The Montgomery County Commission will consider a proposal to abate a portion of the personal property taxes for Google’s Project Spade data center project at its meeting June 8.
In preparation for that meeting a cost-benefit analysis was prepared by Gilmore & Bell, P.C., a firm that specializes in public financing agreements.
The plan, as drafted, states that Montgomery County intends to issue taxable industrial revenue bonds in an amount not to exceed $100 billion. As with the previous bond arrangement on the Amazon project, this bond is merely a paper transaction under the framework of Missouri revised statutes Chapter 100 that allows for tax abatements for projects
Chapter 100 authorizes cities, counties, towns and villages to issue industrial development revenue bonds to finance the purchase, construction, extension and improvement of a variety of different facilities within such governmental entities.
Under the terms of the proposed abatement agreement, Kinetic Site Ventures LLC, a subsidiary of Alphabet Inc. and an affiliate of Google is the primary party to the agreement with Montgomery County.
The abatement agreement is scheduled to last for 25 years.
According to the cost-benefit analysis, Google estimates that total acquisition of equipment for the project will be between $56 billion and $87.5 billion, defined as the low and high scenarios. The company initially plans to invest $500 million in equipment in 2026, approximately $7 billion in 2027, $7.6 billion in 2028 and $9.4 billion in 2029.
Every six years thereafter the company plans to spend between $3.5 billion (low) and $7 billion (high) to replace outdated equipment.
Currently the assessed valuation of personal property at the site location is $0. The total assessed valuation of equipment in 2027 is estimated to be in excess of $1.8 billion. By anticipated completion of the project in 2029, the estimated valuation is expected to be in excess of $4.6 billion.
As part of the agreement, which will run from 2028 to 2052, Google is expected to pay 100% of the real property tax assessed on the property. Google is requesting a payment in lieu of taxes (PILOT) of 30% of the personal property taxes assessed, meaning they are seeking a 70% tax abatement on personal property only.
The plan calls for Google to transfer the project equipment to the county, which the county will then lease back to the company. This will not occur until 2027. Because of that, Google will have to pay 100% of the personal property taxes on any property it owns at the site on Jan. 1, 2027, which is estimated to be approximately $7,370,293.
In exchange for the abatements, Google will make an annual payment of $5 million for each completed data center building at the site (they are anticipating completing two buildings). The $5 million will be allocated 80% to the Greater Montgomery County Port Authority and 5% will be paid each to New Florence, High Hill and the Wellsville-Middletown R-I and Gasconade County R-I school districts.
As the Montgomery County Ambulance District and the New Florence Fire Protection District have the right to opt out of the abatements, it is believed they will do so and receive 100% of their respective personal property tax assessments.
According to the cost-benefit analysis over the 25 years of the potential abatement agreement, over $1.6 billion in personal property taxes would be abated under the low scenario, while $2.19 billion would be abated under the high scenario.
A chart within the analysis outlines an estimate of what each taxing district would receive under the agreement and how much would be abated over the 25 years of the agreement under both the low and high scenario.
As an example the Montgomery County R-II School District without the abatement would receive $1,836,910,475 under the low scenario and $2,479,631,351 under the high scenario. However, with the abatement the district will only receive $551,073,143, while $1,285,837,333 will be abated under the low scenario. For the high scenario, the district will receive $743,889,405, but $1,735,741,946 will be abated.
The current cost-benefit analysis is only a proposal. The Montgomery County Commission has scheduled a public hearing for June 8 at the Montgomery County Courthouse.
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