OT: Madison data center tax fight

[Darryl Steight]

The FILOTs don’t prevent assessment fights. The language simply spells out the “rules of engagement.”

The better question is why did the company reps and the assessor/staff let it become a public spectacle? Should never have gotten to that point.

On your first point - I think they could (and if you're AWS, should) have agreed to language in the docs setting a percentage rate or a set dollar amount ahead of time.

Your second point is 100% dead on. That's the bigger issue I have with this whole thing. That seems like a really bad play for a county that's been on a roll lately, and is currently in discussions with not only AWS, but other large companies they're recruiting. Airing this publicly could throw cold water on all of it.

 

[Darryl Steight]

There are fee in lieu agreements. But those are always based on assessed value.

Like I said above, I'm fairly certain in a FILOT they can agree to a percentage or dollar figure ahead of time if both sides agree. I think the Amazon attorneys didn't ask for it, and the county attorneys were like, "Got 'em".

 

[Perd Hapley]

A few thoughts I had last night (sad that i woke up in middle of night & this is what came to mind).

Amazon is going to have to give up the information to support their claim. I’m sure they know that. You can’t just appeal your assessment & not provide documentation to support your claim. This is likely all about getting it protected under a court secrecy order. The tax assessor had offered to sign a non-disclosure agreement, but apparently Amazon wants it under a court order. The assessor will subpoena it, Amazon will get the court order, then they’ll provide it and it will either be negotiated out or go before the judge. Also, one reason the assessor is assessing it so high is these are highly specialized buildings with materials & components ordinary buildings don’t have.

Makes sense.

For those following the broader stock market right now, the absolute biggest discussion currently happening is whether or not the high bandwidth memory storage required by these data centers to support all the AI infrastructure is enough to bring about a permanent change to make certain segments of the semiconductor industry move out of cyclical demand status, and into a more perpetual demand condition. A lot of eyeballs on every stage of the data center construction supply chain right now.

There is currently a massive shortage of semiconductor components needed to support this data center build out that is happening globally, and as such, prices for the components are through the roof right now and spots in line for orders are at a premium. The semiconductor manufacturers have also locked in all the big players into long term contracts with some price flexibility both ways (but less than the open market) to help stabilize their revenues over time. Those contracts are highly punitive to the buyers for both canceling the deals, and leaking the pricing info.

If Amazon were to allow the prices they’ve negotiated to leak out publicly, they could seriously jeopardize their ability to get the product they need at all, let alone get it at their currently negotiated price…..which may or may not be favorable compared to the current market pricing.

 

[patdog]

Like I said above, I'm fairly certain in a FILOT they can agree to a percentage or dollar figure ahead of time if both sides agree. I think the Amazon attorneys didn't ask for it, and the county attorneys were like, "Got 'em".

Minimum FILOT is 1/3 of the property tax, which is based on assessed value & millage rate. So assessed value always comes into play. And if the agreement is for 1/3, which I think is pretty standard why would Amazon ever want to negotiate a fixed dollar contract?

 

[OG Goat Holder]

The better question is why did the company reps and the assessor/staff let it become a public spectacle? Should never have gotten to that point.

Because even though it's the nice part of MS, it's still MS. A few thoughts here:

- I go back to that deal about moving the airport. On the surface, seems like a great thing, build a bigger, more corporate-type airport farther out, closer to industry and back-develop the area where it is now. But instead, Rudy Warnock. Whole thing falls apart and we've got a freaking airport in a quiet, residential part of town.
- You have Canton, with the quaint historical downtown, and Madison/Ridgeland, suburbia. Why weren't these developed together? How nice would Canton be? OK OK, I get it, distance. But why are we out developing Flora, when a town with good bones is right there? I know the reality of the situation (look no further than the weird congressional cut-out), but I'm talking ideals here.

 

[mstateglfr]

...the absolute biggest discussion currently happening is whether or not the high bandwidth memory storage required by these data centers to support all the AI infrastructure is enough to bring about a permanent change to make certain segments of the semiconductor industry move out of cyclical demand status, and into a more perpetual demand condition.

Well, it looks like I just found my next thing to translate into dumbed down words, then Google and learn about.

 

[ababyatemydingo]

Minimum FILOT is 1/3 of the property tax, which is based on assessed value & millage rate. So assessed value always comes into play. And if the agreement is for 1/3, which I think is pretty standard why would Amazon ever want to negotiate a fixed dollar contract?

not always. we are negotiating a FILOT with a company now (not data center related) that is offereing $20 MM over 35 years. It's a shitey deal for us, as it's mostly back loaded, so we're playing hard ball on it, because we want the best deal for our county. Waverly Harkins is our lawyer on it and we work with her and Watkins & Eager on other large projects we have in the pipeline. She also represented Madison County on their AWS FILOT.

 

[Darryl Steight]

Minimum FILOT is 1/3 of the property tax, which is based on assessed value & millage rate. So assessed value always comes into play. And if the agreement is for 1/3, which I think is pretty standard why would Amazon ever want to negotiate a fixed dollar contract?

Why would they want to? To avoid what's happening now. There was a time when AWS could have negotiated almost literally anything they wanted, and the county would have bent over and said "thank you". There's no law that says it has to be 1/3 or anything else - they literally could have agreed to a number in the middle where both sides win and called it a day.

As an example, if AWS thinks they should be paying $90M/year and the county wants $200M/year -- both sides might have agreed to $120M/year and walked away unscathed.

I'm not arguing for that particularly, but it would have avoided this public scrutiny and apparent tension between the two sides. I'm still not sure why the county is handling it this way, WHILE they are currently trying to encourage AWS to spend another $10+B in the county.

 

[johnson86-1]

Like I said above, I'm fairly certain in a FILOT they can agree to a percentage or dollar figure ahead of time if both sides agree. I think the Amazon attorneys didn't ask for it, and the county attorneys were like, "Got 'em".

I don't think they can agree to a dollar figure ahead of time. The fee in lieu has to be a minimum percentage of what they would otherwise pay. If they had agreed to a dollar amount up front, and the assessor had come back with an assessment that would put that dollar amount at too low of a percentage of what they'd otherwise pay, then it would be invalid.

Maybe they could have built in some guidelines for the valuation process, but in theory the valuation process is the same for everybody. Maybe they could have clarified some points relevant to data centers that are not really relevant to other types of projects? You really are pretty reliant on the county acting in good faith. Hell, lots of these deals are essentially already done before the fee in lieu is approved. Any of htese counties could, in theory, refuse to enter into a fee in lieu after there is too much investment in the ground for the company to pull out. BOS's cannot commit themselves without a vote, so the assurances made before hand don't bind them to my knowledge and I don't know that a promissory estoppel type argument can bind a county. Of course, the county could only do that once, and then the entire structure of our abatements would I think have to be changed legislatively to allow some sort of commitment prior to putting capital on the ground.

 

[vhdawg]

Interesting. I think that your 2nd sentence supports the taking advantage position. I don't expect that they will be all bad. I do expect that we will have some unintended negative consequences and there is a possibility that some of those are not ones we would have accepted had we known about it in advance. Below are just a few examples of things we've seen pumped up over the years that were failures and what stands out to me about those is that, in stark contrast to the data center craze, these were not also being built on every piece of flat earth in the world (i.e. direct competition at scale was not as big of a factor). Don't get me wrong, I hope we all win. However, this datacenter building craze is going to be an expensive game of musical chairs, and we all aren't gonna get a piece of Ms Doris' chocolate cake.

I just don't trust our politicians to look much beyond the end of their noses (perhaps as far as their wallets).

Period	Project	What state leaders expected	Public exposure and outcome
2003–2004	Mississippi Beef Processors, Yalobusha County	A state-supported beef-processing operation intended to create an agricultural market and manufacturing jobs	The plant failed shortly after opening. The State Auditor treated it as a long-running taxpayer-loss investigation; six individuals were convicted or pleaded guilty, and only $617,115.86 had been recovered by March 2014. The auditor specifically called for greater oversight of state-supported economic-development programs.
2010–2012	Twin Creeks Technologies, Senatobia	A solar-technology manufacturing facility expected to invest at least $132 million and create at least 500 jobs	Mississippi provided approximately $26 million through building, equipment, site and infrastructure assistance. The company reportedly never employed more than 25 people and liquidated in 2012. The State Auditor later classified $23,480,239 in public funding as associated with the failed project.
2010–2014	KiOR, Columbus	A high-profile biofuel refinery that would convert wood chips into transportation fuel and was promoted as creating approximately 1,000 jobs	Mississippi provided a $75 million state loan. The facility did not operate as designed, most employees were laid off, the company defaulted and entered bankruptcy in 2014. The State Auditor’s later accounting classified $76.25 million in public funding as connected to the failed project.
2010–2017	Kemper County Energy Facility	A first-of-its-kind “clean coal” power plant using Mississippi lignite, coal gasification and carbon capture	The expected cost grew from approximately $2.4 billion to $7.5 billion, and the coal-gasification portion was abandoned in 2017. Under the eventual settlement, Mississippi Power took a reported $6.4 billion write-down, while customers were responsible for approximately $1.1 billion associated with the natural-gas portion. This was primarily a ratepayer/shareholder loss, not an MDA loan default.
2011–2017	Stion Corporation, Hattiesburg	A solar-panel manufacturing operation expected initially to invest $400 million and create 1,000 jobs	MDA provided a $75 million loan. After the requirements were subsequently reduced, Stion still had only 137 employees when it closed in October 2017. The State Auditor found the company in default, classified $74,760,199 as public funding tied to the failed project and issued a total demand of $92,943,780.86, including principal, interest, local fees and recovery costs.
2011–2017	GreenTech Automotive, Tunica/Robinsonville	An automobile manufacturing operation expected to invest $60 million and create 350 full-time jobs	The project received $3 million from MDA, while another $2 million state loan went to Tunica County for land. The State Auditor found that GreenTech failed to make loan payments, make the promised investment or create the promised jobs, and issued a demand for $6,360,019.60. The auditor’s broader review identified $4,879,292 in public funding associated with the failed project.

Oh man, the beef plant. So much JT and Dave programming based on that. Good times....

 

[ababyatemydingo]

I don't think they can agree to a dollar figure ahead of time. The fee in lieu has to be a minimum percentage of what they would otherwise pay. If they had agreed to a dollar amount up front, and the assessor had come back with an assessment that would put that dollar amount at too low of a percentage of what they'd otherwise pay, then it would be invalid.

Maybe they could have built in some guidelines for the valuation process, but in theory the valuation process is the same for everybody. Maybe they could have clarified some points relevant to data centers that are not really relevant to other types of projects? You really are pretty reliant on the county acting in good faith. Hell, lots of these deals are essentially already done before the fee in lieu is approved. Any of htese counties could, in theory, refuse to enter into a fee in lieu after there is too much investment in the ground for the company to pull out. BOS's cannot commit themselves without a vote, so the assurances made before hand don't bind them to my knowledge and I don't know that a promissory estoppel type argument can bind a county. Of course, the county could only do that once, and then the entire structure of our abatements would I think have to be changed legislatively to allow some sort of commitment prior to putting capital on the ground.

They can legally agree to a set dollar figure up front. it's not smart to, but it's certainly an option. We are in negotiations right now with company offering a fixed dollar figure up front over a set number of years. It's an industry, though, that the capital investment is pretty well known.

 

[Darryl Steight]

I don't think they can agree to a dollar figure ahead of time. The fee in lieu has to be a minimum percentage of what they would otherwise pay. If they had agreed to a dollar amount up front, and the assessor had come back with an assessment that would put that dollar amount at too low of a percentage of what they'd otherwise pay, then it would be invalid.

Maybe they could have built in some guidelines for the valuation process, but in theory the valuation process is the same for everybody. Maybe they could have clarified some points relevant to data centers that are not really relevant to other types of projects? You really are pretty reliant on the county acting in good faith. Hell, lots of these deals are essentially already done before the fee in lieu is approved. Any of htese counties could, in theory, refuse to enter into a fee in lieu after there is too much investment in the ground for the company to pull out. BOS's cannot commit themselves without a vote, so the assurances made before hand don't bind them to my knowledge and I don't know that a promissory estoppel type argument can bind a county. Of course, the county could only do that once, and then the entire structure of our abatements would I think have to be changed legislatively to allow some sort of commitment prior to putting capital on the ground.

I'm no expert, but AI say:


Yes, in Mississippi, you actually can negotiate a fee-in-lieu (FILOT) agreement using a stated dollar amount. [1]
While most regional incentives default strictly to percentages, Mississippi law explicitly accommodates both structures under Mississippi Code § 27-31-104. However, a key statutory "floor" applies if a business opts for a fixed dollar fee. [1]

1. The Fixed Dollar Amount Option
If the FILOT agreement explicitly uses a stated dollar amount, that exact flat figure is legally binding. However, it operates on a "whichever is higher" standard. [1]
The payment will be the higher of:

• The fixed dollar sum negotiated in the written contract.
• One-third (1/3) of the total ad valorem taxes that would otherwise be payable if calculated normally each year. [1]

Note: The statutory floor drops to one-tenth (1/10) if it is an eligible renewable energy or solar project under Section 27-31-46 and the agreement was entered into before July 1, 2026. [1, 2]

2. The Percentage-Based Option
If the agreement is framed as a fraction or percentage, the fee is computed annually against the standard ad valorem tax levy (which includes county, municipal, and school district taxes). Just like the flat option, it can never drop below the 1/3 statutory floor (or 1/10 for eligible pre-July 2026 renewable projects) of what the standard property tax would be. [1, 2]

---

Key Requirements for Mississippi FILOTs
To use either option, the project must meet strict local investment criteria:

• The Minimum Threshold: Generally requires a minimum private capital investment of $60 million.
• The Approval Process: The agreement must be negotiated with the county Board of Supervisors (and/or municipal authorities) and requires final approval from the Mississippi Development Authority. [1, 3]

 

[patdog]

Why would they want to? To avoid what's happening now. There was a time when AWS could have negotiated almost literally anything they wanted, and the county would have bent over and said "thank you". There's no law that says it has to be 1/3 or anything else - they literally could have agreed to a number in the middle where both sides win and called it a day.

As an example, if AWS thinks they should be paying $90M/year and the county wants $200M/year -- both sides might have agreed to $120M/year and walked away unscathed.

I'm not arguing for that particularly, but it would have avoided this public scrutiny and apparent tension between the two sides. I'm still not sure why the county is handling it this way, WHILE they are currently trying to encourage AWS to spend another $10+B in the county.

There literally is a law that says it has to be 1/3 minimum. If they set a flat fee & it comes back less than 1/3 of the tax, the agreement isn’t legal and they have to either amend it to meet the legal minimum or abandon the project.

 

[goindhoo]

A few thoughts I had last night (sad that i woke up in middle of night & this is what came to mind).

Amazon is going to have to give up the information to support their claim. I’m sure they know that. You can’t just appeal your assessment & not provide documentation to support your claim. This is likely all about getting it protected under a court secrecy order. The tax assessor had offered to sign a non-disclosure agreement, but apparently Amazon wants it under a court order. The assessor will subpoena it, Amazon will get the court order, then they’ll provide it and it will either be negotiated out or go before the judge. Also, one reason the assessor is assessing it so high is these are highly specialized buildings with materials & components ordinary buildings don’t have.

What does it matter if it cost them a billion dollars to build each one if it is only worth 300 million? If it cost you a million to build your house, but the market only values it at $500K, what value should the tax assessor use?

ETA: Amazon provided documentation of market values (prior sales of similar buildings) to support their valuation claims.

 

[patdog]

not always. we are negotiating a FILOT with a company now (not data center related) that is offereing $20 MM over 35 years. It's a shitey deal for us, as it's mostly back loaded, so we're playing hard ball on it, because we want the best deal for our county. Waverly Harkins is our lawyer on it and we work with her and Watkins & Eager on other large projects we have in the pipeline. She also represented Madison County on their AWS FILOT.

You definitely can have a fixed price FILOT. But as you say it’s not a good deal for you. Because it can only be for more than the minimum. A much better deal is to just negotiate a percent of the tax (ideally 33.3% or big much above that).

 

[johnson86-1]

They can legally agree to a set dollar figure up front. it's not smart to, but it's certainly an option. We are in negotiations right now with company offering a fixed dollar figure up front over a set number of years. It's an industry, though, that the capital investment is pretty well known.

They can agree on it, but the dollar amount isn't fixed. It's just a floor. If the assessor comes back with a valuation triple what people are expecting, then it's the fee in lieu isn't valid. I don't even know if the fixed amount is helpful in fighting against an over valuation, because the assessor could just claim they were trying to pull a fast one on them and were low balling the expected value during negotiations in an attempt to sidestep the minimum 1/3 requirement.

If you have a project that is desirable enough to demand the maximum percentage exemption, then the setting a floor can really only help the county, not you.

 

[She Mate Me]

- You have Canton, with the quaint historical downtown, and Madison/Ridgeland, suburbia. Why weren't these developed together? How nice would Canton be? OK OK, I get it, distance. But why are we out developing Flora, when a town with good bones is right there? I know the reality of the situation (look no further than the weird congressional cut-out), but I'm talking ideals here.

You should probably spend a little quality time in Canton, outside the square. It’ll answer some questions for you.

 

[OG Goat Holder]

You should probably spend a little quality time in Canton, outside the square. It’ll answer some questions for you.

Stop, I know all that crap.

It's a town of 10K. With all the activity and jobs out there now, you'd think there'd be some folks willing to come in and gentrify. Or never move off and let it go to begin with.

And the hell with school districts anyway, nowadays everybody is going private. Especially in metro areas.

 

[ababyatemydingo]

They can agree on it, but the dollar amount isn't fixed. It's just a floor. If the assessor comes back with a valuation triple what people are expecting, then it's the fee in lieu isn't valid. I don't even know if the fixed amount is helpful in fighting against an over valuation, because the assessor could just claim they were trying to pull a fast one on them and were low balling the expected value during negotiations in an attempt to sidestep the minimum 1/3 requirement.

If you have a project that is desirable enough to demand the maximum percentage exemption, then the setting a floor can really only help the county, not you.

incorrect. a FILOT can be negotiated one of two ways in Mississippi. a fixed amount agreed to up front, or a percentage of ad valorem taxes based on assessed value. I was just in a meeting with a company making their initial pitch to our board last Friday morning. $20 MM over 35 years, but highly backloaded to the later years. We are punting it back to them to come up with better terms. The total sum isn't far off based on the value of the project, but how they have it backloaded makes it a bad deal. I'm fortunate enough (/S) to deal with this daily and talk to some of the brightest lawyers in the state that deal with it. Chris Pace, Waverly Harkins, ...among others. And talk to Bill Cork about it, who has final say and has to sign off on every FILOT agreed to in Mississippi. It is not set in stone that 66.666 % of ad valorem taxes based on assessed value is exempted. For example, we negotiated one last year with a company that expanded in our county and successfully got an additional 2% added onto our county cut, simply for the fact that this company is known for being a royal PITA and makes a lot of unreasonable requests of the county and city. We call it the "company shall remain nameless" frustration factor. So, they got 64.666 % exempted, instead of 66.666 % exempted. Where a taxing authority runs into trouble is finding and hiring a competent consultant to help assess the true value of the personal property and equipment that's inside the buildings. The company can try to recoup that 2% by undervaluing personal property and equipment.

 

[johnson86-1]

incorrect. a FILOT can be negotiated one of two ways in Mississippi. a fixed amount agreed to up front, or a percentage of ad valorem taxes based on assessed value. I was just in a meeting with a company making their initial pitch to our board last Friday morning. $20 MM over 35 years, but highly backloaded to the later years. We are punting it back to them to come up with better terms. The total sum isn't far off based on the value of the project, but how they have it backloaded makes it a bad deal. I'm fortunate enough (/S) to deal with this daily and talk to some of the brightest lawyers in the state that deal with it. Chris Pace, Waverly Harkins, ...among others. And talk to Bill Cork about it, who has final say and has to sign off on every FILOT agreed to in Mississippi. It is not set in stone that 66.666 % of ad valorem taxes based on assessed value is exempted. For example, we negotiated one last year with a company that expanded in our county and successfully got an additional 2% added onto our county cut, simply for the fact that this company is known for being a royal PITA and makes a lot of unreasonable requests of the county and city. We call it the "company shall remain nameless" frustration factor. So, they got 64.666 % exempted, instead of 66.666 % exempted. Where a taxing authority runs into trouble is finding and hiring a competent consultant to help assess the true value of the personal property and equipment that's inside the buildings. The company can try to recoup that 2% by undervaluing personal property and equipment.

I know next to nothing about this other than what is in the Mississippi code, but for your sake and the sake of you bonding company, I would not take the position that you can do a fixed fee agreement that will result in less than 1/3 of what the ad valorem tax would otherwise be.

"If the fee is a stated dollar amount, said amount shall be the higher of the sum provided for fixed payment or (a) one-third (1/3) of the total of all ad valorem taxes otherwise payable as annually determined during each year of the fee-in-lieu..."

Or if you do take that position, I would ask whoever is telling you that the fixed dollar amount controls despite the language in 27-31-104(5) to give you a detailed explanation in writing that you can point to.

​

 

[ababyatemydingo]

I know next to nothing about this other than what is in the Mississippi code, but for your sake and the sake of you bonding company, I would not take the position that you can do a fixed fee agreement that will result in less than 1/3 of what the ad valorem tax would otherwise be.

"If the fee is a stated dollar amount, said amount shall be the higher of the sum provided for fixed payment or (a) one-third (1/3) of the total of all ad valorem taxes otherwise payable as annually determined during each year of the fee-in-lieu..."

Or if you do take that position, I would ask whoever is telling you that the fixed dollar amount controls despite the language in 27-31-104(5) to give you a detailed explanation in writing that you can point to.

​

so, you admit you know next to nothing about it, yet you're gonna argue with someone who deals with it daily. OK

 

[johnson86-1]

so, you admit you know next to nothing about it, yet you're gonna argue with someone who deals with it daily. OK

Tell me what you think that statue means then? Or what you think trumps it or makes it inapplicable?

 

[patdog]

so, you admit you know next to nothing about it, yet you're gonna argue with someone who deals with it daily. OK

So what examples do you have of agreements that stood even though they were less than the 1/3 (or 1/10 in certain cases) legal limit as provided by the statute.

 

[ababyatemydingo]

Tell me what you think that statue means then? Or what you think trumps it or makes it inapplicable?

I stand corrected on the statute. The company we met with last Friday offered a set amount, but it was based on a 50% assessment rate throughout the life of the project. So, technically, yeah, they're saying "You'll get X amount over X years", but it's really just based on the 50% assessment they want Which we totally reject. I did email Waverly, and she corrected me on my understanding. The email is attached here.

 

[She Mate Me]

Stop, I know all that crap.

It's a town of 10K. With all the activity and jobs out there now, you'd think there'd be some folks willing to come in and gentrify. Or never move off and let it go to begin with.

And the hell with school districts anyway, nowadays everybody is going private. Especially in metro areas.

There are a lot of things you don’t understand nearly as well as you seem to think you do.

Canton, like Jackson, has been in a multi decade decline. Areas of Madison county outside of Canton will continue to develop, but that town is not going to gentrify.

 

[OG Goat Holder]

There are a lot of things you don’t understand nearly as well as you seem to think you do.

Canton, like Jackson, has been in a multi decade decline. Areas of Madison county outside of Canton will continue to develop, but that town is not going to gentrify.

I probably know it better than you. Matter of fact, I know I do.