Amazon to invest $1B in data center project

By Randy Bell

With City leaders in attendance, Governor Tate Reeves made the long-anticipated announcement that Clinton will soon be home to an Amazon Web Services (AWS) data center, an investment valued at $1 billion, which is expected to create one hundred jobs.

Much of the information about the data center had already been revealed, but there had been no official confirmation that it was Amazon’s project until Reeves spoke in Ridgeland April 9, part of a larger announcement that the company is increasing its overall investment in central Mississippi by $12 billion, most of that in Madison County.

The governor told the crowd gathered under a tent at the Amazon site on West County Line Road that, “Mississippi is not attracting the industries of the future. We’re building them.” He called data centers “the backbone of the digital economy.”

Amazon Web Services Vice President of Economic Development Roger Wehner said the Clinton project is “a super unique opportunity to take a pre-existing building that needed a little love—we’re retrofitting that building and reinventing it as part of this broader story that we’re creating here in Mississippi.”

The data center is being built in the Clinton Industrial Park in the old Delphi plant, a building which has been unoccupied for decades.

Wehner also addressed concerns that Amazon’s data centers might require a significant amount of water to help cool their servers, possibly leading to shortages for the public.

“We have a water-positive goal,” he told the crowd in Ridgeland. “In Clinton, we will actually use no water.” He said the Canton facility will use only recycled water, and Amazon’s Ridgeland campus will require water “approximately thirty days a year.”

Here’s the company’s explanation of why water won’t be needed to cool the Clinton data center: “This facility is a retrofitted building, and the cooling system design is driven by the existing structure. Adapting the building for the standard water-cooled approach would have required significant structural modifications, making air-cooled chillers the right fit for this site’s constraints and timeline. This alternative design means ongoing cooling water will not be required. For new construction, water-based cooling remains the industry-standard approach due to its efficiency, and each location is evaluated individually to ensure it works for both operations and the community long term.”

Entergy Mississippi’s President and CEO Haley Fisackerly said the data center in Clinton won’t put a drain on the local power supply.

“It will have its own dedicated substation, therefore it’s served directly from the transmission grid and does not impact the distribution grid that serves the residential neighborhoods,” said Fisackerly.

Hinds County Economic Development Authority Executive Director Hunter Gardner called Amazon’s decision to locate its Clinton data center in an existing building rather than constructing it from the ground up “a model that moves at a speed and scale rarely seen in economic development.”

Clinton Mayor Will Purdie, who was on hand for the announcement, said the City is “incredibly grateful” for Amazon’s $1 billion investment in the community.

Purdie talked about the City’s efforts to secure the project.

“It was really a team effort, from Public Works to Community Development to the Fire Department to everybody, to get in and just work as quickly and efficiently as possible to help make this project happen.”

Purdie is hoping that the assurances which Amazon and Entergy have offered regarding water and power supplies should ease worries among some citizens over possible data center impacts. The mayor said, “I think certainly [with] the environmental concerns that have been raised, the announcements should put those folks at ease.”

What is a FILOT?

In order to secure the Amazon Web Services (AWS) data center that’s being built in Clinton, the City agreed to what’s called a “Fee in Lieu of Taxes” (FILOT) arrangement, which Mayor Will Purdie says will generate about $2 million in revenue for Clinton in the first year and about $3 million for the Clinton Public School District.

Here’s an explanation of how a FILOT works, from Chris Pace with the Jones Walker law firm, who is working in partnership with the Hinds County Economic Development Authority:
“A ‘fee-in-lieu agreement’ (or FILOT) is a commonly used property tax incentive authorized by State for significant economic developments. This includes data center projects, as long as the associated project investment exceeds $60,000,000. Because the AWS project in Clinton will total or exceed $1 billion, it certainly qualifies.”

Under the FILOT Agreement approved for the Clinton AWS project, AWS will make annual contract payments equal to 1/3 of ordinary property taxes during the first ten years of the project. In effect, the FILOT simply provides an effective 2/3 discount for this period.

After the initial ten-year period, the 2/3 reduction will apply only to new equipment and other assets (i.e., new, additional property value) added to the project. And in no event will any property be eligible for the property tax discount for more than ten years. The FILOT Agreement ultimately expires after thirty years under the FILOT statute.

So, AWS will be paying property taxes under the FILOT, albeit at a discounted, 1/3 rate for ten years with respect to each taxable asset used in the Clinton data center project.”