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Tax Battle Kills Utah's Bid for Facebook Facility

A town in Utah that was competing to serve as the home of a new Facebook data center announced Tuesday it is withdrawing from negotiations with a subsidiary of the tech firm, leaving Los Lunas as the last known candidate for the site.

By Andrew Oxford

A town in Utah that was competing to serve as the home of a new Facebook data center announced Tuesday it is withdrawing from negotiations with a subsidiary of the tech firm, leaving Los Lunas as the last known candidate for the site.

In announcing an end to their bid in a news release Tuesday, officials in the Salt Lake City suburb of West Jordan cited opposition among state and local leaders to offering a package of property tax incentives to lure the Silicon Valley giant.

"The city of West Jordan understands the concerns of the several taxing entities that voted on the proposed incentive package for this large data center which, while investing a large amount in capital expenditures, would not include a long-term significant employment base," the news release said.

Recently, education officials rejected a $240 million deal, considering it too generous.

The facilities would house long rows of servers and hard drives that store and process vast quantities of highly secure information powering everything from online shopping to streaming movies.

While the facilities are an increasingly important part of the global economy, such data centers function more like giant walk-in refrigerators for computers that generally require few people on the ground to keep them running, said data center consultant John Harrington with Verify Research Associates.

Boosters have said the Facebook facility could create 30 to 50 full-time jobs during its startup period, with the potential for hundreds more as it expands, as well as more than 200 construction jobs.

The village of Los Lunas approved an ordinance in June allowing for the issuance of up to $30 billion in industrial revenue bonds to lure the project.

The social media company has been eyeing an 850-acre parcel of land known as the Huning Ranch Business Park near Interstate 25 and N.M. 6. And the state Public Regulation Commission last week unanimously approved a plan by Public Service Company of New Mexico to develop renewable energy sources for the site. PNM would initially power the facility with three large solar arrays and eventually wind energy.

Water emerged as a chief concern among Utah officials opposed to the project. Data centers are known to use large quantities of water to keep computer servers from overheating. Authorities in Utah bandied about estimates that the facility would require anywhere from 5 million gallons of water a day to less than 1 million gallons.

Los Lunas Mayor Charles Griego recently told The New Mexican he has seen data indicating the center would require far less water than the numbers reported by Utah news organizations. But Griego would not say what numbers he has seen for water usage at the proposed facility.

Facebook did not respond to a request for comment Tuesday night.

In a statement after the announcement by West Jordan, Jon Barela, Cabinet secretary of the state's Economic Development Department, said: "We've been working with this company for a year and this is a reflection of New Mexico's new competitiveness for high-wage and technology-related jobs."

While Utah officials debated and ultimately declined the proposal, state and local leaders in New Mexico jumped on the bandwagon with clean energy advocates and business groups such as the Association for Commerce and Industry.

The prospect of New Mexico drawing a prominent tech company over Utah seemed unlikely, however, given the conventional wisdom regarding each state's business climate. Utah has topped lists of business-friendly states published by Forbes magazine and CNBC, while the Land of Enchantment has ranked poorly.

But in the news release, officials from the city of West Jordan said: "As the state of New Mexico has opened its doors, from the Governor on down to its varied state and local agencies, to welcome this great company, we wish them well."

The Associated Press contributed to this report.

(c)2016 The Santa Fe New Mexican (Santa Fe, N.M.)

Caroline Cournoyer is GOVERNING's senior web editor.
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