Facebook will save up to $5.8 million in sales taxes at its planned Eagle Mountain data center, in addition to the roughly $150 million in property tax incentives offered to the social media giant.
The sales tax exemption was acknowledged, but largely de-emphasized, by government representatives involved in the data center negotiations. And specific estimates based on Facebook’s planned data storage facility were not publicly available.
“We don’t generally quantify the state policy stuff, just because it’s so dynamic,” said Theresa Foxley, president of the Economic Development Corporation of Utah.
The $5.8 million figure is based on analysis by the Legislative Fiscal Analyst’s Office of SB3002. That bill, approved during a special session of the 2016 Legislature, expanded sales tax exemptions to include data centers with the aim of luring Facebook back to the Beehive State after a failed negotiation with West Jordan City.
Facebook will be the first data center to benefit from the sales tax changes, according to the Legislative Fiscal Analyst’s Office, as the National Security Agency’s data center in Bluffdale predates SB3002. And because the tax exemption has not yet been utilized, the $5.8 million figure is a general estimate based on similar facilities in other states.
Foxley said Facebook was aware of the sales tax exemption, and it likely factored into the company’s decision to locate in Utah. But she added that it was not a specific element in Facebook’s negotiations with Eagle Mountain and state leaders for the project, which is expected to employ fewer than 50 workers when completed.
“I haven’t run the numbers,” Foxley said. “I am certain that they had a very complicated spreadsheet that captured a whole lot of data points. And I’m sure that was one of them.”
Melanie Roe, a Facebook spokeswoman, said in a statement that the company worked with Utah to secure a mutually beneficial agreement that would support long-term growth. She said sites are selected based on factors like community support, access to internet and renewable power, local talent pools and “shovel-ready” locations.
“Deciding where to locate a facility like this is a thorough process that involves balancing dozens of different criteria,” Roe said. “A business-oriented environment is important, but it’s only one part of the kind of broader partnership we need with the local community and the state to make the project successful.”
Gov. Gary Herbert announced last week that Facebook was the company behind “Project Steeplechase,” confirming suspicions that the company was looking to house a data storage facility in Utah County.
The deal includes a $100 million commitment by Facebook to fund road and utility upgrades — expected to jump-start development on Utah’s County’s west side — in exchange for 20 years of rebated property taxes from Eagle Mountain City, Utah County, Alpine School District, Unified Fire Authority and the Central Utah Water Conservancy District.
Foxley said the deal includes a number of positive and comparatively smaller elements, such as $13 million that the data center will generate for affordable housing projects during the life of the tax incentives.
City and county leaders are also looking at ways to maximize the electrical capacities generated by Facebook’s utility upgrades, Foxley said, and to mitigate increased water usage — a key concern among data center critics — by recycling wastewater for municipal landscaping.
“The details of that are still forthcoming,” Foxley said.