Springfield City Commission on Tuesday held the first reading of an ordinance to authorize the city manager to enter into an Enterprise Zone tax-abatement agreement with CMH01 Holdings Inc., a company related to 5C Data Centers USA, Inc. The city’s actual vote on the deal will take place at the Dec. 17 commission meeting.
“We’re getting a wonderful project and $1.3 billion dollars in new investment in our community,” Assistant City Manager and Director of Economic Development Tom Franzen said Tuesday night. “We continue to work on projects that diversify our local economy, so this is another step, welcoming a technology company. That’s key to us.”
Franzen indicated permits have been approved for some of the planned interior LexisNexis renovation that will take place in a couple of phases, with Phase 1 completed in 2025. Franzen’s October memo to commission said the project’s completion date is during the fourth quarter of 2027.
Addressing the city commission, 5C Data Center Senior Vice President of Business Development Benjamin Basson gave credit to the city’s business development staff for the decision to locate the new venture in the city.
“We approached Springfield about a year ago, and the hospitality and the partnership that the city’s business development team have shown us really brought us into the city,” Basson said. “We develop across the country, we’re international as well and we have a lot of opportunities, but it was that partnership and collaboration that really brought us to Springfield.”
Credit: NYT
Credit: NYT
The city will vote Dec. 17 on a 15-year 100% Enterprise Zone property tax abatement to cover the years 2028-2042. Enterprise zones are specific plots of land where businesses can receive tax exemptions on eligible new investment, according to the Ohio Department of Development.
5C Data Centers requested the abatement “to help offset the construction of the additional 147,000 square-foot expansion facility” that is proposed to be built adjacent to the existing LexisNexis building.
A data center is the physical facility that stores digital data and contains computing machines and related equipment, including the computing infrastructure that information systems require such as servers, data storage drives and network equipment, according to the website of Amazon Web Services.
The Data Center Map group describes the current 67,000 square-foot LexisNexis Springfield site as “a hosting site for law firm data and systems … with a 62,000-square-foot data center, 20,000-square-feet of raised flooring, and an 18,000-square-foot mechanical/electrical plant” with generators, 350-ton chillers and state-of-the-art security measures.
Franzen said “I don’t really think there are any cons here,” adding the city is happy 5CDC will be reusing the LexisNexis facility that has been underutilized for the last five years.
“This is an opportunity to welcome a new company into town to reuse and reenergize that facility as well as reposition it for future growth,” Franzen said. ... “The project will create 100 jobs with an average payroll of $127,000 each, a little over $60 an hour … It also really helps us with the diversification of our industry base. When we talk about adding jobs, we really look at the technology sector as an opportunity.”
Credit: Bill Lackey
Credit: Bill Lackey
The Clark-Shawnee school board has already approved a 100% 15-year property tax abatement on the 601 Benjamin Drive property.
Clark-Shawnee school superintendent Brian Kuhn said last week that the district was willing to delay receiving property taxes on the new investment for 15 years.
“What we’re doing is setting up the district for a financial revenue stream,” Kuhn said. “In 15 years the district will start to receive the property tax on that facility, and that’s going to be a solid and strong revenue stream.”
If the project moved forward with no property tax abatement, 5C would pay more than $95 million in property taxes over the 15 year-period, with Clark-Shawnee Local School District receiving more than $63 million, according to a city memo from Franzen. With the abatement, about $1.5 million will be paid in taxes in those 15 years, and Clark-Shawnee would get just more than $1 million.
That makes the value of the company’s tax abatement more than $93 million over $15 years. The city’s October memo said, “The savings generated from the abatement play a large role in the company deciding to invest in Springfield, Ohio, as opposed to larger metropolitan data center markets like Columbus and Chicago.
Franzen said more plainly Tuesday night that if not for the tax abatement, the project wouldn’t move forward.
“We’d have a vacant building and no new project,” he said. “The school district certainly realized the upside of the project and the new industry. They supported the enterprise zone agreement unanimously at their last meeting.”
Franzen said the project will bring a lot of vendors and suppliers into town to work with, so the city expects 5CDC’s project to lead to future growth and opportunities as well.
As part of the enterprise zone agreement, Clark-Shawnee schools have an income tax sharing deal with the city, which could produce about $70,000 in annual tax revenue for the schools, generated from employee payrolls on the project site.
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