Facebook’s data center is dead even before it has come into existence. On Tuesday, West Jordan revoked a deal with Facebook regarding the building of a massive data center in Utah. The offer promised a hefty tax incentive package worth up to $260 million over 20 years.
Too little return compared to investment
The deal could not be finalized as the State Board of Education passed approval for only a scaled-down plan with tax breaks capped at $100 million, reports the Salt Lake Tribune.
Several taxing entities were involved in the offered tax breaks, and hence, West Jordan needed two-thirds approval of a committee comprised of representatives of the different agencies. The decision the State School Board made on Tuesday assured that supporters would not be able to move forward with the whole package, with one vote short of the required majority, noted the report.
“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 statement read.
Previously, the agreement won unanimous support of West Jordan City’s Council, and the Jordan School District too supported it. However, Salt Lake County Mayor Ben McAdams and the county council felt the return on the package was too little while giving away a lot. It was estimated that it would create only 50 to 300 permanent jobs, the report said.
Facebook does not need tax breaks
Facebook makes billions of dollars in profits, and this made the council members question why it would need such major tax incentives. They also raised the concern that doing so would force them to make similar concessions for other companies as well.
The West Jordan City leaders did not name Facebook as the company seeking to move to Utah but instead referred to it as “Project Discus” in the statement. The city defended its approach, saying that a competitive package must be offered to “attract an all-star player.”
In a press release, West Jordan City said, “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 Any and all incentives and inducements preliminarily offered the company to locate in West Jordan are hereby rescinded in whole without prejudice.”
On Tuesday, Facebook shares closed up 0.18% at $124.37. Year to date, the stock is up more than 17%, while in the last year, it is up almost 45%.