City Not Liable For Data Center Bonds Totaling Up To $55 Billion, Officials Say

By Editor | July 7, 2026 |

LOCAL GOVERNMENT COVERAGE – DATA CENTER

Ahead of the July 13 public hearings on two proposed data center bond issuances in Clarksville, officials say the bonds would not obligate the city to repay the debt and would not be paid from city tax revenues.

The proposals involve industrial development revenue bonds that would be issued by the city under state law and repaid through agreements tied to the private development, according to the public hearing notices and bond counsel.

Bond counsel and city officials provided additional detail to The Graphic following publication of legal notices outlining the proposals for SF ARK1, LLC, or Serverfarm, and Hatchbo, LLC.

According to the bond notices, the SF ARK1 proposal would authorize up to $5 billion in taxable industrial development revenue bonds and the Hatchbo proposal would authorize up to $50 billion in taxable bonds. Both are part of the same overall data center development but finance different components of the project.

The two issuances are structured separately to align financing with different categories of project assets and anticipated phases of development.

According to the bond notices, the SF ARK1 financing is primarily designated to fund real property at the site, while the Hatchbo financing is primarily designated to fund personal property associated with the project.

Real property includes land, buildings and other fixed infrastructure. Personal property includes equipment and other operational assets used in facility operations.

Both proposals list 101 Tech River Valley Road as the project site. City Inspector Cody Graham said Tech River Valley Road will serve as a private drive off Poplar Street, south of Johnson County Health and Rehab.

According to bond counsel Gordon Wilbourn of Kutak Rock in Little Rock, the $5 billion and $50 billion figures listed in the legal notices are “not to exceed” amounts included in the proposed bond ordinances rather than projected construction costs. He said the authorizations establish the maximum amount of bonds that could be issued under the financing structure.

Officials did not provide a breakdown of how those authorization levels relate to anticipated project costs, financing phases or total project valuation.

According to the public hearing notices, the proposals are industrial development revenue bonds issued under Arkansas Act 9 authority and Amendment 65 to the Arkansas Constitution.

Those provisions allow cities and counties to issue revenue bonds to support industrial development projects. Under this structure, the city authorizes the bonds so the developer can raise money for construction and related costs, while investors purchase the bonds, which are repaid through project revenues or lease agreements tied to the facility.

According to the public hearing notices, 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 bond repayment.

Under Arkansas law, the city serves as the issuer of the bonds but is not responsible for repayment. Wilbourn said the bonds are “not obligations payable from city taxes or revenues.”

That means the city’s general tax revenues are not pledged to repay the bonds, and repayment is tied to the project and agreements between the city and the developer.

Public Hearings

The SF ARK1 and Hatchbo proposals are scheduled for public hearings July 13 in the conference room at Clarksville City Hall, 205 Walnut St., prior to the regularly scheduled City Council meeting at 6:30 p.m. The SF ARK1 hearing begins at 5:30 p.m., followed by the Hatchbo LLC hearing at 5:45 p.m.

Following the hearings, the City Council is scheduled to consider ordinances authorizing the proposed bond issuances.

Residents may attend and provide oral or written comments on the proposed bond issuances and the nature and location of the projects. Those wishing to speak must sign the sign-up sheet outside the City Council chambers before the hearing begins.

The legal notices for both proposals may be viewed on Page X.