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West Jordan reverses decision to terminate negotiations with Facebook

(Weston Kenney, Deseret News)

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WEST JORDAN — Less than 24 hours after negotiations to lure a Facebook data center to West Jordan were terminated, city officials had a change of heart.

"This is too good of an opportunity for Utah to pass up, so we have been working throughout the night and will continue through the day to keep the project alive," a post Wednesday on the city's Facebook page stated.

It was a stark shift from West Jordan's announcement Tuesday night that negotiations with Project Discus — the code name given for the Facebook project — over a $250 million, 20-year tax incentive deal had been shut down.

At the time, city officials even offered well wishes to West Jordan's competing suitor for Facebook, Los Lunas, New Mexico, which has approved a 100 percent property tax abatement over 30 years for the data center, the Albuquerque Journal has reported.

The original decision came minutes after the Utah State Board of Education voted to approve only the first phase of the data center's construction and capped the incentives of that phase at $100 million — an offer West Jordan City Manager Mark Palesh said would be a "nonstarter" for Facebook, unwilling to budge on the 20-year proposal.

But Wednesday, after speaking with Facebook officials, Palesh said the company is still interested in working with West Jordan, despite the $250 million deal's demise.

"There's a lot going on behind the scenes," he said, noting Facebook officials haven't officially entered into a new negotiating contract, but they're invested in continuing conversations with West Jordan over a new deal.

"It's all up to Discus right now. We're all waiting to find out if they want to re-engage," he said. "It's starting anew."

Now, he said, West Jordan is continuing discussions with Facebook to strike a new deal — one that could potentially remedy concerns from the project's main critics, though he did not know what shape the new deal could take.

When asked why he terminated negotiations Tuesday night after the vote without considering the State School Board's proposal, Palesh said he knew Facebook would not want to enter into a short-term, one-phase deal, and it had become obvious that other taxing entities weren't giving the $250 million proposal the support it needed.

Salt Lake County Mayor Ben McAdams and the County Council had previously voted against supporting the proposal, saying the tax incentives were too rich for the estimated 70 to 130 jobs the data center would provide. They also opposed committing 4.8 million gallons of water per day to the center, though West Jordan officials say the facility would actually use much less on a daily basis.

Canceling negotiations over the $250 million proposal was a strategic way to "start fresh" and "level the playing field," Palesh said, presenting the company with a choice to either walk away or consider a new deal.

"We'd been working on this for many months, and we weren't getting anywhere with some of the major players," Palesh said. "I felt this was the only way."

McAdams said he "looks forward" to hearing more if West Jordan does in fact enter in a new negotiating contract with Facebook.

"As I've said all along, we would love to have Facebook come here, but the cost-benefit analysis has to work," he said. "If that balance can be struck, where the benefit outweighs the cost, then I look forward to being a part of those negotiations."

The mayor said Wednesday's "turn of events" showed he and the County Council were correct in thinking the incentive being offered was "way more than what was needed to attract Facebook to Utah."

"The fact we turned down that deal and they're still interested in negotiating says that we negotiated a bad deal the first time and we can do better," McAdams said. "I would hope that we broaden the conversation beyond just a few people who negotiated the first bad deal and insisted that it was the only package that would get Facebook here."

He said now, West Jordan has a chance to be more "inclusive" of other taxing entities and taxpayers as negotiations continue.

"I hope we can learn from the first time around and make sure we engage all stakeholders," he said. "It's important its done in a transparent way so the public understands where their dollars are being spent."

McAdams added he believes state officials need to set new "ground rules" on how Utah negotiates economic incentives.

"The 'Hunger Games' of economic development, where we pit city against city to see who can sink the lowest to negotiate the worst deal for the taxpayer is an awful way to plan for our economic future," he said.

State School Board member Stan Lockhart, who expressed disappointment after West Jordan's termination of the deal Tuesday, said he'd be "delighted" if Facebook decides to come to West Jordan.

"I think we all need to come forward in good faith and do the best we can to find a win-win situation for the company and all the taxing entities," he said. "I think that's what we're trying to do right now. We just need to be patient. We all just need to take a deep breath and see what developes, whatever that might be."

Susan Pulsipher, president of the Jordan School Board — which voted to support the deal, despite misgivings about the size of the incentive — said she and other school board members are waiting to hear what the new negotiations might entail.

"We're very, very hopeful that the new negotiations bring better terms," she said.

The West Jordan City Council was scheduled to vote Wednesday night on whether to reduce the 1,700 economic development area to the 230-acre site Facebook was interested in — a request of Salt Lake County leaders to make the deal more palatable.

West Jordan Mayor Kim Rolfe, however, pulled the discussion from the agenda at the beginning of the council meeting, telling the public and the council "there will be no discussion tonight of the Discus project."

"We are in negotiations and have nothing further to report," he said.

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