We are obviously disappointed in the result, but wish Facebook, Los Lunas and the state of New Mexico tremendous success on their project. —West Jordan Mayor Kim Rolfe
WEST JORDAN — After months of competition between West Jordan and Los Lunas, New Mexico, Facebook has made its choice.
The social media giant has decided to build its newest, $2.5 billion data center in New Mexico, according to a joint release Facebook and New Mexico leaders issued Wednesday.
While New Mexico Gov. Susana Martinez celebrated Facebook's decision, calling Los Lunas' selection a "big win for the people of our state and our economic future," West Jordan Mayor Kim Rolfe lamented West Jordan's loss.
He blamed the Salt Lake County Council and Mayor Ben McAdams for the deal's demise.
"It's unfortunate that this $1 billion-plus investment in our community was jeopardized by political theatrics," Rolfe said in a prepared statement issued Wednesday.
Rolfe said the now-failed project would have been a "win-win for all interested parties" by infusing millions of new dollars into the local economy by developing West Jordan land that has remained vacant for decades.
"After months of confidential negotiations between all the taxing entities and a belief that an agreement was in reach, we were surprised as the public when the county publicly released a list of concerns and initiated a public campaign against the project," Rolfe said.
Salt Lake County leaders were the loudest critics of West Jordan's offer to Facebook, concerned about size of the estimated $250 million, 20-year tax incentive and the nearly 5 million gallons of water per day that would be required to be held in reserves for the 230-acre, 3.3-million-square-foot project.
McAdams was unapologetic Wednesday, standing firm by his decision to raise concerns about the project, which had remained secret for months under the code name Project Discus, until the Deseret News and KSL reported West Jordan's negotiations last month.
"I firmly believe this was not the right opportunity and not a good deal for taxpayers," he said. "I will never be apologetic for having discussions in the public eye that are of critical importance."
'Dodged a bullet'?
To Dave Swenson, an economist at Iowa State University, "the only winner here is Facebook."
"Two cities were pitted one against each other, offering massive subsidies for an extraordinarily profitable company," Swenson said. "Honestly, West Jordan dodged a bullet, and the state of Utah dodged a bullet. They would have committed to spending an extraordinary amount of money for a negligible increase of productivity in their regional economy."
While West Jordan leaders argued the "marquee" company name would draw more high-tech companies to West Jordan, Salt Lake County officials worried the tax incentive would not be worth the roughly 70 to 130 jobs the data center would initially bring to Utah. That count, however, does not include jobs that would come from construction and other economic growth West Jordan officials say would stem from the data center.
West Jordan scrapped negotiations late last month after it became apparent it would not receive the support it needed from the Utah Board of Education — one of the taxing entities, along with Salt Lake County and the Jordan School District — that would need to approve the tax incentive package.
But not 24 hours later, West Jordan leaders said Facebook officials expressed interest in "continuing conversations" with the city, though details of those conversations remained private.
While conversations appeared at a standstill for West Jordan — smarting from public controversy — New Mexico cleared a welcoming path for Facebook, offering an even sweeter deal than West Jordan's failed incentive package.
New Mexico's incentives
Los Lunas approved an offer that waives 100 percent of the company's property taxes for 30 years in return for annual payments from Facebook ranging from $50,000 to $500,000, as well as a $10 million subsidy from state economic development funds, the Albuquerque Journal reported.
It's not clear exactly how much the 100 percent, 30-year rebates would cost New Mexico in taxes. However, West Jordan's deal would have provided at least $185 million in property tax rebates over 20 years, as well as another $10 million in sales energy tax breaks and a so-far-undisclosed state incentive package.
While West Jordan officials argued it wouldn't amount to $240 million — the initial figure McAdams protested last month — the city also attempted negotiating a $250 million cap on incentives, though Facebook never accepted that potential cap.
Construction on the New Mexico data center is slated to begin later this year and expected to finish at the end of 2018.
In a joint statement with New Mexico leaders issued Wednesday morning, Facebook's vice president of infrastructure, Tom Furlong, made the decision official.
“We're thrilled to have found a home in New Mexico and embark on this new partnership with the state of New Mexico and the village of Los Lunas,” Furlong said. “Everything here has been as advertised. New Mexico is a great place to do business. We're excited to announce this initial investment and look forward to future phases of development.”
McAdams said he understands Los Lunas' eagerness to attract a company like Facebook, as a village with a population of 9,000 "in the middle of nowhere."
"If I was Los Lunas, I might be more desperate and willing to give away the farm in order to attract opportunity," McAdams said. "Los Lunas has the abundance of land and the scarcity of opportunity. But the Salt Lake metro area, we have people knocking on our door on a daily basis inquiring about what it would take to locate their business here, and land is scarce."
Los Lunas Mayor Charles Griego said his village will be "proud to call Facebook our neighbor."
"As our community grows, we look forward to attracting even more high-tech jobs and significant construction projects to the area," Griego said.
Facebook and Utah
Even though Rolfe said current conversations with Facebook have ended, Facebook spokeswoman Lindsay Amos did not rule out potential future conversations with Utah cities.
"While Facebook's next data center will be constructed in New Mexico, we are always evaluating sites that may be conducive to data center operations," Amos said in an email Wednesday. "Since determining where to locate a data center is a multiyear process, many locations remain in the pipeline for future consideration. We appreciate the efforts of so many Utahns in outlining the state's benefits and look forward to conversations continuing in the future."
Amos did not return requests for additional comment.
Val Hale, executive director of the Governor's Office of Economic Development, congratulated New Mexico but also welcomed continuing conversations with Facebook.
"The Governor's Office of Economic Development believes in attracting the right projects, for the right communities and is committed to facilitating processes that expand and diversify our economy," Hale said in a prepared statement. "We are optimistic that Facebook and its innovative peers in technology will recognize our strengths as a state, and we would welcome a partnership in the future."
West Jordan City Manager Mark Palesh said no company wants to "burn any bridge," so he hopes Facebook's experience with West Jordan and Salt Lake County doesn't ruin any future proposals.
Swenson said Facebook is rapidly growing, constantly seeking new sites for data storage, so it wouldn't be surprising if the company eventually returns to Utah for a new offer. However, that could take years, he said, since other similar metro areas likely remain on Facebook's list.
"(Salt Lake County) is now back in the bundle like everybody else," he said. "Boise, Colorado Springs, you're all in the same boat. There's nothing special about Salt Lake."
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