In order to understand the impact of data centers on our local economy, we need to understand Eagle Mountain’s impact on Utah County and the Wasatch Front.
Eagle Mountain, situated in northwest Utah County with Saratoga Springs to the east and county land to the west and south, is geographically the largest city in Utah County. Currently, with an estimated population of 45,000 and growing at an accelerated rate, 80% of Eagle Mountain’s employed residents work outside of the city.
As we look to the future and consider that Cedar Valley, where much of Eagle Mountain is situated, is nearly as big as the Utah Valley, and population has the potential to triple within current city limits alone, it is not hard to see several problems that will occur, especially in the forms of traffic congestion and higher taxes, if something is not done to create jobs in Eagle Mountain.
It is also easy to see that the vast majority of jobs accumulate along transportation corridors, like Interstate 15. Since there is no transportation corridor through the Cedar Valley, other measures must be taken. What Eagle Mountain must do is start with industry that does not require a transportation corridor.
This will create daytime jobs that in turn will bring commercial and retail businesses to support the daytime workers in the city. The data centers are like business magnets that make up for the lack of an interstate freeway. They are the missing catalyst to jumpstart a local economy.
The result is a strong local economy that provides even more jobs and tax revenue, keeping taxes down while providing more service.
For example, while under construction, a typical data center employs 1,688 local workers, provides $77.7 million in wages, produces $243.5 million in output along the local economy supply chain, and generates $9.9 million in revenue for state and local governments.
Every year thereafter, that same data center supports 157 local jobs paying $7.8 million in wages, injecting $32.5 million into the local economy, and generating $1.1 million in revenue to state and local governments. They do this with very little negative impact.
This scenario could be repeated over the next 40 years or more. And the economic impacts don’t stop there. Other tech and non-tech industries follow like what occurred in Eagle Mountain with LBI Satellite and Tyson Fresh Meats.
However, none of this can happen without the cooperation of all the taxing entities. This is where it can get confusing. People ask, why would you give a tax break to a multi-billion-dollar company when they clearly don’t need it? First of all, tax incentives are not given for the benefit of the company, they are given for the benefit of the community.
Allow me to explain. The area of raw land a data center would sit on generates less than $50 a year for all taxing entities combined. That includes state, county, city, school district, fire department, and water district. That amount of money is hardly worth the effort to collect it.
When a data center is built it brings in millions of dollars annually to these entities. All while building roads, water, power, and sewer infrastructure, giving grants to schools and businesses, and providing food to those in need. This has been particularly valuable during COVID-19 restrictions when small businesses and families need all the help they can get.
Compare this to homes being built on the same amount of land. A residential area would require more services and cost more money than it would produce in tax revenue. And yet, there would still be no more daytime workers than there were before to stimulate a local economy.
The number of homes it takes to bring in one grocery store or fast-food restaurant is many times larger and does not have anywhere near the economic impact of one data center.
Another question asked is, shouldn’t families and small businesses get similar tax breaks as a big tech company? In most cases they do or at least have the same opportunities. Every homeowner gets a significant break on their taxes and yet is a cost to services, net loss to a taxing entity.
It has been theorized that a data center would eventually come anyway, even without a tax incentive, yet this has never happened. In fact, some states offer data centers a 100% tax incentive, meaning they pay zero taxes for as long as 30 years.
Why would they do this? Are they poor negotiators? The reason is clear: a data center costs a city nothing; good jobs are created; infrastructure is quickly put in place (Over $100 million of infrastructure has been put in place in Eagle Mountain so far. How many years would it take for a city, county, or state to do that with your tax dollars?); if all of that weren’t reason enough, whole local economies rapidly grow up around a data center, providing an even bigger tax revenue source that could have never existed otherwise.
In this way, Eagle Mountain changes from a potentially overwhelming burden on the county, school district and neighboring cities to a net positive contributor.