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Facebook fires up first data center operations in Utah as massive construction project continues

Facebook has opened the first phase of its massive Eagle Mountain data center.
Facebook’s data center in Eagle Mountain is pictured on Thursday, Feb. 18, 2021.
Spenser Heaps, Deseret News

Facebook announced this week the first phase of its massive data center in Eagle Mountain is now operational and work continues on four other structures set to house banks of digital data servers that keep the world’s biggest social media platform humming along.

The company’s $1 billion-plus data center in this small community on the west side of Utah County is just one of 13 across the country and when complete will occupy some 1.5 million square feet.

Exactly how much data the facility will be able to hold is a little murky, and the company isn’t saying, but experts estimate the highly secretive National Security Agency data center in Bluffdale, which has a similar footprint, might accommodate 3-raised-to-the-power-of-12 exabytes of data. And don’t feel bad if you haven’t heard of an exabyte, the term for 1,000 to the 6th power or 1,000,000,000,000,000,000 bytes of information.

Facebook’s massive data center in Eagle Mountain has opened its first phase, while work continues on four other structures.
Facebook’s massive data center in Eagle Mountain has opened its first phase, while work continues on four other structures.
Facebook

In a report released last fall, Facebook says it spent $11.5 billion from 2017 to 2019 on capital expenditures, operating expenses and direct wages related to data centers, investments that have generated some $18.6 billion in contributions to gross domestic product for its host communities across the U.S. In Eagle Mountain, the company says it has kept over 1,200 workers busy during peak construction, and the data center operation will, when complete, “support” 200 jobs (though only a few dozen employees are actually needed to manage the facility.)

With the release of that report, Facebook community development manager William Marks said work on the Eagle Mountain facility has continued throughout the pandemic and provided an ongoing economic boost to the community.

“We are proud to invest $1 billion into Eagle Mountain but even prouder to see how our investments spur further economic benefits for the area, especially during this tough economic climate,” Marks said in a statement. “Our data center investments go beyond economic growth to benefit the local environment and community.”

While many companies, particularly those in the food service, hospitality and recreation/entertainment sectors, suffered catastrophic losses amid the restrictions brought on by COVID-19, many leading U.S. tech endeavors, including Facebook, have been experiencing record-setting business volumes.

Facebook says it had 2.85 billion users worldwide as of the end of March and reported $26 billion in revenues for the first quarter of 2021, up over $8 billion from the same period in 2020, a 48% jump. The company’s net income for the quarter of $9.5 billion was nearly double what it made in the first quarter last year. Facebook, which also owns popular photo/video posting platform Instagram as well as messaging service WhatsApp, started the year with its stock at just under $269 per share and closed Wednesday trading just under $348 per share, a 29% gain so far in 2021. The current price gives Facebook a market capitalization of over $985 billion.

Last summer, Facebook founder and CEO Mark Zuckerberg said he was pleased his company could play a role in keeping people connected amid the ongoing global public health crisis.

“We’re glad to be able to provide small businesses the tools they need to grow and be successful online during these challenging times,” Zuckerberg said in a statement. “And we’re proud that people can rely on our services to stay connected when they can’t always be together in person.”

Facebook unveiled the Eagle Mountain project in May 2018 after rumors and speculation about a mysterious big tech project in the area swirled for months. The depth and breadth of local and state tax incentives provided as a lure for the company were also clarified at that time, and they are unprecedented.

If all five phases of the data center project are completed in the next few decades, Facebook is set to harvest a potential $750 million in taxpayer subsidies along the way.

Facebook’s massive data center in Eagle Mountain has opened its first phase, while work continues on four other structures.
Facebook’s massive data center in Eagle Mountain has opened its first phase, while work continues on four other structures.
Facebook

Under terms ratified by five 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.

Phase 2, announced in late 2019, adds 500,000 square feet of additional facilities to the first phase and pushes the capital investment to $1 billion, according to the company.

While Facebook is currently in the second phase of the project, the open-ended incentive agreements extend public benefits well beyond the first two phases and could land the company hundreds of millions in additional tax relief over the next four decades.

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.

Utah is currently home to numerous data centers, including facilities operated by eBay, Twitter, Oracle and the National Security Agency.