2685 J
ORDINANCE NO. 2024- S5'
AN ORDINANCE TO AUTHORIZE THE EXECUTION AND DELIVERY
OF A MEMORANDUM OF UNDERSTANDING TO FACILITATE THE
CONSTRUCTION OF CERTAIN LARGE DATA CENTERS; TO
DECLARE AN EMERGENCY; AND FOR OTHER PURPOSES.
WHEREAS, the 'City of West Memphis, Arkansas (the "City") and Groot, LLC (the
"Company") desire to enter into a Memorandum of Understanding ("MOU") to facilitate the
construction of a large data center within the City; and
WHEREAS,pursuant to the MOU,the City will receive certain payments,provide certain
incentivizes, and furnish certain services (as specified in the MOU)to the Company for the large- .
scale processing of data(the"Project").
NOW,THEREFORE,BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF WEST MEMPHIS,ARKANSAS:
Section 1. There be, and there is hereby, authorized and directed the execution and
delivery of the MOU, and the Mayor and City Clerk are hereby authorized to execute, •
acknowledge, and deliver the MOU for and on behalf of the City. The MOU is hereby approved
in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer
with the Company in order to finalize the Agreement with such changes as shall be approved by
such persons executing the Agreement, their execution to constitute conclusive evidence Of such
approval.
Section 2. There exists a pressing need to increase jobs and economic activity within
the City and the opportunity has arisen to achieve both of the goals through a single project,
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provided that approval of certain incentives are timely achieved. Thus, this ordinance being
necessary for the immediate protection of the health, safety and welfare of the citizens of West
Memphis, Arkansas, an emergency is hereby declared to exist, and this ordinance shall be in full
force and effect from and after its passage.
PASSED and APPROVED this 29th day of October,2024.
ATTEST: APPROVED:
9,-frar" /(6t,tail 7C-(6 e,/-
City Clerk Mayor
[SEAL]
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.MEMORANDUM OF UNDERSTANDING
I. Project Overview .
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Groot, LLC (the "Company") is evaluating the City of West Memphis, Arkansas (the
"City")for a site that would allow for the construction of an approximately 900,000 square
foot data center facility, including ancillary buildings and infrastructure (the "Project").
The Project shall be located on the Crittenden County parcels currently identified by parcel
numbers 395075000000, 395080000000, 395080200000. The Company anticipates the
investment in the construction and equipping of the Project will be approximately
,$1,000,000,000. Approximately 50 new high-quality jobs will be created as a result of the
Project. If the right economic, business, and market conditions exist, it is possible the
Company will construct one or more additional data center facilities, inclusive of the data
center building and associated infrastructure improvements. This MOU reflects the desires
of both parties and will become binding upon approval by the West Memphis City Council.
II. Annual Company Payment
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a. The Company will make an annual payment to ensure the City receives an agreed upon
minimum total through a combination of the annual payment and property taxes or
payments in lieu thereof(the "Company Payment"), as further defined in Appendix A. If
approved by the West Memphis City Council,this MOU shall serve as enacted legislation
(i) exempting the Company from any existing or future local license fee obligations under
', Ark. Code Ann. 26-77-102 through 105 and (ii) exempting the Company from being
impacted directly or indirectly by Ordinance No.2672. For so long as the Company timely
remits the Company Payment to the City, the City shall not: (i) challenge the validity of
the Property Tax Abatement (defined below); (ii) levy or collect a local licensing fee on
the Company; or (iii) impose a franchise fee related to the Company's use of electricity,
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water, wastewater, or telecom/fiber.
b. The first Company Payment will 'be paid within 60 days after a final certificate of
occupancy is issued for the Project. The Company Payment shall then be due each year
thereafter on October 15th beginning the calendar year following the year the initial
Company Payment is paid. The last year of the Company Payment shall be the last year
the Project is subject to a Property Tax Abatement.
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c. To the extent allowed by law,the City shall use the annual Company Payment in a manner
• that benefits the Project's public infrastructure needs or in a manner that benefits the City.
and aligns with the Company's core values of sustainability, education,technology,public
safety, diversity and equality. If requested, the City shall provide the Company sufficient
documentation to detail the disbursement of 'these funds to substantiate that the
expenditures align with these values.
d. The Company agrees to pay a one-time permit fee equal to $125,000 for the Project and
for each data center facility (along with any buildings and infrastructure that directly
support each data center facility ("Ancillary Building")) thereafter that will cover all
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building,mechanical,plumbing and electrical permit fees, as well as any additional permit
and administrative fees, required to enable the data center construction. For the avoidance
of doubt, the one-time permit fee specified herein_will be in lieu of, among other fees, all
of those set forth in Ordinance No. 2669. The' Company will make commercially
reasonable efforts to support the City with respect to any supplemental third-party plan
reviewers and building inspectors required to benefit the Project.
III. City Commitments:
a. In return for the Company Payments outlined above and the significant additional
economic and community benefits from the Project and any additional data center
facilities,the City agrees to the following:
i. The City agrees to support, including through future legislative and
administrative actions consistent herewith,a 65%real and personal property
tax-abatement for 30 years (the "Property Tax Abatement") for the Project
and each additional data center facility and any Ancillary Buildings
constructed. The City agrees that in light of the build-out and equipping
periods for hyperscale data center projects and the dynamic nature of the
hyperscale data center market, the bond structures used to provide the
Property Tax Abatement will be broad and flexible,(e.g.,, build-out and
equipping periods of at least twenty-five years;minimum investment levels
of no more than $100,000,000 for real property and $250,000,000 for
personal property; and maximum investment levels of at least
$10,000,000,000 for real property and $50,000,000,000' for personal
property). The City, agrees that if the Company does not receive the
Property Tax Abatement for any portion of its investment in connection
with the Project or any additional data center facilities constructed as a
result of an action or inaction ' by the City, the Company will have no
further Company Payment obligations, including those related to
investments for'the Project or any additional data facility for which it
received or continues'to receive a Property Tax Abatement (for the
avoidance of doubt, in such a circumstance the Company shall continue to
be entitled to the Property Tax Abatement notwithstanding the relief it shall
be provided from the Company Payment obligations).
ii. This MOU will serve as the initial agreement between the Company and the
City regarding the development of the Project site'and key business points.
The Company and the City intend to enter into additional agreements (e.g.,
a development agreement, a PILOT agreement, etc.) in order to address
r additional details related to the Project. This agreement exempts the Project
from Ordinance 2672 and any other Franchise Fees that may apply,now or
throughout the duration of the abatement period, within the City of West
r Memphis. ' )
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iii. Aside from the $125,000 permit fees described in II(d) above, the City will
not impose any other City franchise, excise, license, permit, or other fees,
taxes or assessments, directly or indirectly (e.g., increased fees on others
that may be borne to the Company in the form of franchise fees, higher
prices or otherwise) related to the Company's use of electricity, water, or
wastewater.
iv. The City agrees not to discriminate against the Project or any additional
Company data center facilities by adopting special assessments, taxes, fees
or charges that target or impair the Project or any additional Company data
center facilities, and to the extent the nature or scope of the Project or any
additional Company data center facilities cause any special assessments,
taxes,fees or charges to be disproportionate to the costs imposed on the City
as a result thereof,the City will reduce those special assessments,taxes,fees
or charges'to align them with the costs imposed on the City as a result
thereof.
IV. Infrastructure:
a. The City and the Company will continue to cooperate on the necessary water,wastewater,
sewer, fiber optic, medium voltage power capacity and other infrastructure needed to
support the Project and potential additional data center facilities, which may be
documented in one or more separate MOUs, agreements or other documents, as needed.
b. The parties acknowledge the infrastructure improvements needed to support the Project
and potential additional data center facilities and the timing of the improvements are being
negotiated in a separate agreement. The infrastructure improvements currently known to
the parties are described below. These are subject to change as the project advances. The
• City will be responsible for design, permitting, and construction of the following •
improvements at the sole expense of the Company unless the parties agree otherwise:
i. Potable Water Supply to the Project Site: The City will be responsible for design,
permitting and construction of a potable water supply extension to serve the site.
This will be an extension of the City's existing water supply infrastructure.
ii. Domestic Sewer Connection From the Project Site: The City will be responsible for
design, permitting and construction of a sewer line extension to receive sanitary
sewer discharged from the site, to be conveyed to the West Memphis Wastewater
Treatment Plant ("WWTP") via the City's existing collection system. It is
anticipated that the domestic sewer connection will include a sewer lift station.
iii. Effluent Reuse Water Supply to the Project Site: The City will be responsible for
design,permitting and construction of a pump station and pipeline to supply treated
effluent (disinfected secondary effluent) from the West Memphis WWTP for use
as non-contact cooling water. This will include all easements and permitting
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required for the pipeline, with the final pipeline routing to be determined by the
City.
iv. Cooling Tower Blowdown Discharge Infrastructure from the Project Site: The City
will be responsible for design and permitting of a dedicated blowdown water
discharge pipeline from the site to the Mississippi River for direct discharge to the
river, the location of which will be determined by the City. This would include all
elements required for conveying and permitting the discharge, including Army
Corps of Engineers permitting and Arkansas Department of Environmental Quality
(ADEQ)permitting, and all necessary easement acquisition.
v. The City shall be responsible for providing a detailed breakdown of cost and
schedule to provide 10 MW of Medium Voltage (13.8 kV or 12.47 kV) service to
the site, in addition to associated rates for said service.
vi. The City shall be responsible for providing fiber optic cable access for up to 800
fibers with redundant connectivity, as needed to meet the Company's needs. The
schedule to construct and complete the fiber optic improvements shall be negotiated
by the parties in good faith and take into account any construction schedules.
c. The parties acknowledge that except for road infrastructure projects,which will be paid for
by the City, any infrastructure projects and improvements needed to support the Project
and potential additional data center facilities will be undertaken by the City, but paid for
by the Company subject to engineering and design agreements,unless the parties mutually
agree otherwise.
d. The schedule to construct and complete any infrastructure improvements shall be
negotiated by the parties in good faith and take into account any construction schedules.
e. The City and Company agree that certain road improvements, including the construction
of a two-lane road to Bollinger Road and a construction access road, will need to be made,
which shall benefit the City and the Project (the "Road Improvements"). The schedule to
construct and complete any Road Improvements shall be negotiated by the parties in good
faith and take into account any construction schedules associated with the Project. The
Company and City shall cooperate and act in good faith to schedule the Road
Improvements to mitigate any possible damage to the Road Improvements from the Project
and to avoid any interference with the Project. Additionally, the City will continue to
pursue funding for an extension of the two lane road from Bollinger Road to
Airport/Waverly Road and will make a good faith effort to complete the.final extension by
December 31, 2027.
The City will not discriminate in utility charges, and will work with the Company to
establish rates for utility services not currently covered in City Ordinances and applicable
to the Project, including treated effluent water and dedicated river discharge. These new
rates will be based on a rate study and will be codified in an Ordinance in a timely manner.
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Groot, LLC
Name
Title: its Authorized Signatory
CITY OF WEST MEMPHIS
By: �( D
Name: Marco McClendon
Title: Mayor
City Council Approval Date: /o49/tea V
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