Local governments need to better negotiate tax abatement applications, especially regarding data centers.
Local governments need to understand their leverage over the applicant. Only specific Tier 1 sites meet all the qualifications necessary to build a data center, including existing unused supply of electric power, large volumes of daily water, soil conditions, etc.
The current Canton/Perry Township legislation and agreement allow the data center to receive the maximum legally permitted 30 years and 75% reduction in real estate taxes without needing the school district’s approval.
Would the data center have walked away from 20 years and 50% abatement? Millions of future dollars have been permanently lost to the affected school district and local governments. Local taxpayers will need to pass additional future levies because of increased costs over the next 30 years plus increased electric bills.
Tax abatement agreements should contain the following material terms with any breaches by data center grantee automatically causing immediate and non-recourse cancellation with waiving all rights to the jurisdiction of federal and state courts and administrative agencies.
The grantee agrees to never file a complaint for reappraisal to the county requesting a decrease for the building/property valuation during the term. The grantee agrees to maintain said minimum number of employees working on-site at the building and not remotely for 30 years. The grantee agrees the project’s employees shall be compensated at 300% of the federal minimum wage law. The grantee must timely make every payment when due.
My legal career began 51 years ago with the city of Canton, including drafting the state’s first tax abatement application for the Newmarket Project. I then was a partner at a large Cleveland law firm, then the largest Akron and Canton law firms. I had worked with out-of-state developers on another data center site.
William G. Williams, Plain Township
This article originally appeared on The Repository: Local governments need to do better on tax abatement deals | Letter
Reporting by The Repository / The Repository
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