With incentive, eBay to build Utah center, add 2,200 jobs
Online marketplace eBay Inc. intends to expand its presence in Utah once again, thanks to another economic carrot from the state.
The company, which employs about 1,400 Utahns, wants to build a facility in Draper that would replace an existing one there. The new operation is expected to employ an additional 2,200 people over the next 20 years.
The new workers initially will be brought onboard to offer human resources and other support to the company's existing customer-service operations in Utah. As the new facility expands, though, other roles will be added in other areas.
"It only has been in the last 60 days or so that we concluded Draper was the right location for this expansion," said Steve Boehm, eBay's senior vice president of marketplace and global customer services, so details are still being worked out.
Boehm offered that comment Monday morning after the board of the Governor's Office of Economic Development approved a one-time $38.2 million tax incentive for eBay.
The incentive, which is contingent upon eBay fulfilling its jobs commitment over the next two decades, combines two previous job-based incentives for the company worth $3.8 million, said Spencer Eccles, executive director of GOED. Salaries for the jobs will have to be 125 percent of the average Salt Lake County salary of $42,600.
Eccles noted those earlier incentives were approved in May and October 2009.
He said that if eBay meets its hiring goals, GOED projects that the company's new operations will generate an additional $127.2 million in state tax revenue over 20 years. Those increases would come from higher employee withholding and corporate income and sales taxes from company purchases.
Monday's final package represents $34.4 million in new incentives for the San Jose, Calif.-based company, which moved the first of its operations to Utah 12 years ago.
The company's newest Utah facility, a data center in South Jordan that opened last year that is expected to eventually employ 50 Utahns, will remain in place and not be part of the Draper operation, said Michael Frandsen, eBay's Utah spokesman.
Data center employees provide technology services that support the company's many websites and the hundreds of millions of buyers and sellers that use them.
Frandsen said the e-commerce company still needs to select and acquire the land in Draper, a process that is expected to be completed by year's end. "We're looking at a proposed site but still need to finalize the details," Frandsen said, noting the new location is expected to be completed in about two years.
Draper Mayor Darrell Smith said eBay has made it known over the past two years or so that it was interested in expanding its operations, possibly in Utah. "But they keep things pretty well to themselves. And it only has been the last week or so that they've really opened up to us about their plans for our city."
Governor Gary Herbert said Utah's favorable tax rate and business-friendly environment contributed to eBay's decision to expand in the state.
Utah's highest corporate income tax rate is 5 percent lower than Idaho and New Mexico at 7.6 percent, Arizona at 7 percent and California at 8.8 percent. Colorado's top corporate income tax rate is lower, at 4.3 percent. There are no corporate income taxes in Nevada and Wyoming, according to the Federation of Tax Administrators, an organization of state tax officials.
"The growth we're seeing [in Utah] is nothing short of phenomenal," he noted, pointing to other recent expansion plans announced by such companies as ITT, Adobe Systems and IM Flash.
Mark Knold, chief labor market economist at the Utah Department of Workforce Services, said the jobs eBay is promising to bring will be a welcome addition to the state's economy.
"You take jobs where ever you can get them," Knold said. "eBay is a big name, and there is a lot of stature that goes along with having some of their operations here. Along with those operations, we may get some additional companies, such as suppliers, coming in to support them."
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