AMERICAN FORK — The last two of five taxing entities signed off Wednesday on huge tax breaks that seem poised to pave the way for an enormous new data center facility in Eagle Mountain that's been described as "one of the greatest economic opportunities the state has ever had."
The unknown potential data center owner took an active though remote role in discussions Wednesday morning for the entity that stands to gain, and lose, the most in the deal, depending on how you look at it.
The Alpine Board of Education approved the long-running tax breaks, potentially worth hundreds of millions for the unnamed company, but not before a live game of chicken played out in the midst of the board's deliberations Wednesday.
And, it's one the board lost.
Members said they felt rushed, pressured and "bullied" after they received a 50-plus page document Friday, May 11, ahead of a hoped-for vote the following Tuesday. But the board — even after delaying the vote for a week and vowing to never consider any future proposals under the same circumstances — still approved the interlocal agreement on a 6-1 vote Wednesday.
"I have serious concerns about the process that has gone on," said board member Scott Carlson. "I am confident that this board will not seriously consider future projects which do not include school representatives early in the process."
The board made an attempt to put caps on a tax relief package that would grant the unnamed company a 100 percent discount on personal property taxes due and 80 percent on real property taxes due for 40 years. Just for Phase 1 of the project, that would equate to $150 million in lost tax money on the company's expected $750 million investment, with the district the biggest loser because it would be entitled to about 70 percent of the property taxes.
But when discussing limiting the deal to no more than $40 million per phase and $120 million total on real property over 30 years, Carlson announced during the meeting that he had received word from district administrators, who were being told in real time by the company that the cap proposal would be a deal-killer.
"In the time we've been debating this proposal, the promotion team continued to be in discussion with the company … and they're aware of the motion on the table," Carlson said. "There’s great fear amongst those on the promoting team that if we approve the motion as stated, that the company will not come."
A counterproposal — conveyed from the company via school administrators — was to up the tax relief limit to $150 million over a 35-year span. After a short discussion, the board amended its proposal to reflect those changes and quickly voted.
While making some concessions on the terms of its proposed caps, Alpine School District is the only taxing entity involved in the deal thus far that has set any monetary limits on the tax breaks.
On Tuesday, the Utah County Commission set a 40-year limit on terms of the deal, but without stipulating any ceilings on tax relief. Previously, Eagle Mountain and the Unified Fire Authority approved the package without monetary limits.
Later in the day on Wednesday, the Central Utah Water Conservancy District approved the tax breaks, again without monetary limits, on a unanimous vote. Now, all five taxing entities have approved the deal and the ball is back in the court of the unknown company, according to Theresa Foxley, President/CEO of the Economic Development Corporation of Utah.
She noted the review process on that end of the deal will be swift as will the likely revelation of the unknown entity.
"(The company name) will be known in the very near term," Foxley said. "The company will go back, analyze all the deal terms that have surfaced over the span of this public process. They’ll take that to the decision-making bodies within the company and, assuming, in aggregate, it’s a good business decision for them we would expect them to make a decision very quickly and make an announcement very quickly because they need the capacity (of the new data center)."
Pending the company's decision to move forward, Phase 1 of the effort will include putting up two facilities on the roughly 500-acre parcel south of Eagle Mountain city center. Foxley said once shovels are in the ground, the expected construction term should be about 18 months. The company will also be investing, according to Foxley, about $150 million in infrastructure improvements including bringing power to the site from a nearby high-capacity power line corridor, extending sewer and water service, bringing in telecommunication lines and improving roads.
That infrastructure investment is expected to be equalized by the Phase 1 tax benefits of $150 million over 20 years. All additional phases will be eligible for the same level of tax relief and, except for the caps approved by Alpine School District, will only be limited by time and the size of the site.
A study commissioned by Eagle Mountain on the project referenced the potential for five phases which, if executed, would earn the mystery company $750 million in tax relief.
According to Eagle Mountain officials, the property currently generates about $66 per year in tax revenues. After Phase 1 of the data center is complete, the tax revenues would shoot up to about $840,000 annually, with Alpine School District getting about $540,000 of that.
While a handful of residents offered comments in support of the proposal to the Alpine board on Wednesday, Lehi resident Michell Stallings said she was concerned with the rationale given by those who support the agreement.
"To say Eagle Mountain won't grow without this seems doubtful to me," Stallings said. "Schools deserve this money and you don't need to incentivize businesses to come in and get these tax breaks. Where does it stop? We just have to give up more, and more and more."
Her comments mirrored concerns shared by board member Wendy Hart, who was the sole dissenting vote on the agreement.
"This is wrong," Hart said. "What if the projections are wrong? What if this spurs a level of economic growth that instead of needing to build a new high school every five years, we have to build one every two years?"24 comments on this story
Val Hale, executive director of the Governor's Office of Economic Development, also addressed the board before their vote on Wednesday, encouraging the body to support the measure. Hale previously outlined what he said were numerous benefits of the project, including the infrastructure investment opening up surrounding property in Eagle Mountain to new development potential.
"This may be one of the greatest economic opportunities the state has every had," Hale said. "There's a pile of cash right in front of you, if you'll reach down and pick it up."