(Seguin) – A new data center is on its way to Guadlaupe County. Guadalupe County Commissioners on Tuesday approved a development agreement and tax abatement package for a CloudBurst multi-billion-dollar data center campus in northern Guadalupe County. The decision reverses a vote taken by the court back in February.
With the item back on the agenda, commissioners spent nearly four hours hearing public comment, listening to a presentation from CloudBurst representatives, and debating the proposal before ultimately approving it in a 3 to 2 vote.
Guadalupe County Judge Kyle Kutscher, Precinct 2 Commissioner Drew Engelke and Precinct 3 Commissioner Jim Wolverton voted in favor of the project. Precinct 1 Commissioner Jaqueline Ott and Precinct 4 Commissioner Stephen Germann voted against it.
The proposal has sharply divided the community. More than 30 people either appeared in person, participated by phone or joined online to voice concerns about the project. Many who attended Tuesday’s meeting left disappointed after seeing the court approve the project despite what appeared to be overwhelming public opposition.
Before the vote, each commissioner except Wolverton explained his or her position.
Kutscher says the county’s limited land-use authority makes the development agreement and tax abatement a critical enforcement tool.
“The development agreement was specifically structured in a way that allows a project like this to build what they’re requesting to build and nothing else. The tax abatement agreement is the leverage and what a county has to be able to hold somebody accountable to say, if you don’t do what you said you’re going to do, now there are millions of dollars of penalty that come back on you at a single time.’ It’s not just that they would start paying their full available tax bill, but they would actually be recaptured to the beginning of the agreement in a single bill. That’s really the leverage. When counties in the state of Texas don’t have that land use authority and don’t have what cities can regulate and don’t do those things, having those abatement agreements — typically people go, I don’t like abatements. And I understand that. I respect that position. But the other side of that from a governance structure is it is one of the only leverage documents and tools we can use as a county with our limited authority to tell the applicant, you must do what you said you were going to do. Otherwise, you have to pay the citizens of our county and the taxpayers all of these millions of other dollars,” said Kutscher.
According to information presented Tuesday, the proposed campus would include 10 to 12 buildings across roughly 700 acres, representing an estimated $14.5 billion investment.
Kutscher says the county is offering a tax abatement that reduces over a ten-year period.
He says the court is not giving away existing tax dollars, instead this will be new tax revenue generated by the improvements made by CloudBurst.
“What is being considered in the tax abatement today is the $500 million of capital expense and investment only on the buildings that are being talked about. And it’s not a 10-year abatement at 100 percent like Caterpillar was years ago because they created a thousand jobs and were a catalyst for a manufacturing environment that everybody saw as a benefit. It is structured at 90, 80, 70, 60, and reduces and then tapers off. Now please remember also that 90 percent is only based on a small portion because they can’t build everything at once. So as their assessed value and development and construction activity start to increase over the first few years, the abatement, again, only on the $500 million of capital building projects reduces,” said Kutscher.
Under the agreement approved Tuesday, beginning in year 11, the project would pay taxes on its full appraised value.
The county’s agreement does not apply to Navarro ISD who is in line to receive $1.6 billion. Now while they won’t see the entire figure, county officials say they will be a “significant amount of that total.” School districts are generally not allowed to provide those kinds of abatements, meaning Navarro ISD would continue collecting taxes on the project’s full value.
Still, opponents like Ott and Germann raised concerns about the long-term impacts of the project, including water usage, energy demand and what could happen if technology changes make large-scale data centers obsolete.
Ott says here decision to vote no was based on the unknown future of artificial intelligence and data center development.
“Data centers in other cities, states, and countries stand unused due to rapid progress in artificial intelligence, most of which is unknown or unpredictable to those not within the closest circles. Many data centers close prior to the end of the tax abatement period. What then happens to those buildings, internal materials, or land? We cannot say that we have reliable results and solutions reached between communities and these AI owners and giants because it’s too new. As an attorney, this causes me grave concern in both terms of risk and liability. We can make an agreement in the best of faith, and I do believe that the individuals here all are here to do that. But when conditions reach an emergency status, things change because they have to. That, again, gives me serious pause when it comes to both energy and water supply,” said Ott.
While agreeing with Ott, Germann says his decision to vote no was based largely on what he has heard from constituents.
“I don’t sit up here with an opinion. I don’t sit up here and say, I know what’s better for my people, okay? I’m the representative of Precinct 4. And my people could say, well, this is not in my backyard, so what’s the difference? But they’re not. I have had significant numbers of emails, significant numbers of phone calls, I have been going door to door in my election, and I have none that say, you need to vote for this. Facebook is lit up. My Facebook page is lit up. Don’t vote for this. It dooesn’t really matter what my opinion is. It’s the opinion of the people that I represent and the people that are paying my paycheck,” said Germann.
As for Engelke, he says not everyone is against the project.
“Like Commissioner Germann alluded to, I look for precinct constituent input. So, you may have 50 here today that say no, but I’ve got 50 out there that say yes, it’s a no-brainer. What do you, what’s the problem? The benefit to Navarro ISD, the students, the faculty, staff, is going to be very beneficial in the long term. So for me, it’s difficult because it is in my precinct. But I have to weigh all options, and I do that all the time,” said Engelke.
Kutscher also acknowledged the concerns of those who live closest to the proposed site, particularly residents who would be directly impacted by the development.
“There are potential hazards with anything, but residential development and the rate in which it’s happening is hurting our county because we have very little control over it. This is the part where it’s probably not going to be — these comments are probably not going to be favorable for most — but I understand why. For the Lindseys, I completely understand why you would not want a project. You live across the road. I respect your position. I feel for you. And the last thing we want to do is hurt somebody. It makes perfect sense. If I was you, I’d be doing exactly the same thing you’re doing, period. You’re the most impacted because you live right across the county road. I understand that,” said Kutscher.
Although Wolverton did not offer personal insight into his decision before casting his vote, during the meeting, he did ask the county attorney to address concerns raised by members of the public regarding some of the language included in the development agreement. He asked for his take on the document and confirmation that the county “is protected.”