Race for Facebook Data Center Raises Tax-Break Questions

The race between a small town on the Rio Grande in New Mexico and a Salt Lake City suburb to entice a new Facebook data center with millions of dollars in tax breaks and subsidies is raising questions about public investments in a booming cloud-computing economy that typically brings few local jobs.

In West Jordan, Utah, an initial plan to offer some $240 million in tax breaks over two decades fell apart after several local leaders said the lure was too rich. Negotiations have since restarted.

In New Mexico, The Los Lunas Village Council agreed to give up all property taxes for 30 years in exchange for annual payments that start at $50,000 and top out at nearly a half-million dollars.

The village has yet to provide a tally of the revenues it would forgo under a complex economic development agreement that also involves tax breaks on billions of dollars in computer equipment over time.

Officials in West Jordan say they can hardly compete with the generous offer from the town of 15,000 people in New Mexico.

Dave Swenson, an economist at Iowa State University, says West Jordan's initial offer was greater than the total combined tax breaks offered for seven other data centers in Iowa.

"This is nothing but a giveaway," Swenson said.

Los Lunas officials foresee a possible $1.8 billion construction project that provides as many as 300 direct temporary jobs, and just 50 permanent jobs thereafter -- a fraction of the steady employment at the local Walmart distribution center.

Still, supporters of such deals see an opportunity to attract a hot company that would bring tax revenue despite the incentives and could attract other high-tech companies.

"If you're in the market for a new car and this dealer offers a rebate for the same car and this dealer doesn't, where are you going to buy the...

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