Facebook said to be building in Prineville

By David Holley / The Bulletin

Last modified: January 21. 2010 10:23AM PST

It would appear the social networking Web site Facebook is the company that plans to build a 117,245-square-foot data center in Prineville.

The data center — known to date only as “Project Vitesse” — is expected to open in mid-2011 and will cost an estimated $188.2 million, according to records obtained from Crook County. A groundbreaking ceremony is scheduled for today in Prineville.

An unnamed source familiar with the project’s plans confirmed that Facebook is building the center. When a California construction firm was asked if one of its employees was working on the “Facebook project” in Oregon, the company said yes. In response to an article about the Prineville project on www.datacenterknowledge.com, a blogger posted “It’s Facebook ....”

A Delaware-based entity, known as Vitesse LLC, has been doing the footwork for Facebook in Prineville. The identity of the company behind the data center was not revealed by the sources until Wednesday.

No one with knowledge of the company’s identity — including Economic Development for Central Oregon, the Oregon Governor’s Office, Business Oregon or spokespeople for Vitesse LLC — would confirm or deny on the record that Facebook is building the data center. Facebook was not able to respond to a preliminary inquiry by press time.

Facebook, based in Palo Alto, Calif., was founded in 2004 by a group of college students at Harvard University and now has more than 350 million users, according to its Web site. People with Facebook profiles are able to leave notes on each other’s “walls,” add photos and personalize their profiles with personal information and applications.

Facebook is the second-most visited Web site on the Internet, behind Google, according to Alexa Internet, a Web information company.

The company is receiving financial incentives to come to Prineville.

It will build its data center on 124 acres of land off Tom McCall Road, an area that is designated as an enterprise zone. If companies that build in enterprise zones meet certain requirements, they receive tax breaks on the property.

In Facebook’s case, it will be excused from paying up to $2.8 million per year in taxes that would have been charged because of the $188.2 million value of the new data center, according to records obtained from the county.

That discount will be good for 15 years, as long as Facebook maintains an average staff of 35 or more people at the site during that period. It also must pay its employees 150 percent of Crook County’s average annual wage to maintain the enterprise zone benefits, according to the records.

Crook County approved the enterprise zone on Dec. 2, and the city of Prineville approved it on Nov. 24.

Vitesse bought the 124 acres for Facebook this month for $3.2 million, but not before months of negotiation between Vitesse and local and state parties. Speculation has been high regarding who Vitesse was representing.

Jill Miles, the national recruitment officer with Business Oregon, the state’s business recruitment division, said Vitesse was interested in locations in Washington and Oregon when she started working with it in January 2009.

Eventually, Vitesse narrowed its choices to Ontario and Prineville, and soon settled on Prineville because of the power prices, the enterprise zone and the land, Miles said.

“The city of Prineville and Crook County worked very hard to make the offer as attractive as possible,” she said.

That’s not to say that those local governments are getting nothing out of the deal.

The city will receive a franchise fee from Pacific Power, the power company that has rights to the land, based on how much electricity Vitesse uses. That fee will be a percentage of the total bill, said Jason Carr, EDCO’s manager in Prineville and Crook County.

“The city has the potential of realizing several hundred thousand dollars a year in franchise fees,” Carr said.

Carr said Vitesse also will pay an annual $110,000 community fee each year because it is not paying the $2.8 million in taxes.

Facebook will still pay a property tax on the 124 acres of land — close to $27,000 annually — because of Oregon’s enterprise zone law. If a previous owner paid property taxes on the land — Aspen Ville LLC paid property taxes before selling the land — then the next owner must pay them, even if it is in an enterprise zone.

Construction crews were out this week at the site clearing brush and drilling holes.

Documents filed by Vitesse in Crook County show that the company plans to begin hiring the 35 employees it will have on site in September 2010, and hopes to complete hiring by December 2013. Documents show the company hopes to begin operations in mid-2011 and finish construction of the facility by June 2011.

The 117,245-square-foot building will be on approximately 30 acres of the land, allowing room for expansion.

Data centers house large banks of computers commonly used to manage information gathered through the Internet. They are used by Internet Web sites, such as Google or Yahoo, to sift through the information gathered when people use the engines, and to create Web storage space.

David Holley can be reached at 541-383-0323 or at dholley@bendbulletin.com.

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