$2B PREDICTION
Report probes whether Los Lunas Facebook center validates public expenditures
A document obtained by the Journal projects nearly $2 billion in fiscal and economic impacts from the new Facebook data center in Los Lunas over a 10-year time period.
The study was prepared by David Taussig & Associates, a California-based consulting firm, which was retained by the village of Los Lunas. The document is dated December 2016, more than a month after Facebook broke ground on the data center.
Los Lunas officials said preliminary data from the study was made available to officials while the project was still under consideration. A spokesman for the state’s economic development department said last month the department had not yet prepared its own economic impact study.
The report states that the goal of the study was to “determine whether the project is expected to generate enough revenues for the Village to fully offset expenditures for Local Economic Development Act (LEDA) assistance as well as services provided on its behalf by the Village. Note, however, that the study does not address the cost of water rights or additional Village infrastructure needed to service the project.”
To incentivize the social media giant to choose New Mexico for its new data center, Facebook was offered $10 million in state Local Economic Development Act funding in addition to a gross-receipts tax reimbursement from Los Lunas of up to $1.6 million annually and $30 billion in industrial revenue bonds. Facebook is responsible for repaying the bonds, which provide a property-tax break for the company.
Among the previously undisclosed information in the report:
Total economic output over 10 years, which include both the temporary impacts of the construction project and the more permanent impact of the data center, is projected to reach $1.88 billion if “indirect and induced” impacts are also included. That number reflects the creation of 5,660 jobs countywide and the addition of $234.77 million in wages.
Assuming the maximum six buildings are constructed, the project is expected to generate a net of $2.17 million per year in revenue for New Mexico’s general fund, $21.71 million over 10 years.
Los Lunas is expected to net nearly $28 million in gross-receipts tax revenues related to the construction project over a decadelong period, a figure that accounts for the amount forgiven in the incentive package. Total gross-receipts tax revenues are projected to total $83.41 million over the same period.
The project will require “significant new infrastructure ... ultimately owned by the Village and maintained by the Village’s general fund” and “financed through public or private funds,” including water main extensions, additional fire hydrants and sewer improvement.
As reported previously, PNM is also building a high-voltage electrical line and several solar facilities for the data center.
In its executive summary, the report states the net impact of the project will likely be a positive one: “Although the project is expected to require a considerable amount of public infrastructure, the project is also expected to generate significant new revenues for the Village of Los Lunas.”
A spokesperson for Facebook declined to comment on the report.