WEST JORDAN — PayPal, an online payment system that allows users to transfer funds electronically, plans to establish a data center at 3333 W. 9000 South under a proposed agreement with the West Jordan Redevelopment Agency.
Representatives of West Jordan and its redevelopment agency have been quietly meeting with taxing entities to explain the details of the proposal, dubbed the "Pepper River Project."
For the project to move forward, the redevelopment agency needs the approval of a supermajority of a Taxing Entity Committee, which in this case includes representatives of the Jordan School District, the city of West Jordan, Salt Lake County, special service districts and the Utah State Board of Education.
Jordan School District Board of Education voted unanimously Tuesday to direct its representatives on the committee to support the project, which would rebate personal property taxes on the proposed data center's computer servers for 10 years.
The data center is expected to create just 20 jobs and PayPal could receive $6.8 million in tax increment over the 10-year life of the project, according to a West Jordan presentation to a State School Board committee and Jordan District board earlier this month.
School board member Bryce Dunford, who heads the board's finance committee, said the proposed project "is one of the best, very well put together." He urged the board to support the project.
The project will provide PayPal "with some tax relief" while at the same time creating jobs and leasing space in a formerly idle facility that is not seeking tax incentives from the school district, he said.
According to documents attached to the school board agenda, the project has the potential to increase the commercial tax base of the school district by $122.3 million, and "puts current real property back in use" while "minimizing impact on required services," including housing and schools.
It will increase the "concentration of office and high-skilled labor job opportunities, the documents said.
"(The) jobs created qualify, although not many jobs are being created — around 20," the document states.
During a meeting with the State School Board committee on Nov. 2, West Jordan's economic development director Kent Andersen did not identify PayPal by name, but called it a Fortune 250 technology company.
"I'm always a little amused by project names. This one caught me as a little interesting because there's the Salt Lake and now this is the Pepper River," Andersen said.
Adam Long, attorney for the West Jordan Redevelopment Agency, told the State School Board's finance committee that the proposal takes "a very targeted, very narrow approach" in that it only applies to the company's personal property.
Tax-increment agreements are commonly tied to real property. In this case, "Pepper River" would be the anchor tenant of a facility owned by Aligned Energy of Plano, Texas.
"So basically, Pepper River goes in and puts in hundreds of millions of servers in this building. This increment is just from those servers," Long said.
The company anticipates investing $633 million over a 10-year period, Andersen said.
PayPal is currently advertising to hire a data center supervisor in Salt Lake City.
Andersen told State School Board members that the Jordan School District had also requested that the company provide non-financial considerations.
"Right now, Project Pepper River is considering a couple of ideas. One of them would be a career day for students to come and understand a little bit more about the data center process and creating an internship through the school district for their facility," Andersen said.
A memo to members of the State School Board by board staff offered this explanation of the deal:
"The West Jordan Redevelopment Agency is proposing a 10-year project called Pepper River Community Reinvestment Area. The EDA (economic development area) is being created to spur development of a server center in the old Fairchild EDA. The project would send 60 percent of the personal property increment to the applicant for up to a maximum of $6,820,303. No increment is requested on real property. The project budget anticipates an investment of $122,310,000. The investment would consist mainly of new server and associated information technology equipment and installation in the existing leased space."
The State School Board finance committee lent its support to the project but its actions must be ratified by the full 15-member board. The board is expected to address the issue at its Dec. 6 meeting.
Once participating entities determine whether they support the project, their representatives on the taxing entity committee will vote.
PayPal would lease about 40 percent of the Aligned Energy building, which Andersen described as "a co-location facility for data centers."
Aligned Energy has invested $16 million for rehabilitation of the facility, Andersen said.
"West Jordan entered into a participation agreement with Aligned Energy to rebate municipal energy tax capped at $5 million over a 10-year period, so we already have some stake in the game to see this project be successful," he said.
The facility was formerly known as the Fairchild building.
In 2010, an economic development area was created to help Fairchild Semiconductor International Inc. modernize its plant. It collected tax increments for two years but closed the plant in 2014 and the building has sat vacant since.
In October 2017, an emerging biotechnology firm announced its intention to purchase the 60-acre site but that plan for the site did not develop either.
In 2017, the Redevelopment Agency of West Jordan purchased the facility and it was sold to Aligned Energy in March.
Aligned Energy celebrated the grand opening of its 294,000-square-foot Utah headquarters in October, a facility that will support both cloud providers and enterprise customers, according to a company press release.
"We are delighted to be a part of the Salt Lake business community, expand our portfolio to a new market and serve the region with an incredibly efficient and highly reliable data center platform. We continue to see strong demand for our services in Phoenix, Dallas and now Salt Lake," said Aligned Energy CEO Andrew Schaap in a press release.