This is an archived article that was published on sltrib.com in 2016, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Salt Lake County Council members seemed as skeptical Tuesday as Mayor Ben McAdams about participating in West Jordan's plans to dangle $240 million in tax incentives before Facebook, hoping to entice the company to build a large data center in the city.
But they might not have much choice about it.
The county has two seats on an eight-member Taxing Entity Committee, which comprises representatives from school and water districts, local governments and other agencies that levy property taxes on the 1,050-acre parcel West Jordan wants designated as an Economic Development Project Area, or EDA.
Some county officials worry that they will be in the minority when that committee votes on whether to support West Jordan's plan, which would return to Facebook much of the new tax revenue generated by its portion of the site for the next quarter-century.
The company would get 75 percent of the new tax revenues in the first phase of development, when two of six proposed buildings would be constructed. The revenue rate would graduate to 85 percent when the third and fourth buildings are built, and it would reach 100 percent with the completion of the final two buildings.
Construction is expected to take 12 years, said Adam Long, an attorney for the West Jordan Redevelopment Agency, while the EDA's provisions would allow Facebook to receive tax incentives for 20 years with no cap on the dollars flowing back to the company.
The investment would be worthwhile, Long and other city officials told the County Council on Tuesday, hoping they could persuade its members to instruct their representative on the Taxing Entity Committee, fiscal manager Dave Delquadro, to vote for the EDA. (The county's other representative comes from the library system.)
The council held off on the request, delaying a decision until next week.
Long said that even with the property taxes lost to incentives, the county and other taxing entities will receive nearly $34 million in new revenues from land yielding $321 per year now. And the company, which West Jordan officials did not name, will make a capital investment of $1.5 billion, create 130 high-paying jobs and potentially trigger more development.
West Jordan "sees a $33.8 million return as attractive," he said. But "without a very generous incentive project, this data center is not coming to Utah."
If the price is too high, responded McAdams, maybe it shouldn't.
"We don't have to say yes to everything a company asks for. If it's too much for us, let the company go elsewhere," he maintained. "The company keeps asking for more and more, and we keep throwing it on the table. At some point, we have to say enough is enough and walk away."
By several factors," the mayor added, "this is the largest economic-development incentive in Salt Lake County history and it will bring us just 100 jobs. That's $2.4 million per job. I have been and will be a supporter of economic-development incentives, but we have to ask ourselves: At what cost?"
He and several council members don't like the EDA, compared to a more conventional Community Development Area, or CDA, which gives its member-taxing agencies more say in terms of the agreements.
But council members are particularly peeved that West Jordan is insisting the EDA cover 1,050 acres down from an original proposal of 1,696 acres instead of the 232 acres Facebook would be using.
"Why don't we just deal with this client and the acreage they need?" asked Councilman Jim Bradley, supporting McAdams' contention that the county shouldn't extend tax breaks to 800 acres of undeveloped ground without knowing what's planned there.
It's especially true, Bradley said, because that property near the intersection of State Route 111 and New Bingham Highway undoubtedly will be developed without government incentives.
"We have a vigorous economy here," he said. "We don't need to sell ourselves short."
Councilman Richard Snelgrove agreed.
"All of us are in favor of economic development," he said, "but not economic development at any cost." He questioned whether West Jordan and state economic officials might be "star-struck because we're talking Facebook," which would be wrong.
"It needs to be evaluated in terms of dollars and cents regardless of who the [company] is," Snelgrove added, assessing the plan as "a $240 million piece of corporate welfare."
Councilman Steve DeBry objected that West Jordan's plan does not cap the amount of new tax money returned to Facebook, a first in his council tenure.
"It doesn't sit right. It doesn't smell right," said DeBry, whose council district includes much of West Jordan. "I don't want to be difficult, but the way it's laid out, it's just not good government."
West Jordan officials remained steadfast throughout the sometimes terse exchanges with McAdams and council members, saying the project will benefit the city and state by bringing such a big-name company.
"This will be the biggest data center they have," City Manager Mark Palesh said of Facebook. "That's kind of a nice moniker [for the city] to have."
And it could lead to more high-tech companies establishing roots in the area, he added, eliciting support from officials with the Governor's Office of Economic Development (GOED) and the Economic Development Corp. of Utah.
"We have seen clustering effects as ancillary benefits of other data-center projects," said GOED Deputy Director Theresa Foxley. "That's not guaranteed here. But having some of those brands helps put us on the map as we're talking to other corporations" eager to associate with the Facebooks of the world.
"When you get invited to the party," she added, "you want to know who else is going to be there."