Jordan MillerEight sheriff’s deputies. Six EMTs. Sixteen firefighters.
These are some of the expenses Box Elder County officials saw coming once they welcomed a sprawling data center and energy campus to their corner of northern Utah. They asked the developer for a lump sum — $16.2 million, up front — to cover these costs and more.
But the state board shepherding the project quickly countered: It was more than the developer expected. It would be better to spread the payments over three years. The money wouldn’t be needed until construction began.
Those negotiations came to light in documents obtained by The Salt Lake Tribune through an open records request. Emails — sent weeks before the key county vote that created the project area on roughly 40,000 acres of unincorporated land centered in Hansel Valley — show Utah’s Military Installation Development Authority repeatedly advocating on behalf of developer and celebrity investor Kevin O’Leary.
O’Leary’s name is not mentioned in the records; he is referred to only as “the developer.”
On April 20, the county’s chief civil deputy attorney, Anne Hansen, sent MIDA officials a document outlining upfront costs the county faced if the development — dubbed the Stratos Project — were approved. Those expenses included more than $14 million allocated to public safety and emergency services, the public records show.
The rest of the money — about $1.9 million — would fund staff with administrative and operational duties, including $50,000 for legal assistance, $300,000 for lobbyist support and roughly $625,000 for a project manager.
“While the county recognizes and supports the long-term economic potential of the Stratos Project, that potential does not offset the immediate fiscal realities,” Hansen wrote to MIDA.
“Future revenues cannot be relied upon to justify present unfunded obligations,” she continued. “... Without a secured upfront funding commitment, the county cannot support the level of service required for this project to proceed responsibly.”
Hansen said the construction phase alone would bring 4,000 to 5,000 workers to the area, resulting in a “significant and immediate” demand on county services like law enforcement and “administrative oversight.”
“At the same time, the county does not anticipate receiving meaningful project-related revenues for approximately three years,” Hansen said in the proposal. “The county cannot absorb these costs within its existing budget without materially degrading current service levels or shifting the financial burden onto existing taxpayers.”
Paul Morris, MIDA’s executive director and general counsel, replied later that day that he would pass along the proposal to the developer, but added that he assumed the county would be “willing to spread it out over three years of $5.4 million per year.”
The county would receive its first payment when the first building permit for the project is issued, Morris told Hansen, since “there is no real impact until construction starts.”
Hansen replied that Box Elder County still wanted the full payment up front so funds would be available “to prepare for the impact and use as the needs increase.”
“The county’s main concern up front is covering public safety need with the influx of construction,” Hansen wrote. “With that in mind, let us know what you would suggest and we can go from there.”
In another reply on the same day, Morris said the county’s request was “much larger” than the developer was expecting, and that he was “anticipating some push back.” In another email, Morris said he heard back from the developer, and that the county’s estimated upfront costs were “quite a bit higher” than the developer anticipated by “several million dollars.”
“One way to mitigate it is to spread it out over the 3 years and they build it into their construction costs,” Morris said in an email. “There is not additional impact until there is actual construction going on and the construction will ramp up over time and not be all at once.”
Hansen replied that the three-year payment timeline was “certainly reasonable,” and said she felt the county could find a way to “prioritize the expected costs” and “ramp up” as the project gets underway.
Morris added the developer would agree to the cost if payments were spread out over three years — with one more caveat.
The developer wanted to have these upfront costs reimbursed to them from future revenues — such as utility fees — that the county would receive once the data center project was built.
But after further negotiation, the developer agreed to cover all of these upfront costs without future reimbursement, Hansen said in a statement to The Tribune.
On April 24, four days after the county submitted its proposal, MIDA approved the project with O’Leary. Last week, the three-member Box Elder County Commission voted unanimously to allow MIDA to create the project area, which was the final step it needed to offer O’Leary an array of financial incentives.
