Utah County Commission approves tax break for mystery Eagle Mountain data center

Story by Katie England – Daily Herald
Photo by Evan Cobb – Daily Herald

From left, Utah County Commissioners Greg Graves, Nathan Ivie and Bill Lee are seated at the head of the Commission Chambers on Tuesday Feb. 13, 2018, in Provo.  

The Utah County Commission approved an inter local agreement — with some contingencies — Tuesday morning, giving a tax break to a data center looking to build in Eagle Mountain.

The agreement between Utah County and the Eagle Mountain Redevelopment Agency creates a community reinvestment area, which is an economic development tool used by municipalities to allow those building within the project area to put money towards development that otherwise would have been spent on taxes.

Eagle Mountain City Administrator Ifo Pili told the commissioners Tuesday that the project area is more than 400 acres in Eagle Mountain between a wastewater treatment plant and a mink farm.

According to the agreement, the project area contains “vacant and underutilized land,” which is anticipated to be developed as a data center. The data center is not named in the agreement.

A 1,000 percent return on investment is expected from the proposed development, Pili said, and the company is planning on investing more than $100 million in infrastructure. Pili said Eagle Mountain began actively seeking to bring data centers to the city about 10 years ago.

The project area has historically generated a total of $66 per year in property taxes split among the various taxing entities including Utah County, Eagle Mountain and the Alpine School District. The school district receives about $40, or 60 percent, of the $66 the property generates currently. Upon full development, the data center is expected to produce more than $8.3 million per year for all the taxing entities, according to the interlocal agreement with Utah County.

The commissioners expressed several concerns with the proposed contract, and originally proposed delaying a decision to work out language, but Pili said the timeline was tight and asked for the language to be worked out in the meeting.

The Alpine School District Board of Education voted May 16 to delay their vote on a similar agreement with the Eagle Mountain Redevelopment Agency, and will likely vote on the agreement Wednesday. Eagle Mountain has already approved its part of the deal.

The redevelopment agency is requesting the city, county and school district to agree to the tax break in the community reinvestment area for a specified period of time.

The property would be developed in different phases, and the agreement outlines that the county would remit, or give up, 100 percent of the county’s portion of the annual tax increment generated from personal property tax within the project area, and 80 percent of the annual property tax.

Pali said that the company, though asking for the tax break, will pay all impact and development fees in full.

That money, which would normally be paid as taxes, would instead be reinvested back into the development including into construction of buildings, infrastructure improvements and other development costs, the interlocal agreement states.

Nathan Ivie, chair of the Utah County Commission, said he was concerned that there was not a performance guarantee specified in the contract ensuring that the company would do what it said it would do, and Commissioner Bill Lee echoed the concern, saying the county needed something in the agreement that was measurable.

Pali said the company will have to put in infrastructure before the tax incentive will really benefit them.

“They have to make all these investments before they get a dime of anything,” Pali said. “If they were to leave and say no, six months from now, we’re out nothing. Not even a development fee.”

When the commission passed the contract, it stipulated several changes, including stipulation that company will not receive any tax increment past 2059, in the 40th year of the project, and that the tax break was conditional on the infrastructure being completed as outlined in the development agreement with Eagle Mountain.

The commission also put a condition on the passing of the agreement that it is contingent to passage by the Alpine School District.

Expressing support for the agreement was Theresa Foxley, president and CEO of the Economic Development Corporation of Utah.

When the agreement was discussed by Alpine School District, Utah Valley Chamber of Commerce President Rona Rahlf spoke in favor of the project, as did Val Hale, the executive director at the Utah Governor’s Office of Economic Development.

The agreement states that Utah County has determined that significant additional tax revenues will likely be generated by the development of the project area, though that development is not likely to happen in the foreseeable future or to the degree desired without the tax break to encourage the development activity.

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