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Even before Phase 1 completion, Facebook announces expansion to Utah data center

A rendering of Facebook’s data center project in Eagle Mountain. The social media giant announced Phase 2 of the project Wednesday, which includes 500,000 square feet of additional facilities to the 1 million-square-foot project announced in May 2018.
Facebook

EAGLE MOUNTAIN — Even before the first bytes of digital information are stored, social media giant Facebook on Wednesday announced plans to expand its data center project in the western Utah County community of Eagle Mountain.

The news comes as no surprise as the company predicted, when it unveiled its project in May 2018, that the facility could be built out in as many as five phases. If all five phases are completed in the next few decades, Facebook is set to harvest a potential $750 million in taxpayer subsidies along the way.

Under terms ratified by five different taxing entities, Facebook will qualify for some $150 million in tax breaks over 20 years for Phase 1 of the project, a two-building, 970,000-square-foot undertaking worth $750 million.

The expansion adds 500,000 square feet of additional facilities to the first phase and pushes the capital investment to $1 billion, according to the company. In a release, Facebook said it has made “great progress” on the project thus far, having poured over 41,000 yards of structural concrete and incorporated over 7,000 tons of steel.

Months of intrigue and controversy preceded the revelation that Facebook was the company behind the mammoth project, which includes construction of enormous warehouse-style buildings that house thousands of computer servers — the hardware behind the digital “cloud” — that store and process data.

The open-ended incentive agreements, however, extend public benefits beyond the first phase and could land the company hundreds of millions in additional tax relief over the next four decades.

Facebook continues to be the most profitable social media company on the planet and just reported record revenues of over $17 billion for the third quarter of 2019. Facebook’s current market capitalization is over $570 billion. The company has continued to be highly profitable in spite of a bevy of criticism, legal actions and scrutiny by government entities around the world for its handling of personal data supplied by its users. One of the most well-known controversies erupted in late 2017 when it was revealed a data scientist harvested personal data, without authorization, on some 80 million Facebook users. Later, he sold the information to Cambridge Analytica, a firm that worked with various political campaigns, including President Donald Trump’s before he was elected, as well as organizations working on the pro-Brexit movement.

In addition to its capital costs, Facebook is investing about $150 million in infrastructure improvements, including bringing power to the 500-acre 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. That tax break gives Facebook 100% tax relief on personal property taxes due and 80% relief on real property taxes due for a term of 40 years for four of the five taxing entities it’s beholden to.

Only the Alpine School Board created some caps on those benefits, with limits of $40 million per phase and $120 million total over 35 years. Alpine School District represents the biggest beneficiary of the taxes Facebook will pay — and the entity giving up the most via the tax break package — as the recipient of about 70% of the total taxes due. The company will also enjoy some sales tax exemptions, created specifically for data centers by the Utah Legislature.

A study commissioned by Eagle Mountain on the project detailed that if Facebook carries the project through five phases inside the 40-year limit, the company would earn $750 million in tax relief.

While data centers represent large capital investments for the companies that construct them, the operations themselves require relatively little in terms of human staffing. The Facebook facility will require only a few dozen people to operate, though the company says the project will “support” 200 jobs on completion. Utah is currently home to numerous data centers, including facilities operated by eBay, Twitter, Oracle and the National Security Agency.