King George supervisors ready to ‘go to war’ with Amazon

by | Mar 23, 2024 | ALLFFP, Government, King George

The King George County Board of Supervisors declared that it is prepared to do battle with a corporate giant.

During Tuesday’s meeting, Board Chair T.C. Collins accused Amazon Web Services — which is in contentious negotiations with the county to build a data center — of hiring a “big old company in Arlington to dig up dirt on people.”

“Amazon, are you listening? Because I know we’re getting ready to go to war here,” Collins said. “I want you to know that I know what you’re doing. I’m not afraid of you. I don’t have many years left.”

The King George supervisors, led by Collins, voted in January to renegotiate a performance agreement with Amazon to construct the first phase of an 869-acre data center campus at the Birchwood power plant on State Route 3 in the Sealston area.

The previous board — before three newcomers arrived and Collins took over as chair — signed the performance agreement in December following months of negotiations.

In a letter to King George Interim County Attorney Richard Stuart dated Jan. 22 and obtained by the Free Press, Charles Payne, a lawyer for Hirschler Fleischer, a law firm representing Amazon, argued that, “For over a year Amazon worked closely through the county with open hearings and forums to finalize the performance agreement.”

Payne’s letter contends that the performance agreement remains legally enforceable and that the board’s Jan. 2 vote did not “revoke or otherwise affect the enforceability of said agreement.”

After watching Tuesday’s board meeting, Payne said he was taken aback by the supervisors’ remarks.

“I’m personally disappointed,” he said. “I continue to be an advocate for King George County, and I look forward to King George’s opportunities in the future.’

Supervisor doesn’t trust figures

Amazon released a statement to the Free Press that officials have no record of the company in Arlington that Collins is referring to, and that it takes compliance with the law “very seriously.”

“We have robust processes in place for ensuring we meet the highest legal and ethical standards in all of our business practices — including our engagement and interactions with government officials and external entities,” the statement read.

Collins and supervisors William Davis, Cathy Binder, Ken Stroud, and David Sullins all took up a portion of their comment period Tuesday discussing Amazon and why they believe the performance agreement isn’t a good deal for the county. All except Collins and Binder are first-year board members.

“Grant money was [to be] given to Amazon in this performance agreement,” Binder said. “There weren’t any guarantees for King George. We got, ‘Maybe we’ll get some tax money,’ but we never got a firm number on what that tax money was. I kept seeing all these different statistics thrown out and I remembered a book I learned in college, and it was called ‘How to Lie With Statistics.’”

Many of those statistics were provided by a financial consulting firm the county hired to evaluate the project. Davenport & Company provided the county with an independent Economic Development Revenue Analysis in November to project revenues associated with the Amazon proposal.

Davenport projected the county to earn $139.4 million in tax revenue from 2027-2041 based on the construction of six data centers. It also provided projections based on three data centers ($63.3 million) and one data center ($14.2 million). According to Davenport’s analysis, Amazon would receive $36.6 million from the county for infrastructure reimbursement, repaid via 60% of incremental tax revenues.

Amazon estimates it paid $334 million in taxes to counties in Virginia in 2022.

Gov. Glenn Youngkin held a celebration March 13 at Germanna Community College’s Spotsylvania County campus to tout the establishment of data centers in the Fredericksburg area. Officials from Stafford, Spotsylvania, Caroline and Louisa counties attended and spoke glowingly of the deal.

Amazon began discussions with the counties in the region in 2018, and the five jurisdictions agreed to reduce their personal property tax rate for computer hardware and data center equipment — a specific tax classification — to $1.25 per $100 of assessed value and changed zoning ordinances to permit data centers. That number was influenced heavily by the rate in neighboring Prince William County at the time, according to Fredericksburg Regional Alliance President Curry Roberts.

“At no time was the rate negotiated with AWS,” Roberts said. “Never. The rate was not discussed with them until everybody did it.”

During the March 13 event, the parties touted that the Fredericksburg region would be the epicenter of data centers statewide, with 2,000 new jobs and a $35 billion total capital investment over the next 15 years. Amazon is planning a $6 billion total capital investment in King George, as it is in Caroline, Spotsylvania and Stafford. It is planning to invest $11 billion in Louisa.

King George supervisors said they’ve since fielded questions about their conspicuous absence from the event. Supervisor Stroud said while some residents are “sweating AWS,” they need to remember that nothing is keeping the company from building on the land.

“They own the property. They have the permits. They can go build,” Stroud said. “Just like any other business in King George, they can go do what they do and make their money. The only issue is whether they get any grants back from the county.”

Davis: ‘We should have guarantees’

Davis, who represents the Dahlgren district, was particularly defiant during Tuesday’s meeting, saying there are scenarios in the performance agreement in which King George would not see any revenue until 2050. Davis said AWS is taking the county’s residents for “country bumpkins.”

By contrast, the financial analysis from Davenport assumes that “the first data center is complete in calendar year 2026 and the county begins collecting revenue in the fiscal year 2027.” That timeline is consistent with what other counties in the area are projecting.

Davis, however, remains unconvinced.

“With a company taking up a large part of our land, using our natural resources and the strain they’re putting on our power grid, we should have guarantees for the residents of this county,” he said. “The agreement is full of noncommittal language like ‘may do,’ ‘consider to,’ ‘possibly,’ ‘might.’”

Davis also said King George residents could end up stuck paying Amazon to be there. He claimed that the agreement waives a right to a jury trial if any dispute were to arise between Amazon and the county. He said the reality of what transpires in deals like this often differs from the initial wish list.

According to a copy of the performance agreement obtained by the Free Press, in the event of a dispute, each party would appoint a “designated executive,” who would then “negotiate in good faith to resolve the dispute… without the necessity of any formal proceeding.”

No formal [court] proceeding could be held until either a “mutual conclusion” is reached that a resolution doesn’t appear likely or until 30 days after the initial request to negotiate. Any litigation related to the agreement would be brought in King George Circuit Court.

Eminent domain possible but a ‘last resort’

At Tuesday’s meeting, Davis said that the county was informed by Dominion Energy that, if the data center necessitates the construction of a new power plant, eminent domain could go into effect. In that scenario, residents could lose their land.

“You think people are upset now,” he said. “Let’s wait five, 10 years down the line when this room is filled with King George residents [mad] because some power-hungry multi-billion-dollar bully is stealing their freaking land, because that’s what it comes down to.

“Everything in the name of progress though. I wonder if the Indians liked progress because I think that’s what they got sold.”

Jeremy Slayton, a spokesman for Dominion Energy, said that while the company is not currently proposing to build any power generating stations in King George, new substations and electric transmission lines would be needed to accommodate data center growth in the county.

Slayton said Dominion will solicit community input before filing an application with the Virginia State Corporation Commission.

“We work closely with impacted property owners to explain the real estate acquisition process and our preference and goal is to work with individual property owners to purchase easements based on the assessed value of the land and avoid a court-ordered settlement,” Slayton said. “Eminent domain is an action of last resort and only considered after all other options have been exhausted.”

Davis also noted the performance agreement does not include a start date, although Davenport’s projection does. Davis believes that means Amazon could sit on the land until 2038.

Amazon said in its statement that developing quickly is in the best interest of both parties. Spotsylvania County Board of Supervisors Chair Jacob Lane said during the March 13 event that his county will return $13.8 million in average annual tax revenue over 15 years beginning in 2025.

Davis contends that King George’s previous board negotiated from a position of weakness and left the county vulnerable to Amazon taking advantage of residents.

He said the agreement does not guarantee how much water the county will receive, and that it will be untreated, leaving taxpayers potentially having to pay for a treatment facility.

“Louisa had them build a treatment plant,” Davis said. “How come the board didn’t ask them to build us one? We need one.”

However, the performance agreement specifies that under a separate Water Services Agreement, Amazon will provide the county with “600,000 gallons per day of raw surface [river] water at no charge.” It also alludes to the possibility for more water to be provided by Amazon to the county “to address low flow or drought situations.”

Still, Davis urged residents to do their research, citing examples in Georgia and Loudoun County in which some officials now regret allowing the construction of data centers.

Davis said the previous board was afraid Amazon would leave, believed “something is better than nothing” and thought the county needed Amazon more than the company needed the county.

“The past board, they couldn’t see the future down the road,” Davis said. “All they saw was right now.”

Supervisors: ‘We are not messing things up’

King George’s proposed data center campus at full buildout would consist of 7.25 million square feet of space, with each million of square feet resulting in $15 million in tax revenue. King George generated $44 million in total tax revenue in 2022.

The supervisors stressed they are not against data centers but that the current Amazon deal is not the right fit for the county. Binder said that with careful planning, the county can add industrial partners that will be mutually beneficial.

She said Amazon could end up as a “good partner,” but more dialogue is needed to get to that point.

“We worked closely with King George County through open hearings and forums,” the company’s statement read. “AWS has been committed to listening and understanding the community’s needs and priorities so that our data centers drive job creation, investment, and programs that specifically benefit King George and its residents.”

Supervisor Sullins said the county remains in discussions with three different companies regarding data centers and that there are ongoing conversations with another business about solar farms.

“I know people are concerned we may be messing things up with Amazon,” Sullins said. “We are not messing things up. We’ve got a lot of opportunities.”

(Senior reporter Joey LoMonaco contributed to this story).

Hirschler Fleischer, an individual or organization central to this story, is a major donor to the Free Press. Donors do not influence newsroom operations.

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