Berkeley County officials have gotten answers to some of their questions about the financial breakdown of a potential $4 billion data center project that could set a standard for how similar projects affect communities around West Virginia.
But they still have more questions, and now they’re casting a broader net.
Correspondence between the Berkeley County Commission and the West Virginia Tax Commissioner reveals significant concerns over how West Virginia’s data center law affects local tax revenue, particularly the potential for substantial losses in school aid funding.
Berkeley County is preparing for the development of West Virginia’s first designated High Impact Intelligence Center.
The planned $4 billion, 548-acre data center campus in Berkeley County is backed by the real estate firm Penzance Management. The project aims to support artificial intelligence and cloud computing.
West Virginia officials passed a law last year, the Power Generation and Consumption Act, to govern the state’s high impact data center program. The law exempts eligible projects from certain regulatory and zoning requirements and offers a new property tax structure for data centers.
The property tax revenue allocation formula dictates this split for certified data centers:
- 50% for a personal income tax reduction fund;
- 30% to the county or counties where the data center is located;
- 10% to go to all counties on a per capita basis;
- 5% to be used for an economic enhancement grant fund; and
- 5% for an electric credit stabilization and security fund.
State tax officials have acknowledged that they, too, are still considering many of the implications of the new law. During a presentation to delegates last month, state Tax Commissioner Matt Irby said West Virginia is still at the beginning stages of working through a lot of issues, including how to assess the value of the coming data centers for taxation.
Berkeley County officials are trying to more thoroughly understand the local tax implications, so they sent a 10-page letter of questions to the state tax department on March 26.
The tax department responded May 19 with its own four-page letter to provide guidance.
Based on that response, Berkeley County officials followed up with a second letter to the tax commissioner along with a six-page attachment that repeated the original questions but marked each as answered, partially answered or unanswered.
Among the most prominent unanswered questions, according to Berkeley County, is how the local share calculation for high impact data centers might affect the state school aid formula.
In state code, the “local share” of property taxes offsets per-pupil state aid to schools. The higher a county’s computed local share, the less state aid it receives.
Berkeley County worries that because the data center law lacks a carve-out for High Impact Data Center property, the county’s local share will be artificially inflated by property value from which it receives no actual revenue, potentially leading to a substantial reduction in state school aid.
“This is the single most consequential question in fiscal terms — for Berkeley County, the potential reduction in State school aid approaches $30 million per year at the assessed values now contemplated (around $5 billion of assessed HIDC),” wrote Berkeley County officials in the most recent correspondence.
The Berkeley County government has now also looped in other entities, sending additional letters to the state auditor, to the Office of School Finance in the West Virginia Department of Education and to the Property Valuation Training and Procedures Commission, which is within the state tax division.
West Virginia MetroNews obtained the documents through a response to a Freedom of Information Act request.
Berkeley County officials invited representatives of the state tax department to a face to face meeting for a dialogue about the tax implications.
“Our goal is to gather, in one room or on one call, the people best positioned to provide answers,” wrote Anthony Delligatti, legal director for the Berkeley County Commission.
He concluded his response to the tax department by saying, “We remain genuinely appreciative of your willingness to engage on these issues.
“As you noted in your letter, this law is new to all of us, and we share your interest in working through the questions it raises in good faith.”