After months of public speculation and more than a year of quiet negotiating efforts by state officials, Facebook has announced it will build a massive data center in Los Lunas.
Construction is set to begin next month.
“Our Los Lunas facility will be one of the most advanced, energy-efficient data centers in the world,” wrote the company in a statement. “The Los Lunas data center will bring hundreds of new construction jobs, dozens of long-term operations jobs, and hundreds of millions of dollars in new investments to New Mexico.”
Facebook is scheduled to break ground in October, and the data center is expected to be fully operational by late 2018. The first phase of the project – there could be up to six phases – will cost $250 million and bring an estimated 30 to 50 data center jobs and several hundred construction jobs to Los Lunas. The contractor is the Portland, Ore.-based Fortis Construction, which, according to its website, is hiring for several positions involving a “large industrial project in New Mexico.”
The Public Service Company of New Mexico said construction will begin on solar facilities to power the data center as soon as it receives the go-ahead from Facebook.
Gov. Susana Martinez called the deal “a big win for the people of our state and our economic future.”
Attracting Facebook to the Land of Enchantment required substantial investment on the local and state levels. Los Lunas passed both an industrial revenue bond measure of up to $30 billion, a $10 million Local Economic Development Act measure, and promised the company a monthly reimbursement of the village’s share of gross tax revenues. The state also offered Facebook access to up to $3 million in Job Training Incentive Program funding, according to Economic Development Secretary Jon Barela, although it is unclear how much of the money Facebook will use.
It’s also not clear how much direct tax revenue the project will generate for the state.
“This is a major boost for New Mexico,” Barela said. “I am confident there will be many other companies that follow in Facebook’s footsteps.”
The proposed data center has generated breathless enthusiasm throughout New Mexico since the beginning of the summer, uniting interest groups here that have traditionally found themselves at odds. In the race to beat out Utah for the deal, New Mexico politicos demonstrated that the state’s regulatory process could move beyond dissension and procedural issues to be accelerated under certain circumstances.
The project’s narrative was also notable for the way it illustrated the cloak-and-dagger atmosphere surrounding high-profile economic development opportunities. In both New Mexico and Utah, officials publicly referred to Facebook using code names, even when Facebook’s identity was disclosed through public documents.
At Facebook’s request, only certain public officials were authorized to speak about any aspect of the project, and dozens of government employees signed nondisclosure agreements. One Utah media outlet delayed breaking the Facebook story for months so as not to jeopardize the state’s chances of securing the data center.
Greater Kudu & ‘Project Antelope’
A news release from Gov. Susana Martinez said the process began 13 months ago, when a delegation that included the governor met with Facebook executives in California to pitch New Mexico as a target for investment. Barela said Facebook reached out a few months later to ask about the state’s availability for a data center project.
Then, on June 23, the Los Lunas Village Council approved an industrial revenue bond proposal of up to $30 billion for a company called Greater Kudu to build a data center. Little was disclosed about Greater Kudu beyond the fact that it was an limited liability company incorporated in Delaware. The council unanimously approved the proposal for “Project Antelope” without having been told the identity of Greater Kudu’s parent company.
The measure created a mechanism by which Los Lunas would waive the data center’s property taxes in exchange for payments from Greater Kudu, beginning with $50,000 per year with the construction of the first building up to $100,000 per year with the construction of the sixth building. Facebook will be responsible for paying off the bonds.
Los Lunas Mayor Charles Griego said at the time that the project, which would be at Huning Business Park near Interstate 25 and N.M. 6, would create up to 50 jobs at the data center in its initial phases, as well as up to 300 construction jobs for seven years.
A few days later, a redacted document obtained by the Journal divulged additional details about the project, including the company’s claim that the data center would generate “multiplier spending effects” that over 30 years could mean thousands of jobs and “billions of dollars” in economic impact.
“Large data centers tend to create a ‘follow the leader’ effect,” Greater Kudu wrote in its industrial revenue bond application. “Once one large data center project locates in an area, others follow shortly thereafter (and so do their vendors).”
The identity of the parent company came on July 8 from an unlikely source: a regulatory filing from the state’s largest electric utility, PNM. In documents filed with the New Mexico Public Regulation Commission, PNM said Facebook had approached it about a potential data center project that the social media giant wanted to power with renewable energy. Although PNM’s filing did not identify Los Lunas by name, the specifications of the data center matched those in the Los Lunas IRB proposal.
PNM’s filing requested that the PRC approve a special services contract that would allow the utility to recover from Facebook the costs associated with providing the energy, at a cost to Facebook of up to $31 million a year. The data center would be powered primarily by three solar facilities, and PNM would build on Facebook’s behalf. The PRC approved the contract on Aug. 17.
The story in Utah unfolded at a similar pace but with a vastly different tone. In early July, Utah’s Rocky Mountain Power filed documents with regulators that disclosed Facebook’s proposal. The filing sparked a public debate over the proposed data center’s possible water usage, particularly in West Jordan, the city where the data center would have been located. Officials there estimated the data center would need 5.3 million gallons a day, though information on Facebook’s sustainability website indicated the data center would likely use about 25,000 gallons a day.
The water is used in an evaporative cooling system.
A separate debate began brewing over the $240 million in tax incentives being offered to the company, which ultimately led to the incentive package being torpedoed by Salt Lake County and the Utah Board of Education. On Aug. 23, West Jordan announced it had ended negotiations with Facebook, only to announce the next day that negotiations had restarted, leading some Utah officials to dub the project “the zombie deal.”
Big project for state
Los Lunas legislators moved forward on Aug. 26 with the $10 million in Local Economic Development Act funds, which would be used to purchase water rights, as well as a monthly reimbursement to Facebook of up to 75 percent of the gross tax revenues the village would receive from the data center’s construction and operation. The reimbursement is capped at $1.6 million a year.
The village also approved a water and wastewater agreement that guaranteed Facebook access to up to 4.5 million gallons a day. The agreement says that amount of water would be necessary only in a worst-case scenario.
On Wednesday, it became official. While Facebook and the Governor’s Office were expected to make an announcement about the project today, New Mexico’s congressional delegation made a surprise announcement Wednesday morning.
Los Lunas Mayor Charles Griego said he is both excited and relieved that Facebook has made its decision.
“It’s a long process,” said Griego. “But this is the kind of project we’ve all been hoping for.”
Pat Vincent-Collawn, PNM’s CEO, said she thinks the Facebook deal could act as a template in the future, not only for companies seeking renewable energy or economic opportunities in New Mexico, but for the state itself.
“This shows that when all of us really want something, we can put aside our differences and make it happen,” she said. “For New Mexico’s sake, I hope that can happen more often.”