Clarksville Council Reviews Data Center Details Ahead Of Upcoming Votes

By Editor | July 21, 2026 |

LOCAL GOVERNMENT COVERAGE – CLARKSVILLE CITY COUNCIL

by Megan Wylie

Clarksville City Council members spent more than two hours Monday morning reviewing details of the proposed Serverfarm data center as they prepare to consider several agreements connected to the development.

The July 20 work session focused on questions raised during recent public discussions, including the proposed industrial development revenue bonds, utility impacts, environmental protections, property taxes, community benefits and how the city will oversee agreements connected to the project.

Representatives from Serverfarm, attorneys, utility officials and local leaders provided additional information about the project before the Council considers proposed bond ordinances, a payment in lieu of taxes (PILOT) agreement and the Community Benefits Agreement (CBA).

Construction Schedule

Construction of the first phase of the Serverfarm campus is progressing ahead of schedule, according to Mike Lupardus, P.E., who said he is overseeing the project for Serverfarm.

The initial 135-acre campus has all four building pads prepared, foundations for the second building completed and drilling underway for the third building.

The first building has been permitted, with additional construction continuing to move forward. Lupardus said project representatives remain unable to identify the future tenant because of confidentiality agreements but described the customer as a “Fortune 10” hyperscale company with a recognizable household name. He also said the project is not related to cryptocurrency or Bitcoin.

Proposed Bond Structure

A significant portion of the discussion focused on the proposed industrial development revenue bonds, which have drawn questions because the two ordinances under consideration authorize up to $55 billion in financing.

Bond attorney Jacob Hill of Kutak Rock in Little Rock explained the bonds are part of Arkansas’ Act 9 industrial development program and will not create financial obligations for the city of Clarksville or its taxpayers.

Under the proposed structure, the city will hold title to the project while the bonds are outstanding and lease the facility back to the project company. Hill explained lease payments made by the company will equal the debt service on the bonds, meaning the city will not be responsible for repayment.

“The city is not going to have any obligation or financial responsibility for the repayment of these bonds,” Hill said. “The city is incurring no obligation with respect to the bonds. They’re not pledging their taxing authority or anything like that.”

Hill said the project company will retain responsibility for operating the facility and meeting obligations associated with the bonds.

Council members questioned why the bond authorizations are significantly higher than the project investment currently being discussed.

Hill explained the ordinances establish the maximum financing authority available over the life of the project rather than requiring the entire amount to be issued immediately.

The bond structure also is tied to the proposed PILOT agreement, which will outline property tax payments during the project’s abatement period and which was discussed later in the meeting.

Power Needs And Infrastructure Capacity

Council members also spent considerable time discussing how the data center will be powered and what infrastructure will be required to support its operation.

Drew Dixon, senior vice president of Solaris Energy Infrastructure, explained Phase 1 of the project is designed to include four buildings, each requiring approximately 108 megawatts (MW) of electricity, for a combined demand of about 432 MW. By comparison, Clarksville Connected Utilities’ (CCU) current peak demand is approximately 50 MW.

Mayor David Rieder explained CCU’s existing transmission system does not have the capacity to deliver the amount of electricity required by the project, making additional power generation necessary.

Lupardus said Serverfarm planned from the beginning to develop its own power source while remaining connected to the electrical grid as additional regional infrastructure becomes available.

Initial power generation will come from a natural gas “power island” built by Solaris. The system will use 40 on-site natural gas-fired turbines to provide electricity for the facility while additional transmission capacity is developed.

The on-site generation will provide reliability and redundancy for the facility while preventing the project from placing additional demand on CCU’s existing electric system.

Jason Carter, legal counsel for CCU, said locally generated power helps address two challenges facing large industrial developments: availability and deliverability of electricity.

Rieder said those same infrastructure limitations have prevented Clarksville from accommodating some potential developments in the past.

He said the city’s location provides an advantage because Clarksville sits at the intersection of multiple electric transmission and natural gas systems, allowing resources to be accessed from multiple providers.

Rieder described the project as an opportunity to expand infrastructure capable of supporting future growth.

“We’re as big as we’re ever going to be today as we’re sitting here,” Rieder said. “We can’t turn on another light unless we get some investment.”

He said improved infrastructure connected to the project already has generated interest from other companies, including one exploring construction of a 300,000-square-foot facility near the data center.

CCU Interim General Manager Eric Heinrichs said current water usage during construction is approximately 33,000 gallons per day, primarily for dust control.

Lupardus said once operational, the facility is expected to use approximately 1,500 gallons of water per day under normal conditions because its cooling system is designed to operate through a closed-loop process.

Utility Rates And Infrastructure Protections

Council members questioned whether infrastructure needed for the project could increase costs for existing electric, water or natural gas customers. Alderman Rob Risinger specifically asked what measures are being taken to prevent increases in natural gas rates.

Carter explained agreements connected to the project include protections designed to prevent existing customers from subsidizing the data center’s utility needs.

He said any infrastructure or capacity improvements required specifically because of the project must be paid for by the project company rather than through increased rates charged to existing customers.

“CCU is not allowed to enter into an agreement … that will result in increasing rates to the rest of the customer base,” Carter said. “You’ve got to carry your own freight.”

Those protections are outlined in the Electric Service Agreement (ESA) and Contribution in Aid of Construction (CIAC) Agreement recently approved by the CCU Commission that are expected to take effect Friday, July 24, according to Carter.

The agreements define Serverfarm as a CCU utility customer and require the company to cover costs associated with infrastructure, capacity improvements and other work CCU performs specifically to serve the data center rather than shifting those expenses to existing utility customers. (More information about those agreements, including Serverfarm’s responsibilities as a CCU customer, is included in a related story on Page 1 of the July 22 edition or here.)

John Vaughn of Vaughn Property Group LLC, who represents Serverfarm, said new natural gas infrastructure required for the project also will be funded entirely by Serverfarm and its affiliates, helping reduce the risk of increased gas rates for existing customers.

Noise And Environmental Questions

Potential noise, air quality, water and wastewater impacts also were discussed during the meeting.

Dixon said the facility will use natural gas-fired turbines rather than diesel generators, with each turbine equipped with factory-installed noise reduction equipment.

He said noise modeling conducted for the site indicates sound levels are expected to remain below nuisance thresholds. Although sound walls could be installed if needed, Dixon said they are not expected to be necessary because projected noise levels are below those permitted in agricultural areas.

Council members also discussed how future noise concerns will be addressed. Carter said complaints could be evaluated by law enforcement on a case-by-case basis because factors such as weather conditions, terrain and surrounding development can affect how sound is perceived.

He added that any future noise ordinance will need to apply uniformly throughout the community rather than target a single business.

The flushing and cleaning of the closed-loop cooling system will occur under permits issued by the Arkansas Department of Environmental Quality (ADEQ) and the Arkansas Department of Health, according to Lupardus and Carter.

Any water discharged into the city’s treatment system will have to meet required state and utility standards, and the project team will coordinate with CCU to ensure wastewater volumes do not overwhelm city facilities.

Air emissions from both the data center and the natural gas power island will also be regulated through ADEQ permitting requirements.

Tax Exemptions And Property Values

Council members also reviewed the different tax structures connected to the project, including state sales and use tax exemptions available to qualifying data centers, the proposed property tax abatement and how the development could affect surrounding property values.

State Rep. Aaron Pilkington explained data centers with investments exceeding $3 billion may qualify for exemptions on sales and use taxes for electricity used by the facility and qualifying equipment purchases if they meet requirements established under state law.

To qualify, projects must generate more than $3 million in payroll for Arkansas residents over a two-year period and complete a 10-year benefit analysis with the Arkansas Economic Development Commission (AEDC) demonstrating a positive economic impact. The exemption applies only to qualifying electricity and equipment purchases and does not extend to unrelated purchases or other local sales taxes.

The meeting also addressed the separate property tax structure tied to the project’s proposed Act 9 financing. Under the proposed PILOT agreement, Hill explained qualifying improvements would receive a 65% property tax abatement for up to 30 years, with the company paying taxes on the remaining 35% of assessed value during the abatement period.

Hill said the same structure would apply to qualifying equipment, furniture and fixtures, while taxes would continue to be paid on portions of the project not included in the abatement. He said a 65% abatement is a common structure used for large industrial projects.

Officials also clarified the large figures listed in the proposed bond ordinances represent maximum financing authority over the life of the project rather than current assessed values. One ordinance authorizes up to $5 billion for one portion of the project, while another authorizes up to $50 billion for another portion.

Alderman Christel Thompson also asked whether the data center could affect nearby property taxes.

Johnson County Assessor Rusty Hardgrave explained residential property will continue to be assessed separately from industrial property and said the data center’s location within the city’s Industrial Technology zoning district means it will be evaluated under different standards than surrounding residential areas.

He said residential property values are influenced by market conditions and demand and would not automatically increase because of nearby industrial development. Property assessments will continue to follow state standards and audit procedures.

Hardgrave said property tax payments associated with the project are expected to begin in 2029 following the anticipated completion of construction in 2027.

Community Benefits Agreement Still Being Finalized

A proposed Community Benefits Agreement (CBA), also referred to during the meeting as a Community Development Grant Agreement, would create a structure for directing funds generated through the project toward community needs while establishing oversight requirements for how those funds are managed.

Rieder said a committee of community leaders has spent months negotiating the agreement with Serverfarm. Officials described the CBA as an additional component of the project designed to provide benefits beyond traditional development agreements related to construction and infrastructure.

The agreement includes two primary funding components: direct funding opportunities for local governmental entities and a structure for supporting nonprofit organizations.

Under the agreement, funds designated for governmental entities would be provided directly to those bodies, with each governing board responsible for determining how the money is appropriated through its normal processes.

The agreement also addresses how charitable funds would be distributed. City Attorney Clay McCall explained cities face constitutional restrictions on directly providing public funds to many private organizations, leading officials to consider using an established nonprofit organization, such as the Johnson County Community Foundation (CCEF), to administer those funds.

Under that structure, a local board would oversee distribution to eligible nonprofit organizations while providing additional financial controls, documentation requirements, reporting and audits.

McCall said potential areas of need identified during negotiations include health care, education, public safety and nonprofit services. Rieder referenced organizations such as the Ozark Rape Crisis Center, Pregnancy Help Center, River Valley Child Advocacy Center and Johnson County Helping Hands as examples of community needs that could benefit from additional support.

Johnson Regional Medical Center also was discussed as a potential recipient. Carter, who is involved in negotiating the agreement, said the hospital’s participation has not been finalized and remains part of ongoing discussions.

McCall said oversight measures would include financial reviews, reporting requirements and public access to records related to the use of funds.

Carter said the agreement is intended to balance predictability for Serverfarm with long-term community benefits by establishing expectations for both the developer and the community.

He said only minor revisions remain before the agreement is presented to Council members for consideration, adding the negotiations have been challenging but should result in “something we’re all proud of.”

Transparency And Public Records

Questions about transparency and the release of project documents also were addressed during the meeting as officials explained how public records requirements apply to a project involving confidential business information.

Carter said the city must balance Arkansas Freedom of Information Act requirements, which provide public access to government records, with legal protections for proprietary information that could affect a company’s competitive position.

He explained project documents are reviewed individually to determine which portions can be released and which information must remain confidential under state law. Redactions are intended to protect specific business, financial or technical details rather than limit public access to information about the project.

Carter said the goal is to provide as much information as possible while complying with legal requirements governing both government transparency and confidential commercial information.

Additional Improvements And Future Growth

Additional infrastructure improvements connected to the project include fiber upgrades, road improvements and planning for future growth.

Fiber infrastructure required for the facility will be funded by Serverfarm, according to Vaughn, who said the project’s internet service will come from multiple sources. He said those improvements could create additional connectivity opportunities for businesses and residents beyond the data center.

Road improvements also will be phased throughout construction. Rieder said the developer will be responsible for repairing construction-related damage and directing heavy construction traffic along designated routes, with more extensive repairs taking place after construction is complete.

Beyond physical infrastructure, project representatives described Serverfarm’s role in Clarksville as extending beyond construction of the facility. Vaughn and Lupardus said the company intends to be a long-term partner as the community grows and wants to work with local leaders on challenges associated with future development, including affordable housing.

Vaughn said Serverfarm wants to be involved in conversations about community needs and serve as an ally as Clarksville addresses challenges associated with growth.

Lupardus also discussed the company’s connection to future employees and the broader community, saying staff members involved with the project have been enthusiastic about being in Clarksville and have encouraged others to consider relocating to the area.

Project representatives said the development could have impacts beyond the data center itself, including job creation, additional business opportunities and increased demand for housing and services as the community grows.

Council members said continued planning will be needed to address future needs, while infrastructure improvements associated with the project could help position Clarksville for additional economic development.

Next Steps

No action was taken during Monday’s work session. All Council members were present.

Council members are expected to consider the proposed industrial development revenue bond ordinances, the PILOT agreement and the CBA at a future meeting once final revisions are completed and the agreements are ready for consideration.