Facebook to build a massive data center in Eagle Mountain, gets a $150 million tax incentive

(Ben Wood | The Salt Lake Tribune) Facebook has struck a $150 million tax incentive deal to build a 970,000 square foot data center in Eagle Mountain. The center was announced by Gov. Gary Herbert on Wednesday, May 30, 2018.

Eagle Mountain • Social media giant Facebook is set to bring its next data center here. Utah government leaders revealed the company’s identity Wednesday after months of closed-door negotiations.

The project, publicly known only as “Steeplechase” before Thursday’s announcement, includes roughly $150 million in property tax incentives for Facebook, which in turn will invest $100 million in road and utility enhancements for Utah County’s west side.

Facebook will also benefit from a sales tax exemption approved by lawmakers in 2016 and intended to lure data-center development to the state.

“As the newest members of the community, we are so happy to get to celebrate Eagle Mountain’s history as well as its future,” said Rachel Peterson, Facebook’s vice president of data center strategy.

Gov. Gary Herbert made the formal announcement of Facebook’s involvement at an event at Eagle Mountain City Hall. He thanked Facebook for not giving up on Utah after a similar proposal for a West Jordan data center fell through in 2016, remarking that the “steeplechase” moniker was an apt name for the project and its negotiations.

“We have probably fallen down a couple times,” Herbert said. “Stubbed our toes and scraped our knees.”

The project would lift Utah’s economy by broadening development beyond the I-15 corridor, Herbert said, and make the state more nationally competitive and appealing for additional partnerships between the public and private sectors.

“It’s going to help attract other opportunities for us to bring business here,” he said.

The planned H-shaped, 970,000-square-foot facility will be on a currently empty 500 acres on the south end of Pony Express Parkway, roughly 15 miles south of the National Security Agency data center in Bluffdale. The property currently generates $66 in annual property taxes — split among five taxing entities, including Alpine School District — but that is expected to climb to roughly $837,000 during the project’s first phase.

The tax breaks — approved by the school district, Eagle Mountain City, Utah County, Unified Fire Authority and the Central Utah Water Conservancy District — have a 20-year term, with the utility and road upgrades expected to jump-start additional development in the area.

Facebook’s Utah data center will be powered by renewable energy sources through an arrangement with Rocky Mountain Power. The facility is expected to employ fewer than 50 full-time staff, but Peterson noted that construction and other data center-related jobs will be supported through development of the site.

“Facebook is in it for the long game,” Peterson said. “We look forward to having a long successful partnership with Utah.”

Utah House Speaker Greg Hughes, R-Draper, said he looks forward to the conversations he can now have with leaders of other states. In the years since the West Jordan project collapsed, Hughes said, he has frequently heard about Facebook developments from elected leaders in New Mexico, where the proposed West Jordan project was ultimately housed.

“I am being hazed by New Mexico,” Hughes said. “They’re rubbing it in.”

Salt Lake County Mayor — and Congressional candidate — Ben McAdams was a vocal opponent of the West Jordan data center plan. The city later blamed McAdams for Facebook opting for New Mexico over the Beehive State in 2016.

The Utah Board of Education also cast a vote of provisional support that would have capped the tax incentives of the West Jordan data center proposal. The structure of the Eagle Mountain agreement does not require a vote of the state school board.

On Wednesday, McAdams said that he was not involved in the Eagle Mountain negotiations. But from a distance, he said, it appears both the state and Facebook had learned lessons from the failed West Jordan proposal.

“What it looks like is a significant improvement from the offer that was on the table previously,” he said.

McAdams said he was not familiar enough with the Eagle Mountain plans to formally support or oppose the new data center and its tax incentive package. But he added that compared to a site in rapidly-growing West Jordan, the state and local communities have more reason to use tax breaks to lure development to an area like Eagle Mountain.

“This is an area that wouldn't develop for 40 to 50 years,” McAdams said. “The remoteness of this site — I think there’s less that we’re giving up.”

Eagle Mountain Mayor Tom Westmoreland said a data center is an optimal fit for the bedroom community, which lacks the economic opportunities and ”drive-through traffic” of cities along the I-15 corridor.

“This truly was a team effort,” he said. “It took everyone, all hands on deck, to make this happen.”