The Development Authority of Fulton County (DAFC) will debate Tuesday whether to award a hefty tax break to a Beltline-adjacent data center that’s already under construction.
Kansas-based Quality Technology Services is seeking about $45 million in tax savings over the next decade as it forges forward with a 50-acre expansion to its Atlanta data center campus. The incentives would be for two buildings currently under construction, which will join the company’s two operational data centers in the area.
A QTS spokesperson said starting construction before finalizing incentives was a necessary risk given the fervent demand for data center space. The representative said work could be delayed or that investment, by QTS or prospective tenants, could be re-directed if the tax break isn’t granted.
QTS, which is owned by investment giant Blackstone, has expanded its Jefferson Street site over the past 15 years. The two existing data centers on the campus span roughly 1.5 million square feet. The expansion — for which QTS is pursuing the tax break — would add roughly 755,000 square feet of data center space.
QTS said the expansion represents a roughly $1.3 billion investment. It is located near a rapidly growing area of the Beltline, Westside Reservoir Park and Georgia Tech’s campus. The expansion will involve up to 600 temporary construction jobs and up to 20 permanent jobs.
A 2021 Atlanta Journal-Constitution investigation found DAFC provided preliminary or final approval for more than $328 million in tax breaks in a three-year period, largely in fast-growing areas like the Beltline or Midtown with few public benefits.
Data centers, which house gigantic warehouses filled with computer equipment, have become one of the fastest-growing uses for industrial land in the United States as companies digitize and internet usage grows. It’s an industry Georgia leaders have worked to court, typically through lucrative state and local incentives.
Critics say the facilities require a lot of power, water, land and resources to operate. They produce many temporary construction gigs but few permanent jobs. And they question the return on investment for million of dollars in incentives used to woo them.
In its statement, QTS said the incentives will help the company further its community investment. The company previously contributed more than $30 million to local infrastructure improvements, including the Beltline.
“In addition to the new property and local option taxes, the construction and operation of the project will have a powerful and positive impact on the surrounding area,” the statement said. “QTS is committed to being an active community member and believes the project will continue to reinvigorate Atlanta’s Westside.”
Sean Baillie, a QTS executive who is no longer with the company, told the AJC last October that his company’s new data centers are often leased in advance.
“Usually when we do these builds, the buildings are about 80% sold out before we even turn them on,” Baillie said then. “So the buyers are showing up. They need to keep consuming this stuff.”
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
Julian Bene, a former board member of Invest Atlanta, the city’s development authority, called the QTS proposal “indefensible,” saying a project under construction does not need incentives.
“Pay your damn taxes!” he tweeted. DAFC, as part of the “bond-for-title” transaction, would also earn a fee for enacting the tax break.
Atlanta Councilman Matt Westmoreland also took to Twitter to oppose the tax abatement request, saying the City Council signed a resolution in 2020 for DAFC to stop issuing tax breaks within the city limits.
He said the DAFC board on Tuesday “will have the chance to reject a particularly egregious request.”
Residents of the Howell Station neighborhood have complained about QTS’ massive construction site. The area has been popular with tech companies, with QTS and Microsoft each buying large swaths of land in their backyards.
Arthur Toal, the neighborhood association’s president recently told the AJC that, “Neighbors feel like they’ve been hit with multiple bait and switches.”
Credit: arvin.temkar@ajc.com
Credit: arvin.temkar@ajc.com
QTS has further plans beyond the data center expansion. A later phase could add 350 apartments, 50 townhomes and 250,000 square feet of offices to the company’s campus. In addition, QTS recently paid $154 million to buy 615 acres in Fayetteville, which the company aims to transform into another massive data center campus.
Also on Tuesday, DAFC is expected to consider a $13.4 million tax break for the 42-acre Medley mixed-use project by Toro Development Company. A spokesperson for the developer said Johns Creek Mayor John Bradberry and Fulton County Commissioner Bridget Thorne have signed letters of support.
The DAFC meeting will be streamed. The public can access the Zoom meeting at us02web.zoom.us/webinar/register/WN_5skIyK_cTXamJzFBUjf7xw#/registration.
Credit: HYOSUB SHIN / AJC
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