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Secrecy surrounds Eagle Mountain talks for proposed data center

EAGLE MOUNTAIN — Ghosts of a failed Facebook data center bid are haunting an Eagle Mountain effort to close a similar deal with a yet-unnamed tech company.

While public officials involved with the quest are citing ongoing contract negotiations as the basis for protecting the company's identity, statements made in discussions about the project indicate it's likely one of the Bay Area giants. Google, Apple and Facebook have all been actively engaged in building new, big server farms in the U.S., according to reports.

But secrecy surrounding the project — and worries that a potentially higher payday the large project could bring for schools could be lost because of promised tax breaks — is again looming over the potential deal. At least one public official is already troubled by the process.

Much like the one that occurred two years ago.

Eagle Mountain data center
Eagle Mountain data center
Heather Tuttle

In 2016, Salt Lake County officials led the charge in voicing concerns that included the size of a proposed tax incentive — estimated at $250 million over 20 years — to lure a $2.5 billion Facebook data center project to West Jordan. West Jordan, which kept the negotiations secret for nearly a year before the company's name was revealed, eventually lost out to Los Lunas, New Mexico, much to the ire of West Jordan city officials.

Salt Lake County Mayor Ben McAdams said at the time that the contract going to Los Lunas was the best outcome for students, educators and taxpayers.

"I thought this was a bad deal for the kids of the Jordan School District and taxpayers in West Jordan and Salt Lake County," McAdams said. "This was something we needed to walk away from."

Eagle Mountain, however, is currently having better success at lining up support for its effort, which officials say will bring $750 million in investment in just phase 1 of what could be a multiphase project.

Economic Development Corp. of Utah President/CEO Theresa Foxley said the company, which she declined to identify other than confirming it was "one of the Fortune 100 companies," is willing to pay for extensive infrastructure investment upfront that will include new power, water/sewer, telecommunications and road improvements to the site.

A study commissioned by Eagle Mountain cited returns of 1,000 percent on the city's investment and highlighted that the 500-acre parcel just south of the city's center is currently a "greenbelt" that generates $66 annually in property taxes. In the event the data center goes in, tax revenues would skyrocket, with annual property tax receipts approaching $840,000.

A proposal currently making the rounds with relevant taxing entities includes the extension of about $150 million in tax breaks to the mystery company to offset its infrastructure costs. That plan, with a 20-year lifespan, suspends 100 percent of taxes on the company's personal property investment, with a projected value of $375 million, and extends an 80 percent break on tax liabilities for an estimated $375 million in real property investment.

Foxley said the new infrastructure the company would fund will "end up being owned by public entities."

Eagle Mountain and the Unified Fire Authority, both taxing entities in the area, have already signed off on the plan, but Utah County, the Central Utah Water Conservancy District and the board of the Alpine School District are slated to make their decisions this week.

At a meeting last week, Alpine School Board member Wendy Hart said during a discussion of the data center proposal that while the new revenue that the district could expect if the data center is built — estimated at around $540,000 annually — is significant, it won't offset the costs that will come with growth that the data center may spur.

"As everybody knows, we're the lowest funded district in the lowest funded state in the nation when it comes to educating our kids," Hart said. "Our obligation … is to not tie the hands of the board for the next 20 years.

"In five years, I've got to build another high school. In five years, I've got to build another middle school and none of this mitigates that," she said, emphasizing "$83 million for a new high school. $500,000? Just do the math."

Governor's Office of Economic Development Executive Director Val Hale told school board members that the project was "exceptional" and that a company willing to invest over $100 million in infrastructure that will "open the area up for further opportunity for industry and other development" was a rare occurrence.

Hale also noted that Utah Gov. Gary Herbert had visited with the unnamed company, "almost exactly a year ago," to encourage them to invest in Utah.

Based on the governor's public schedule from that time, Herbert left for an "economic development" trip to Palo Alto, California, last May 19. Palo Alto is home to Facebook, and the world headquarters for both Google and Apple aren't far away. A Deseret News request to Herbert's staff for details of who he met with on that trip was deferred to GOED.

"We do not disclose the companies with whom we meet as it could provide a competitive disadvantage," a GOED spokeswoman said in a statement.

Critics of huge tax breaks for data center developments point out that while the capital investments are sizeable, the projects generate a meager number of jobs.

An informational posting about the data center proposal on the Eagle Mountain website estimated job creation for the project at 30-50 positions. A Washington Post story on an Apple data center in Maiden, North Carolina, representing a $1 billion investment by the iPhone maker, noted it only generated 50 jobs.

However, a U.S. Chamber of Commerce report last year highlighted that, on average, data center projects generate over $32 million in economic activity for host communities. Utah is currently home to data centers operated by eBay, Twitter, Oracle and the National Security Agency.

Hart, who said the school board did not have ample time to fully review a 50-plus page report that was received from Eagle Mountain on the Friday before the meeting last Tuesday, said she was also vexed by the decision not to share the name of the company.

"To make a decision with this potentiality, without knowing who this organization is, that’s really hard for me to take on faith," Hart said. "But we weren’t elected to trust you. We were elected to listen, to collaborate and to partner."

The Alpine School Board is scheduled to vote on the data center proposal during a special meeting at 8 a.m. Wednesday.