Council Tables Data Center Bonds; Aldermen Delay Action, Work Session Set For July 20
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LOCAL GOVERNMENT COVERAGE – CLARKSVILLE CITY COUNCIL
by Janice Penix
With a standing-room only crowd in their chambers Monday, members of the Clarksville City Council heard comments from the public and numerous stakeholders before voting to table four resolutions that would have advanced industrial development revenue bonds for the hyperscale data center under construction in the city.
The resolutions, two each for Hatchbo LLC and SF Ark1 LLC, were the first steps in a process by which the city would issue a total of $55 billion in bonds that would be repaid through agreements tied to the private development. The resolutions would also certify the city’s endorsement of the two LLCs to participate in the state’s Tax Back Program.
Under the Consolidated Incentive Act 182 of 2003, the Tax Back Program provides sales and use tax refunds on the purchase of building materials, machinery and equipment to qualifying businesses that create new jobs as a result of construction, expansion or facility modernization projects in Arkansas.
Under Arkansas Act 9 and Amendment 65, local governments can issue revenue bonds, commonly called “Act 9 bonds,” to finance facilities for securing and developing industry and tourism. Facilities can be owned by the local government and leased to an industry, as in the proposals for Serverfarm. According to notices published in The Graphic prior to Monday’s public hearings, the city would own the facilities during the term of the financing and lease them to the companies, which would make rental payments sufficient to cover the bond payment.
Although legal counsel assured Council members the city would not be obligated to repay the debt, and the bond payments would not be paid from city tax revenues, aldermen opted to wait to take action to allow for additional time for them to review the proposals.
“I do have concerns, because this was put on us very quickly,” Council member Christel Thompson said. “I really urge the Council to table this, to have some prudence and get some more information.”
The Council voted unanimously to table action on the bond issues, and Mayor David Rieder said he would schedule a work session to provide additional time for members to review the items. The work session will be held at 10 a.m. Monday, July 20, at city hall.
The SF Ark1 (Serverfarm) financing is primarily designated to fund real property at the site, while the Hatchbo financing would be designated to fund personal property associated with the project, including the equipment housed inside the data center.
Gordon Wilbourn of Kutak Rock, bond counsel for the city, said although the project’s scope is much larger than any the city has undertaken in the past, the process is the same.
“Except for the scale, this is not unlike matters the city has done before,” he said, specifically referencing a similar bond issue for Tyson Foods. “You have no financial obligation for the bonds. With these bonds, the owners of the bonds assume the risks, the city is indemnified for any risks. There is no way for the city to be in default over the bonds.”
Wibourn said the $5 billion figure for SF Ark1 and $50 billion figure for Hatchbo are “not to exceed” amounts, rather than projected construction costs. The authorizations from the Council establish the maximum amount of bonds that could be issued under the financing structure.
During public hearings on the bond issues held prior to the regular business session, questions raised by community members included a lack of information about the financial and environmental impacts of the data center, electrical and water usage, and long-term investment by the company into the community.
John Vaughn, developer for the Serverfarm project, was in attendance, along with numerous other stakeholders. Vaughn addressed the Council and audience, stating many of the concerns he heard would not apply to the current project.
“With some of the older built data centers, the technology has changed, the effects with water and electricity have changed,” Vaughn said.
He also addressed his investment in the community.
“We are a small group that has come in here,” he said. “All of the dollars are personal dollars that we work hard for. We work honest, work diligently and work very fair, trying to make sure we are focusing on the facts, because there’s a lot on the line. The group here in Clarksville are good people, who are trying to make a good impact.
“Since four-and-a-half years ago when we started this, we have taken on all the financial obligations,” he said. “We have been here four-and-a-half years working on this project. I understand the importance of honest work. We have been working with a lot of people in this community, and I always want to do things correctly. I am never for any shortcuts. The due diligence has been thorough, and I’ve done my very best to get to this point, and to make sure the project will benefit everyone.
“We see a lot of negative stuff in the news about these projects. I think the data center industry as a whole could do a better job educating us. Maybe Clarksville can be the blueprint of doing it right.”
Darlene Ragsdale, a community member who addressed the Council, said she only became aware of the project two years ago, and felt many people were also unaware of it before then.
“A lot of people are in the same situation I’m in,” she said. “It makes it seem rushed. We have questions come up because we simply didn’t know. If we could have been better informed, it could have saved you a lot of time.”
The utility concerns were also addressed.
Drew Dixon, senior vice president for Solaris Energy Infrastructure, introduced his company as the power provider for the first phase of the project.
“Part of the reason we’re going in here, that Hatchbo has chosen to bring us in as the power provider, is there will not be a strain on CCU,” Dixon said. “Our infrastructure will supply all the necessary power for the first phase of development.”
According to Dixon, the upgrades required to Clarksville Connected Utility’s infrastructure that would allow it to service the project will be ongoing, with the hope that it will be able to be part of the data center’s electric portfolio in subsequent phases of development. Vaughn reminded the Council all upgrades required to CCU’s infrastructure for the data center will be funded by the data center.
Mayor Addresses Data Center In ‘State Of City’ Report
After the adjournment of the regular Council meeting, Mayor David Rieder announced he would present a “State of the City” report following a short recess.
The report was not a Council meeting but was hosted by Rieder and city department heads.
A large portion of the report involved questions surrounding the data center project. Vaughn, along with representatives of Serverfarm and related partners, participated in the presentation.
Utility Rates, Upgrades
Vaughn said utility rates will not be affected by the data center.
“The data center develops for its tenant, and they’ve agreed to pay for any amount of costs that are related to any upgrades from the utility perspective,” Vaughn said. “But also, prior to that, any and all costs that pertained to attorneys, that pertain to engineering, pertain to the (Southwest Power Pool) studies, the (Southwestern Power Administration) studies, all the studies that go on – the data center, we as developers have taken on all of the financial responsibility of that.”
Contracts with power generators like Solaris Energy will not only benefit the data center, but the community as a whole, by paying for significant upgrades to Clarksville’s infrastructure that will increase its capacity.
Jason Carter, CCU attorney, said the utility has negotiated with the focus of no risk to the city or its electric and water provider.
“From the utility’s perspective, when we’ve approached this, the City Council has said, ‘Make it happen. Go negotiate. But there will be no cost on the citizens of Clarksville. No cost, no risk,’” Carter said. “So those have been the guiding principles in all negotiations we’ve discussed. They’ve been great partners to negotiate with all along.”
Water Usage
Vaughn said while older data centers used a significant amount of water, modern technology has drastically scaled back usage.
“When you’re talking about the technology, the way they built data centers 10, 15, maybe five years ago, they consumed a lot of water,” he said. “But the new technology, new infrastructure that we’re currently living with now, data centers are using less and less water. Eventually they’re going to be using almost no water.”
Water usage for the Serverfarm project in Clarksville is projected in the “thousands” of gallons, according to Vaughn, “five numbers, not seven or eight numbers. We’re getting a state of the art data center campus here. It’s going to be extremely efficient from an electrical and water perspective. Concerns around people’s water getting contaminated or even losing water in the lakes, it’s just not going to happen.”
Estimates for water usage are 1,500 gallons per day, per building on the data center campus, which is slated to eventually include four buildings.
The data center will use a closed-loop liquid cooling system which will recirculate the same water within sealed pipes, bypassing the city’s water supply to achieve a near-zero daily consumption.
Noise Mitigation
Vaughn also said the data center will not create a noise issue, outside of typical noise related to the construction process.
“It’s a genuine concern if your house is right up against the security fence,” Vaughn said. “But as someone who lives in and around 20-plus data centers, I can assure you, the conversation we’re having here today is much louder than the 24/7 hum that you hear. Also, the normal traffic going up and down (Highway) 123 and I-40 is going to be far louder than any of the noise you’re having to live and deal with.”
In his hometown of Ashburn, Va., there are numerous data centers, he explained.
“In Ashburn, we have the internet, so there’s 200 data centers,” Vaughn said. “Unless I go out there at 3 in the morning and put my ear up against the security fence and intentionally listen for the noise, I would never know that they made any sound. That’s just a fact. Now, if someone wants to get out very early in the morning, they want to go very close, they want to stand there until the birds aren’t tweeting anymore and put their phone up for a few seconds to say, ‘It’s a lot of noise,’ then so be it. But in the overwhelming general sense, the noise factor, I almost never hear my data center near my house, and I take three feet outside my door and see five of them.”
Jobs, Investments
According to a Serverfarm representative, the project will involve around 1,500 jobs in construction trades during the development and approximately 800 permanent jobs upon completion, 200 per phase.
Jobs will not be limited to technological fields, but will include support staff in maintenance and security positions.
On the power island, Solaris will employ around 300 during initial installation and 40-50 full-time employees, according to Dixon.
Indirect jobs from maintenance contracts for the facility are estimated to be around 400.
The estimated tax revenue from real estate and personal property taxes generated by the Serverfarm development is $36.26 million between 2028-31, the first three years of operation, and $435.12 million between 2028-60, the term of the pilot agreement.
(Editor’s note: Additional coverage of Monday’s Council meeting will appear in the July 22 issue of The Graphic.)
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Published In This Week’s Edition
This story appears in the July 15, 2026, edition of The Graphic, available online and at businesses throughout Johnson and Franklin counties.
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