30 years and buy it after that time. During the lease period, the facility is operated and maintained by the city.

Loaning the asset to Quincy means it can save on construction costs and capital investments.

Hemberry said the transfer brings certainty to industrial water users.

"With this lease and the planned renovations of Microsoft's demineralization facility, the city will have the ability to recycle used water from the agricultural processing plants for reuse by data centers," he stated. "Utilizing this symbiotic water relationship between these industry groups to meet all user demands while conserving literally millions of gallons of water annually, can only be described as a win-win situation."

Port of Quincy commissioner Curt Morris said the project just goes to show the stewardship being demonstrated.

Water is a valuable resource, which is now getting many turns.

"It has been a great program," he said in part. "It has been a while in coming."