KUNM

Competing For The Facebook Data Center

Aug 19, 2016

Facebook is going to have to choose where to put its new data center: New Mexico or Utah.

The social media company stores its users’ uploads, mostly millions and millions of photos, on servers. Communities want these data centers because they inject cash back into the hosting community. 

Albuquerque Business First’s business intelligence reporter Joe Cardillo spoke with KUNM’s Anna Lande about the tug of war for Facebook’s bid.

CARDILLO: You know Facebook really hasn’t said a lot about why they are looking at these two locations. They’re always looking at additional capacity for their data centers. New Mexico is on the radar. Utah is on the radar.

There are probably some kinds of different economic incentives on the table, in terms of tax subsidies. As a lot of folks have reported on, Utah is certainly little more contentious than New Mexico where there’s some stuff on the table, but it hasn’t caused any particular issues. And there’s not a lot of information on what those subsidies are.

KUNM: Utah was initially offering Facebook $240 million in tax incentives to sweeten the pot. What happened there?

CARDILLO: You know, Utah is essentially offering a combination of tax subsidies. And there’s a bunch of different actors involved in that, right? You’ve got some counties, you’ve got some cities, and you’ve got some school boards that are involved.  They all have sort of different opinions about the role of this particular project, and what it might do for their economy.

The suburb of West Jordan, which is where they’re looking at locating this particular data center, there’s not a ton of space. It’s already expanding. So, there’s questions, some questions about what that space is going to be used for. Versus here, we don’t have those same concerns. There’s probably lots of space for a Facebook data center.

KUNM: So what have we offered?

CARDILLO: Well, that’s a little bit under the radar at this point. The village of Los Lunas has reportedly negotiated and approved an industrial revenue bond for Facebook to build a data center up to six phases. But the way they work is, a company says 'hey, I’ve got this big capital project. I’m going to do construction. I’m going to add equipment or add a location.' The company then gives the project over to a local government. They issue this bond, and then the city or village leases that project back for the term of the bond. It can be 10, 20, 30 years.

I don’t know what the numbers are behind that. So far the Village of Los Lunas has declined to comment, as well as the county development officials and the state.  

KUNM: So, what would it mean for Los Lunas and the state if Facebook decides to put the data center here?

CARDILLO: Well you know, the attorney aeneral, the congressional delegation and some business leaders have all said, 'hey, this is a good project.' It would certainly increase construction jobs initially. The actual project itself, the data center, isn’t going to create a lot of jobs, somewhere in the neighborhood of 50.  But it could potentially put the state on the map. In terms of, people will go, 'Whoa! Why did Facebook choose to locate there?'

I think one thing that is very clear is that they are expanding their capabilities in this area. And Facebook has also made it pretty clear that renewable energy is a big part of their goal and portfolio.

KUNM: When are we going to know?

CARDILLO: Everybody is pretty much keeping the word under, but I think if you look at the filings in both Utah and New Mexico it’s pretty clear that something like this going to take about a year to build. So, I think you’re looking at a decision most likely in month, two months.