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The Crossroads Journal

Fiscal Impact of an Eagle Mountain Data Center

By Mike Kieffer
Sweetwater Industrial Park is something that is going to be talked about for a while in Eagle Mountain, and has the potential to reshape how the tech community thinks about Eagle Mountain. Sweetwater Industrial Park is the start of a massive Data Center build that is on track to come to Eagle Mountain.

The name of the company that is building the Data Center is a well-kept secret. The Interlocal Cooperation Agreements are in the process of being approved by Alpine School District, Utah County, Central Utah Water Conservancy District, and Unified Fire Service Area. The city council and the Eagle Mountain Redevelopment Agency on 5/17/2018 approved the interlocal cooperation agreements and are now waiting for the other parties to approve the agreements. The Eagle Mountain Redevelopment Agency is an agency set up to oversee the legal aspects and agreements between Eagle Mountain and the other taxing entities. The majority of the agencies will be voting on the agreement during the coming week (5/21 - 5/26) it is expected that after the agreements are implemented that the company will then announce the location and more details.

To help these agencies see the impacts of an Eagle Mountain Data Center the City had a study done. The 64-page report written on 3/12/2018 by Lawrence Walters PhD, titled "Fiscal Impact of an Eagle Mountain Data Center" compared three cities that recently had a Mega Data Center constructed, and the impact it had on those cities. The three cities analyzed in the report are Quincy, Washington, Elk Grove Village, Illinois, and Prineville, Oregon. "The purpose of this report is to assess the impact of constructing and operating a potential data center within Eagle Mountain City, Utah. The focus is on the effect such a data center would have on the operations of Eagle Mountain City, and on its residents."

The reports conclusion/recommendation is, "While Eagle Mountain is similar in many ways to the case study cities, it is also very different in its growth and growth potential. All of the case study cities have experienced increased costs for the general government following the construction of the first data centers. While there is little reason to expect costs in Eagle Mountain to increase to the same extent, it is recommended that the city plan on increases of about 2% to 2.5% of 2017 expenditure levels for general government and public safety. This would total between $106,000 and $135,000 annually. There is no indication that Alpine School District, Utah County or Unified Fire Service operations will be affected by the addition of a data center in Eagle Mountain."

The report also points out that "Data centers lead to data centers." The report continues, "The first important observation to make about the three cases is that data centers do not appear to be one-off events. In all three cities, shortly after the first data center was completed, its expansion was announced and other companies also announced they would be constructing data centers in the community."

The report had this to say about Data Centers and employment, "Typically, a data center will employ 30 to 50 full-time workers, though there may be quite a number of contract workers on-site on any given day."

The report highlights the impact on Eagle Mountain as follows:

General business activity: Limited impact if any, except for the likely increased demand for hotel/motel space

Air pollution: limited impact, especially if the backup generators are equipped with devices needed to reduce their emissions.

Construction trends: Data centers will not affect current trends in residential construction

Property tax revenue: if the current rates are applied to a new data center, the expected total property tax bill will be about $5.8 million per year for the first phase. Of this total, $0.5 million will go to Eagle Mountain, $3.6 million to Alpine School District, $0.9 million to the Unified Fire district, and the balance shared across the other taxing authorities.

In a press release dated 5/17/2018, the city elaborates on this with the following statement:

"The property proposed for the location of the data center currently pays a total of $66 per year in property tax. With the addition of this project the total annual amount of property taxes collected for the first phase annually for 20 years would be $837,450, with Eagle Mountain City collecting $75,825, Alpine School District $537,525, UFSA $135,675, CWP $30,000, and Utah County $58,425.

This project will NOT increase taxes for residents or businesses."

Franchise fees: Based on the information provided, the proposed plant will use only power from renewable resources and consequently will fall under a Rocky Mountain Power rate schedule that is exempt from city franchise fees.

Water and wastewater charges: Based on estimated water use and wastewater generation, the first phase of the data center will increase water revenues by 0.2% and just over 1 percent if all five phases are completed. Wastewater revenues will increase by 0.5% with phase 1 and 2.3% with the completion of all five phases.

Impact fees: Phase 1 will generate about $300,000 in impact fees with similar fees associated with each of the other four phases.

Building permit fees: The estimated building permit for each phase will be about $900,000.

The report also lists these impacts:

General government administration: Limited but likely a slight increase

Public safety: Limited but likely a slight increase

Crime: None

Water operations: water use with phase 1 will increase overall use by 0.5%, and by 2.5% with completion of all phases.

Wastewater: Overall increase in wastewater for the city will total 2% for phase 1 and 10.3% for all five phases. The city will need to find an alternative use for the grey water generated. This may require investment in new infrastructure.

Traffic: after construction, the daily traffic to the data center will increase overall traffic by about 6% to 9%.
The community news source for Eagle Mountain Utah, Saratoga Springs Utah, Lehi Utah, American Fork Utah, Highland Utah, Alpine Utah, and The Cedar Valley, including Cedar Fort Utah and Fairfield Utah. Copyright 2018 The Crossroads Journal LLC. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
 





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