The Ellis County Commissioners’ Court will revisit a 10-year tax abatement for Compass Datacenters' new Red Oak location at next Tuesday’s bi-weekly meeting, after commissioners spent more than an hour discussing it last week.
Ultimately, commissioners asked for more time to review the proposal. Precinct 2 Commissioner Lane Grayson objected to the presentation to the court, saying he would’ve preferred a workshop meeting to learn the details of the Compass offer. Later, Grayson clarified his position, saying he was not against the abatement at all and was simply looking for more information.
“The hardest thing we do is communicate,” Grayson said. “This is the most proactive, pro-development court I believe you’ve seen in many, many years. This court has been aggressive pursuing those opportunities. I don’t want anyone to leave this room discouraged other than the fact that you’re looking at the face of a guy who wants to go back and tell the story, answer the questions and give everybody an ample opportunity to come and speak … All I’m asking for is time to consider this information for those people that I have to answer to.”
Precinct 1 Commissioner Randy Stinson echoed Grayson, saying he didn’t oppose the abatement either but didn’t want to sign something he hadn’t had a chance to read. And Precinct 3 Commissioner Paul Perry added that he had some legal concerns over the wording of the abatement agreement.
County Judge Todd Little said the court is treating the Compass abatement exactly the same as the presentation that Google made to receive abatements for its two data centers in Midlothian and Red Oak. Based on commissioners’ concerns, Little urged that the matter be given two more weeks until the Jan. 28 meeting.
“We did it according to the Open Meetings Act,” Little said. “Our goal is never to violate that public information act. We do things in open session here. We don’t do it behind closed doors; we do it where everybody can see it and look at it. We’ve given commissioners respect on that today, and what I’m hearing is they’d like a couple more weeks.”
Perry noted that the Google case was helped by it coming before the court twice, which gave commissioners more time to consider the Google abatement.
Chris Curtis, senior vice president of Addison-based Compass Datacenters, and his attorney agreed to the two-week continuance and promised to clear up all ambiguities in the contract’s language in plenty of time for the Jan. 28 meeting.
Red Oak Mayor Mark Stanfill, former Mayor Alan Hugley and City Council member Ben Goodwyn all addressed the court in support of the abatement, saying the incentive will be a boon to not only their city and the Red Oak Independent School District, but also for Ellis County; and that any delay in approving it could mean losing a golden opportunity.
The agreement between Compass and the county calls for Compass to have 75 percent of its tax bill abated, which will become 85 percent when the improvements are made. At the end of the 10 years, the abatement will end and Compass will be taxed at the full rate — resulting in even more revenue, Little noted.
Compass customers will also receive a tax break in the form of a business personal property tax abatement, Curtis said.
Representatives from the city of Red Oak told commissioners that Compass differs from Google in that while Google builds what they need in huge, $600 million phases as the end user, Compass will build its entire infrastructure in smaller chunks and will lease to third-party data companies.
Phase 1 of the new Compass facility will be 40,000 square feet and will occupy 20 acres of a 168-acre site that the Red Oak Industrial Development Corporation provided. First, the real property and infrastructure will be constructed, and after that, the tenant will move in with its own servers and other equipment. A clause in the abatement agreement stipulates that Phase 1 must be complete within five years.
Eventually, supporters said, Compass’ facility will grow into a data center that rivals either of the Google centers in both size and taxable value.
“We’re very fortunate to have them coming to town,” Red Oak city manager Todd Fuller told the court. “We’ve been fortunate in Ellis County to have value producers and employment producers. Data centers historically have been lower on the employment, but they’ve been high on the value produced and I think that it’s very important to have diversity.”
Red Oak director of economic development Lee McCleary said Compass is making an initial $40 million investment, with tax revenue benefiting Ellis County, Red Oak ISD, and the city of Red Oak. The Red Oak City Council approved its part of the agreement in November.
At a tax abatement rate of 75 percent, McCleary projected Compass would generate $36,000 in annual revenue to Ellis County alone and $360,000 over the full 10 years of the abatement period.
The revenue to the city of Red Oak would be about $70,000 per year, and Red Oak ISD — which as a school district cannot award tax abatements according to the Texas Comptroller’s Office — would get the biggest slice of the monetary pie by far at $575,000 per year.
The combined revenue over 10 years between the three entities amounts to over $6.8 million, McCleary told the board.
Curtis, the Compass senior vice president, said his company was founded in 2011 and has built several data centers across the United States, moving recently into Canada. Curtis said among Compass’ customer base is a number of top-10 technology companies and Fortune 1,000 companies.
“We’re experienced, we’re well-funded, and we’re super excited about being in Ellis County,” Curtis said. “It’s been a joy and a pleasure to do business with the city of Red Oak and you all so far. That’s a big part of what’s going to make this project successful.”
Curtis told commissioners that the data center is designed to use less water for cooling equipment than other data centers historically, and that noise shouldn’t be a problem because of the center’s location away from homes. At full buildout, Curtis said the campus could be worth “multiple billions of assessed value.”