As a leader in energy development, New Mexico is an ideal fit for the new facility, which is planned to be powered with 100 percent renewable energy.
You know that couple that’s on again/off again and every time you talk to them their relationship is a different status and eventually you just stop caring if they hate each other or are getting married? That’s how I feel about West Jordan and Facebook.
Last we heard, West Jordan had said “Baby, come back,” after calling it quits on the Facebook data center negotiations just twelve hours prior. Then we didn’t hear much for a few weeks, until recently when a handful of New Mexico politicians released the following statement:
“We welcome Facebook to New Mexico and are proud to help secure this new investment in our state’s future. Facebook will bring innovative opportunities for our economy and much needed jobs. As a leader in energy development, New Mexico is an ideal fit for the new facility, which is planned to be powered with 100 percent renewable energy.”
So that’s that, then. It’s over. Facebook said, “Boy, bye” and committed to the state who, let’s be honest, always treated her better. We’re talking promises of no property taxes for 30 years, a $10 million subsidy, and sales tax rebates worth $1.6 million a year. Utah was just never ready to say “I do” to the $40 mil tax incentives.
Later in the day, Facebook released a statement of their own from Ken Patchett Director of Data Center Operations, that I have to say, felt a little pointed. Read for yourself:
“We’re thrilled to announce that our next data center will be built in the village of Los Lunas, New Mexico!”
“The process for finding a location for a new data center takes years, and it’s an important one because these communities become our homes. In our search, we look for great partnerships with the local community, a strong pool of local talent for construction and long-term operations staff, and access to clean and renewable energy. We found all of this in Los Lunas, and we’re excited to join the community there.”
“Our Los Lunas facility will be one of the most advanced, energy-efficient data centers in the world. It will feature the latest in our Open Compute Project hardware designs, and it will be cooled using indirect evaporative cooling systems that emphasize efficiency, while protecting our servers from the frequent dust storms that occur in New Mexico.”
“The data center will also be powered by 100% clean and renewable energy, thanks to the new solar and wind energy that we’re working with PNM Resources to bring to the New Mexico grid. By powering our data center with renewable energy versus natural gas, we also reduce the water usage associated with the data center by 30 percent. The new solar and wind farms also bring additional jobs and investments to the region.”
“The Los Lunas Data Center will support thousands of new construction jobs, dozens of long-term operations jobs, and generate hundreds of millions of dollars in new investments to New Mexico. You can read more about the impact our data center investments have had so far in Oregon, North Carolina, and Sweden. For us though, our project goes beyond just economic impact — we want to do what we can to help the village of Los Lunas and the state of New Mexico continue to thrive.”
New Mexico and Facebook’s gushing about one another has some in our state reaching for the ice cream and turning up the Adele. “We were hopeful that a revised agreement could be reached,” says West Jordan Mayor Kim Rolfe. Rolfe says political theatrics are to blame for the relationship’s demise. “We believe that opponents of the project have every right to state their points and opinions, but the arguments should be factual,” Rolfe says. “This standard was not met in this matter.”
Meanwhile, others in our State are going to discotheque wearing “Single and Ready to Mingle” t-shirts. “[This deal] failed our test of being a good deal for the taxpayers of Salt Lake County, especially when we saw it would cost about $3 million per job,” says Salt Lake County Mayor Ben McAdams. “That was just too much for too little benefit.”
Honestly, I’m just glad we can all get some closure, you know? It’s time to move on. Maybe take some time to find ourselves. Travel a little. Get a massage. Another data center will come along. And we’ll just know when it’s meant to be.
This is too good of an opportunity for Utah to pass up, so we have been working throughout the night and will continue through the day to keep the project alive.
Okay. Disregard everything I’ve written about the Facebook Data Center saga so far. I wrote AT LENGTH about the details of Project Discus. Then I wrote AT LENGTH about West Jordan’s decision to end negotiations with Project Discus. But neither of those stories matter anymore because today West Jordan officials said JK! and then announced that negotiations are starting afresh. It’s fine. Those stories only took 20 hours to research and write.
The statement released by the City of West Jordan today reads:
Yesterday’s State School Board vote challenged negotiations that were already worked out with a company known as Project Discus. The company was not in a position to accept the terms of the School Board’s motion last night. As a result, the City of West Jordan terminated the agreement so that we could start fresh. This is too good of an opportunity for Utah to pass up, so we have been working throughout the night and will continue through the day to keep the project alive.
Based on feedback from other cities where Discus has data centers, we know that this company is a generous community partner and an asset wherever they locate. We have been in talks with Discus since the vote, and they are still very interested in coming to West Jordan. We appreciate the support of the Governor, State School Board, the Jordan School District, and the Jordan Valley Water District who we have worked with throughout our negotiations. The company is anxious to make a decision, and we are ready to welcome them to our city.
This story is one twist away from becoming one of those straws we all had in childhood with which we blew bubbles in our chocolate milk and the dishwasher never really cleaned them properly and they got pretty gross pretty quick but they were really great twisty fun while they lasted.
Effective immediately, all negotiations between the company known as Discus and the City of West Jordan are hereby terminated. Any and all incentives and inducements preliminarily offered the company to locate in West Jordan are hereby rescinded in whole without prejudice.
Well, we had nary a day to consider both sides of the Facebook Data Center Debate before West Jordan City unfriended Project Discus. Ugh. I know. I’m so sorry. I hate myself for writing that.
“Effective immediately, all negotiations between the company known as Discus and the City of West Jordan are hereby terminated. Any and all incentives and inducements preliminarily offered the company to locate in West Jordan are hereby rescinded in whole without prejudice,” reads a City of West Jordan press release released Tuesday afternoon. City Manager Mark Palesh, author of the press release, makes it clear that he believes Utah should have accepted Project Discus’ friend request. “The process to recruit top businesses to our state — and other states across the country — includes incentives. If you want to attract an all-star player, you have to offer a competitive package,” Palesh writes.
All this Project Discus drama has caused the County Council and West Jordan to change their relationship status to It’s Complicated. “Unfortunately, the long courtship of this company has had a negative impact on the working relationships of the several state and local entities involved, which must be repaired for the good of all citizens of Utah,” the press release states. While West Jordan City Council and the Jordan School District voiced their support, Salt Lake County Mayor Ben McAdams has been a vocal opponent of Project Discus. The Salt Lake Tribune quotes McAdams as saying, “I think the incentive that was offered was too rich by an order of magnitude and four other cities in the county looked at it and walked away long before this incentives was ever reached. It needs to pass a cost-benefit analysis and this one wasn’t even close in my book.”
West Jordan officials decided to stay off social media for a while after the State School Board voted to cap the tax incentives at $100 million and approve only the first phase of Project Discus. “It’s unfortunate. (West Jordan) could have tried to continue negotiations,” State School Board member Stan Lockhart says. “We actually approved what we were requested to approve. We just decided to do it in phases. We didn’t kill this deal.” But Palesh disagrees. In a quote found in The Deseret News, he says, “[The State School Board] knew no multibillion dollar company was going to negotiate part of the deal and then hope that they’d fall under the good graces of the (Salt Lake) County mayor and council at a later date. They already know how they’ve treated them, so why would they ever do that?”
Lockhart agrees that we’ve been the worst kind of friends to Facebook. The kind that poke for no reason whatsoever. The kind that post things like, “Ran 15 miles, feeling great!” The kind that comment on articles others post without actually reading them. Lockhart says that he’s embarrassed by the way Facebook has been treated. He says that when he met with Facebook representatives, “All I could do was apologize. We’ve managed to trip over ourselves so many times and had so much bad publicity, now they’re wondering if they really want to come. It’s not so much this deal, but it is do we have our act together as a state?” Palesh pins much of this bad publicity on McAdams, saying, “We’ve been trying to negotiate for six months and trying to negate all the damage that the county mayor has done. Discus has a corporate image to uphold, and so why would they go to a state that has been pretty antagonistic toward them?” McAdams, however, says he felt the public needed to know the details of Project Discus. The Salt Lake Tribune quotes him as saying, “This was the largest tax incentive ever offered in Utah history and the skids were greased, and I felt it was important that the public have a chance to look at it. It was a bad deal that would set a precedent that would harm our state in the future.” McAdams says that the deal would have been especially bad for Utah schools. “I thought this was a bad deal for the kids of the Jordan School District and taxpayers in West Jordan and Salt Lake County,” he says. “This was something we needed to walk away from.” Billy Hesterman, vice president of the Utah Taxpayers Association, agrees with McAdams, saying, “This was definitely a win for Utah’s schoolchildren today. This was a deal that was going to give away so much in a state where schools are clearly underfunded.”
So now it’s looking like the Data Center will change its profile to read Lives in Los Lunas, New Mexico. New Mexico has approved $30 billion in revenue bonds for Facebook and offered a 100 percent property tax rebate over 30 years. So I guess they really want that data center, and honestly, I feel like they deserve it. It can’t be easy being the state best known for fictional blue meth. Also their unemployment rate is pretty bad, so they’re probably more eager to put their eggs in the “Facebook will move more operations here and bring more jobs” basket. “New Mexico rolled out the red carpet,” Palesh says. “Every entity they have offered an incentive we couldn’t even begin to meet. Our state was the antithesis of that.” In the press release Palesh writes, “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 Governer’s Office of Economic Development, who were instrumental in getting Project Discus as far as it did, released a statement from Executive Director Val Hale. Hale states, “After a robust debate and public discussion, ultimately local officials could not agree to the terms of a potential deal. Our work on these projects has always been as a facilitator for local government leaders. The Governor’s Office of Economic Development will continue working to help local businesses expand and succeed in our state.”
It’s going to be weird when New Mexico starts posting photos of their happy new life with the data center. We Utahns will scroll and wonder if maybe we made the wrong choice. Nothing makes a breakup worse than seeing evidence of your ex’s new relationship on social media when you just happen to accidentally be checking their profile. Not that I know. Hopefully in the end we’ll have no hard feelings, something Palesh already strives for in the final line of his press release that reads, “It has been a pleasure working with representatives of Project Discus, and we would do so again, should their plans include the City of West Jordan and the State of Utah.”
“Having the types of companies in our community that can support enterprise-level data centers is thought to enhance the state’s brand value, which assists local companies by enhancing the Silicon Slopes halo effect.”
Last week the public learned of a plan to bring a Facebook data center to West Jordan, and as you might expect, people have questions. Facebook has yet to confirm it’s the company behind what’s being called Project Discus, but sources and documents filed by power companies with state regulators point to the company being behind the project. Project Discus, as it’s been explained by various news outlets, contains some numbers that have more than a few public figures, educators, and citizens concerned. Numbers like five million gallons of water a day; and $240 million in tax rebates. However there are also those who say the reported numbers are inaccurate, and that Project Discus will lead to a bright(er) future for Utah’s workforce.
Let’s say you’re making a movie (omg that’s so great — good luck!) and Michael Fassbender has read the screenplay and agreed to play the starring role (what?! Congrats!). Sure, he wants a tax rebate and a bunch of water, but having Michael Fassbender in your movie means more ticket sales. And, if the movie is good, other big names will probably be willing to sign on to your future film projects, so those rebates and water recourses seem worth it. But wait — some powers at be say, “Actually, I don’t think you should use Michael Fassbender. Why don’t you just wait. Another Michael Fassbender will come along.” And you’re like, “THERE’S ONLY ONE MICHAEL FASSBENDER!”
Facebook (maybe you’ve heard of it?), like Mikey F., is a pretty big deal, and the company setting up shop here lends prestige to Utah’s thriving tech industry. Other companies may take note and follow suit. “Having the types of companies in our community that can support enterprise-level data centers is thought to enhance the state’s brand value, which assists local companies by enhancing the Silicon Slopes halo effect,” says Theresa Foxley, Deputy Director of the Utah Governor’s Office of Economic Development.
Also, Facebook itself may move more operations to our lovely deseret. “If history is any indication, Project Discus may lead to follow-on investment by the company,” Foxley says. “When a data center is wholly owned and operated by a single company, the efficiencies/economies of scale that can be found by co-locating other company operations along-side the data center becomes an extremely attractive option. Utah’s unique geography and talent base make co-locating operations even more attractive and Utah has seen that trend with other data center projects.” Other data center projects such as eBay, which in 2008 announced a data center projecting 50 jobs and $430 million in capital investment. Later eBay announced expansions projecting over $80 million in additional capital investment and 2,200 more jobs. Oracle set a similar precedent by announcing a data center projecting 100 jobs and $260 million in capital investment, then expanding to 351 jobs and an additional $6 million in capital investment.
Project Discus will provide up to 500 construction jobs for local laborers, and while only 30–50 full-time employees will actually work in the completed data center, those positions will be high-paying. And although Facebook will get a huge tax rebate, they will still contribute around $17 million in taxes a year. If Project Discus is voted down, the land could become residential developments, placing a heavy burden on an already strained school system. Or, the land will remain undeveloped and generate only around $100 in taxes a year.
Also, as West Jordan mayor Kim Rolfe explains, the center will likely use less than a million gallons of water a day in the warmer months and far less in winter. The five thousand gallons we’ve seen in various reports is an estimate for six buildings, not one. It is a theoretical maximum for 24 hours, 365 days of peak water usage, on the hottest and most humid day of the year. That’s a tiny fraction of the year in our Utah climate, and most days will use far less water than the theoretical maximum.
“Aside from the brand value, we know other communities that have won enterprise data centers tout the benefits of hosting them,” Foxley says. She explains that Project Discus may lead to an expanded revenue base that can lower tax rates for other property owners, create win-win community partnerships for local schools, and serve as thought leadership on issues like renewable energy deployment.
Okay. But. Let’s also say that you’re in junior high again (my condolences) and sitting with your friends at lunch. Your bestie Becky says, “Hey, I want to be more popular, so I’m going to invite the most popular girl in school, Veronica Smith, to sit with us. We just need to give her $240 million in tax rebates and possibly five million gallons of water for hot days.” Your jaw drops and you can’t find your words. A whole minute goes by while you struggle to pull yourself together. Finally you manage to ask, “What? Why?” Becky explains that Veronica Smith sitting at your table will show all the other popular kids how great your table is and they’ll all want to sit there and it will bring lots of cred to your table in the long term. “Don’t you feel like we’re okay without Veronica?” you ask. “I mean, we’re already friends with Adobe, Oracle, Microsoft, and Ebay.” “No,” Becky responds. “We really need Veronica to like us. I hope you vote to give Veronica the requisite tax rebate and water so she’ll agree to sit here.” “Yeah, I don’t think I’m going to do that,” you say, and then Veronica walks by your table and you yell, “You can’t sit with us!”
Some politicians and citizens feel we’re bending over backward to allow Facebook to build its data center here, just because it’s Facebook. In a Salt Lake Tribune op-ed co-written by state senator Howard Stephenson and Salt Lake County mayor Ben McAdams the two argue, “We should not sell our real estate or our taxpayers short just because a famous name comes calling…The Economic Development Area plan put forth by West Jordan City asks for a tax subsidy — taxes that would come from the school district, the county, the county library, the state, and even city energy taxes for 20 years.”
“If you do the math, we’d be paying between $2 million and $3.4 million per job. That’s far more than has ever been spent by economic development officials to lure businesses such as eBay, Adobe or Boeing,” Stephenson and McAdams state. “We know that the proposed structures, which are essentially very large refrigerated buildings to keep computer servers from overheating, come with a legal contract for delivery of 4.8 million gallons of water per day. They may use less during the winter season, but the water must be available should they need it,” Stephens and McAdams explain. “Utah is the second driest state in the country. In our fast-growing area, water is a finite and a precious commodity and is essential to every current and future resident and business.”
County Councilman Richard Snelgrove has described Project Discus as “corporate welfare” that will ultimately employ only a handful of local employees and fail to benefit the people of Salt Lake county. “A bad deal means less money to fund all the services our residents currently receive, a shortage for our school children, and a worst case scenario of having to raise taxes to make up a deficit,” Stephenson and McAdams write.
West Jordan needs to build new schools soon to educate its booming population, and Project Discus has some educators questioning the state’s priorities. “Education receives funding from property taxes and that $240 million could help education significantly (or even a minor portion of it) but once again, it feels like Utah gives education the short end of the stick,” says a Utah educator who wishes to remain anonymous.
The fate of Project Discus lies in the hands of West Jordan’s Taxing Entity Committee, which is set to vote Monday, August 29. The committee is made up of eight members, and six of the eight must approve Project Discus for the plan to move forward. Two members represent West Jordan, two represent Salt Lake County, two represent the Jordan School Board, one represents the Utah State Board of Education, and one represents all other taxing entities. So far, West Jordan and the Jordan School Board (reluctantly) support Project Discus, while Salt Lake County does not. Meanwhile, New Mexico is willing to volunteer as tribute. That has some saying, “How can this be a bad idea when another state is so willing to adopt it?” and others saying, “Go to New Mexico. See if we care.” (I’m paraphrasing, obvs).
I don’t envy whomever is playing this particular round of Sim City. Luckily, our job here at Beehive is to tell you both sides of the story and make jokes about them, which is precisely what we plan to do as this story continues to unfold.