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Governor calls data center in Los Lunas a ‘big win’ for state

Gov. Susana Martinez

SUSANA MARTINEZ

Copyright © 2016 Albuquerque Journal

SANTA FE – Two years after missing out on a high-profile Tesla battery factory, New Mexico officials say the state has finally landed its big economic development fish.

Gov. Susana Martinez and several legislators said Wednesday that a joint announcement by the governor and Facebook executives that the company will build a massive data center in Los Lunas validates recent tax cuts aimed at diversifying New Mexico’s economy, though at least one group raised concerns about generous state subsidies and tax breaks used to lure Facebook to the state.

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Martinez called the deal “a big win for the people of our state and our economic future.”

“It’s about time that we have some good news in New Mexico,” said Sen. Clemente Sanchez, D-Grants, whose district encompasses the data center site. “It takes time for some of these policy changes to work, but I think they’re starting to come to fruition.”

Martinez, who was traveling back to New Mexico from Boston on Wednesday, said in a telephone interview that New Mexico was ultimately selected from a group of more than 20 states originally competing for the project. New Mexico and Utah were the two finalists for the 510,000-square-foot data center.

She said she first met with Facebook officials while leading an economic development trip to California last year and returned to California last month to answer specific questions as talks intensified.

“I think it’s a massive shot in the arm for our construction industry, and it’s also a massive capital investment (for the state),” Martinez told the Journal. “Other companies are going to be seeing this and saying, ‘That is a competitive location.’ ”

But at least some New Mexicans reacted to the news more cautiously.

Paul Gessing, president of the Albuquerque-based Rio Grande Foundation, said he’s hopeful the project is successful but expressed wariness over the incentive package Facebook is getting – $10 million in state closing fund dollars for infrastructure improvements and up to $30 billion in industrial revenue bonds from the Los Lunas Village Council.

“It’s not that we oppose Facebook, but we’re definitely concerned about the generosity of the tax incentives and the flat-out subsidies,” Gessing told the Journal.

“I don’t see this (project) as some sort of game-changer,” he added, saying it’s unclear how much the project will benefit the surrounding area. “I’m not going to break out the champagne bottles.”

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While the announcement could mean hundreds jobs for the state and the possibility of New Mexico eventually becoming a hub for data center activity, it’s unlikely to single-handedly fix the state’s current budget crunch.

The state is facing a $589 million budget shortfall for the current and just-ended fiscal years, as plummeting oil and natural gas prices have the state’s tax collections falling far short of what had been expected, according to recent estimates.

Some Democratic lawmakers and child advocacy organizations have claimed in recent weeks that tax cuts enacted in recent years to improve the state’s economic attractiveness – including a 2013 tax package that will gradually reduce corporate income tax rates from 7.6 percent to 5.9 percent – were misguided and have failed to create the new jobs that were promised.

But Martinez, the state’s two-term Republican governor, said the Facebook decision shows otherwise, saying, “It validates the fact that New Mexico has become a better place to do business in.”

“From the day I walked in as governor, I knew we couldn’t rely on the federal government,” she added. “We’ve had to diversify our economy.”

Rep. Alonzo Baldonado, R-Los Lunas, whose district also encompasses the site of the Facebook data center, said the state’s tax cuts and increased spending on economic development incentives have been effective.

“I think a lot of the actions we’ve taken in the last few years have changed the image of New Mexico into a business-friendly state,” Baldonado said in an interview.

“Maybe in 10 years we’ll look back at 2016 and see this as the first domino toward putting New Mexico on a better track,” Baldonado added. “I’m hopeful that’s the case.”

Facebook’s decision to build the data center in Los Lunas was first announced Wednesday by U.S. Sen. Martin Heinrich, D-N.M., who posted on social media that he was proud to welcome the company to New Mexico.

The five members of the state’s congressional delegation – four Democrats and Republican U.S. Rep. Steve Pearce – then sent out a news release shortly thereafter, which was followed by a joint announcement from Facebook and the Governor’s Office.

A prominent Republican-leaning political committee blasted Heinrich on social media for trying to take credit for the project, but Heinrich told the Journal the entire congressional delegation has been supportive of the plan.

“I’ve been talking to Facebook for some time about how New Mexico is really an under-utilized resource for these kinds of data centers,” Heinrich said. “Obviously, now with sustainability goals being a big deal with a lot of Fortune 500 and Silicon Valley companies, being able to source renewable energy is a major issue.”

“New Mexico is pretty well-suited for this market, and I’m sure that was recognized,” he added.

Martinez said it was a “little surprising” that the congressional delegation made the announcement, saying she had wanted Facebook to be able to announce its plans, but added she appreciated the tone of the delegation’s announcement.

“You know what? At the end of the day, it’s a good day to be a New Mexican,” the governor told the Journal.

She also indicated there are other prominent companies in the state’s pipeline, but said she could not divulge their identities because plans have not been completed.

Journal staff writer Michael Coleman contributed to this report from Washington, D.C.

 

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