New Mexico county OKs $165 billion of bonds for data center

A big data center development received approval on Friday from a New Mexico county for $165 billion of industrial revenue bonds that will serve as a vehicle to obtain tax breaks.

The taxable debt issued by Do?a Ana County for the construction and equipping of four data centers, along with micro-grid power generation and battery storage facilities, will be privately placed with recently created companies involved in the development. The issuance is a conduit to provide the project with a variety of tax breaks under a mechanism used by New Mexico to spur economic growth.

Modrall Sperling's Christopher Muirhead, the county's bond counsel, said the $165 million "represents what the company anticipates investing in this project through its development over the term of the bonds, which could go out to 30 years, the primary benefit to the company being the property tax abatements for the real property and the personal property, as well as gross receipts tax deduction for the equipment as it is purchased for the facilities."

With IRBs totaling up to $165 billion, an amount more than double the state of California's outstanding general obligation debt, the Do?a Ana County development drew attention amid a continued nationwide stampede of proposed data centers, including projects in other states with similar bond-linked tax-break programs that gained approval for $10 billion or more of bonds.

The road to so-called Project Jupiter in unincorporated Do?a Ana County was paved with the February announcement of a memorandum of understanding between New Mexico and developer BorderPlex Digital Assets that outlines incentives and pledges to facilitate permitting for the project.

On Friday, county commissioners heard hours of public comments from proponents, who touted the project's economic benefits, and from opponents, who raised environmental concerns, including its use of scarce water resources. There can be credit implications for public utilities due to data center demand for water and power.

Combined daily water use for operating the data center and for a micro grid to power it would be around 40,000 gallons, according to BorderPlex Chairman Lanham Napier, who called the project "a generational opportunity" that will generate $360 million in payments in lieu of taxes for the county.

"I encourage you to vote for it," he told the commission. "A vote to delay it is basically a vote 'no.'"

County Commissioner Susana Chaparro, who cast the sole no vote, unsuccessfully tried to postpone final consideration of the bonds.

"We need to build up opportunities for our community and develop a stronger economic base, but not on the backs of our people that are not informed," she said.

Do?a Ana County, with 229,000 residents, is New Mexico's second-most-populous. Its seat is in Las Cruces.