WHAT IS AN IRB?

Readers often respond to the

Journal’s Facebook coverage with skepticism when they see that the company received a $30billion industrial revenue bond for its Los Lunas data center. Yes, that’s “billion” with a “b,” but an IRB functions differently from the other economic development incentives in the state’s toolbox. In New Mexico, these bonds are frequently used as a way to create a property tax break for a company that is constructing a new facility. Here’s how it works, according to Good Jobs First, nonprofit that tracks economic development incentives: ■

First, the facility is placed in the ownership of a public entity (like the Village of Los Lunas). ■

Next, the entity issues bonds to finance the construction, all of which are purchased by the company behind the deal (Facebook). ■

Finally, the company remits lease payments on the facility to the public entity, and that money is used to pay off the bonds. Once the bonds are paid off, ownership transfers back to the company. In essence, the company is borrowing money from itself. For Facebook, this financing structure allows the company to make payments in lieu of standard property taxes for a 30-year period, starting with an annual payment of $50,000 that eventually grows to $500,000. Records from the Valencia County Assessor’s Office show that Facebook’s property taxes would currently be about $93,000 annually if the company did not have the IRBs. That’s just for the undeveloped land, however; with the addition of a six-building data center, the assessed value of the property would be well into the millions of dollars, county officials said. The $30 billion number represents not only the potential value of the data center, but also the equipment inside, applicable taxes, and any improvements or equipment upgrades the company might make over the three decades.