Ferguson data center deal ties biggest tax break to 100 new jobs

Ferguson City Council voted 4-3 Tuesday to approve up to $1.5 billion in tax incentives for Next Revolution Technologies LLC's planned technology hub and data center at the former Emerson campus, a project publicly billed at $1.8 billion. The city's term sheet requires 100 new on-campus full-time-equivalent jobs before the largest tax break, the personal property exemption on equipment, begins.

The term sheet was attached to a March city resolution. SueDataCenters.org, a site that also solicits case reviews for law firms, published an analysis of the document. It sets two hiring preconditions. The first is 250 retained full-time equivalents, required before the real property tax exemption begins. The second is 100 new full-time equivalents located on campus, required before the personal property exemption begins. The document states in parentheses that the 100 "does not include retained jobs."

The city's public job figures run higher. Its written answers to residents repeat the phrase "retention of up to 300 Copeland headquarters jobs, creation of up to 170 to 200 new jobs in Phase One alone, hundreds of construction jobs." The 300 describes Copeland staying on a campus where it already works, according to the SueDataCenters analysis. City documents project more than 350 permanent jobs in total, the St. Louis American reported, but those numbers are projections rather than contractual requirements. The developer must also invest at least $175 million by the end of 2029 to keep the abatements.

The 100-job condition is attached to the bigger concession. Real property would be abated 75 percent for years one through 12, then 60, 35 and 20 percent in the final three years of a 15-year term. Personal property would be abated 75 percent for all 15 years. On a data center, personal property means the equipment. The term sheet prices equipment at $1 billion to $7.5 billion, and the $1.8 billion headline is built on the bottom of that range. Priced at the top of its own range, the project reaches about $8.31 billion, by the SueDataCenters arithmetic.

Councilman Nick Kasoff, the bill's sponsor, has defended the size of the break on exactly that point. Data centers "have hundreds of millions of dollars of computing equipment in a small building," he told First Alert 4, arguing that without relief on personal property taxes the project could have left Missouri.

The deal authorizes up to $1.5 billion in tax incentives and up to $22 billion in industrial revenue bonds on the 217-acre site. The St. Louis American reported the bond ceiling splits into up to $1 billion for real estate and improvements and $21 billion for equipment over the life of the project, and that the bonds would not be repaid with city tax revenue. The campus already runs an 18-megawatt data center. The plan allows expansion up to 300 megawatts, First Alert 4 reported.

For contractors, the construction budget carries the near-term work. The term sheet lists $792 million in construction costs: $400 million for power grid infrastructure, $350 million for campus capital projects, $25 million for additional use-specific construction and $17 million for initial building renovations.

The grid line sits awkwardly beside the developer's own assurances. In the city's written answers, the developer said Ameren "has historically provided up to 14 megawatts" to the campus. It also said "we do not anticipate that the Project will create any additional electrical demand from Ameren beyond historical usage." Asked for the maximum power capacity at full build-out, the answer was that a figure was "impossible to determine at this stage." A $400 million grid budget appears hard to reconcile with a campus held at 14 megawatts, and the SueDataCenters analysis made the same argument.

The council had rejected a largely similar structure in May on a 3-3 vote with one abstention. The version approved Tuesday adds payments. The developer would give Ferguson $700,000 up front for community impacts and emergency services, then $700,000 a year from 2028 while any part of the project is tax-exempt. It would also pay $7.5 million over 10 years to the Ferguson Neighborhood Improvement Program, a nonprofit that funds home repair grants, and $250,000 to start an environmental mitigation fund. The agreement requires water-conserving cooling and compliance with city noise rules. Mayor Adrian Shropshire, who opposed the plan, told St. Louis Public Radio before the vote: "How can you have a nonprofit get more than the city?"

Councilman Michael Palmer abstained in May and voted yes Tuesday, supplying the fourth vote.

The city's finances frame the vote. Ferguson approved a budget this summer that cut 12 full-time positions to save about $2.2 million. Kasoff has also cited layoffs and a hiring freeze. "After this year, it gets worse if we even make it through this year," he said at the meeting, according to St. Louis Public Radio.

The Ferguson-Florissant School District, which has no vote on the deal, estimates it would lose about $71 million in real estate revenue over the 15-year abatement, according to the SueDataCenters account of its April statement.

Residents launched a petition drive Wednesday to put the agreement to a referendum, First Alert 4 reported. A separate recall effort targets Kasoff and council members LaMika Covington and David Williams, and organizers are seeking about 600 signatures.