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Now that Prince Edward’s HIT (Heartland Innovative Technology) Park is going up for sale, what does the contract look like? Who pays for the needed improvements and how much will that be? Here’s a look at the information from the master agreement. 

As mentioned earlier this week, county staff announced the potential buyer for the HIT Park, located in two parcels on 82 Kelly Lane and 230 Kelly Lane near Farmville, and then asked supervisors to take a vote Monday, Jan. 27, during a special called meeting. The deal is with AVAIO Digital, the same group currently working to build a data center in Appomattox. For those unfamiliar with the area, you take East Third Street in Farmville past Sunchase Cinema, heading out of town. Third connects with Persimmon Tree Fork Road, which then connects with Kelly Lane just a few minutes down the road. 

Under terms of the agreement, AVAIO looks to build between two and five data center buildings, each 200,000 to 300,000 square feet. Once those are built, the company plans “leasing the buildings or portions of them to high technology companies or other entities which need data center capacity,” the agreement says. 

But to make that happen, first there’s some work needed in and around the site. That includes finishing up water lines and the water tank, sewer access and a connection to the Town of Farmville’s system. Second, the county is required to do some road work to Persimmon Tree Fork Road, widening it and repaving. 

Looking at the HIT Park terms

According to the master agreement, Prince Edward County’s IDA (Industrial Development Authority) is in the process of designing, engineering and constructing the project’s water infrastructure. That’s expected to cost an estimated $12.6 million. The Town of Farmville will provide sewer, with an estimated $8.1 million for designing, engineering and constructing the infrastructure. The property has already been zoned for a data center and AVAIO has already finished preliminary site engineering. The company has also confirmed that it is negotiating with Dominion for 300 megawatts of power. 

Meanwhile, the county will be in charge of completing all road improvements. That work is intended to be paid, in part, with proceeds of a transportation grant from the Virginia Tobacco Region Revitalization Commission, along with some other funds provided by the state. That comes in at a minimum of $4.5 million. 

Now in each of these cases, there is a clause attached. If Prince Edward can’t secure grant funding to cover the cost of the infrastructure projects, then the company will pay the difference, anything outstanding. 

In return, “the IDA, with the assistance of the county, shall make annual grants to the company each year for a period of 10 years or until the company has been reimbursed 50,” the agreement states. If the company does end up paying, it only gets a guaranteed reimbursement of 50%. 

What the county gets in return 

The purchase price is $12.2 million for the property. A deposit of $250,000 will be paid by AVAIO within 10 days, with the rest paid after the sale officially closes. The county and company estimate that over the course of the data centers’ existence here, the total investment made on and in the site will amount to $5 billion. That includes all IT equipment that will have to be purchased. 

How does that break down? The master agreement has some qualifiers. “Depending on the type of data center build, the Company shall make capital investments into the Project, ranging from approximately $800 million to approximately $2.4 billion,” the document states. This will come in the form of “land acquisition, site preparation and development, construction of the data center buildings and related infrastructure, and acquisition and installation of fixtures, equipment, machinery, processes and furnishings.” 

The majority of the rest of the $5 billion in investment also comes with a caveat in that there are no guarantees. “The company estimates, but does not commit, that its data center tenants will make a collective additional capital investment of $2.4 billion in equipment, machinery, processes and furnishings,” the document states. 

It goes on to say that AVAIO estimates there will be 100 temporary construction jobs created. The group also estimates, but does not commit, that there will be “30 permanent direct full-time jobs per two-story building during the Project’s operations and 15 permanent direct full-time jobs per one-story building.” So in order to see how many jobs will come as a result, we’ll have to wait until construction is finished. The guarantee now is up to five buildings, but no guarantee as to how many will be two-story and how many will be one-story. 

A construction timeline for HIT Park

It could also take some time before we actually see construction begin on the property. The master agreement states that within 36 months after the sale closes and all the infrastructure is put in, then “the company shall commence construction and within 36 months after such commencement, shall complete construction of the first data center building on the property.” 

So within a three-year window after the sale is done, the company agrees to start construction. Then, within another three-year window, the company promises to finish the first building. 

Now if, through no fault of the IDA, construction hasn’t started in that timeframe, Prince Edward will have a one-time right of reversion when it comes to the property. As soon as the county notifies AVAIO that it wants to take the property back, the company will have 60 days to start construction and keep the contract intact. 

If that doesn’t happen and construction doesn’t start on time, then the county can get the land back, but they have to repay the purchase price received from the company.

County officials applaud the deal 

Officials from Prince Edward’s IDA and board of supervisors applauded the deal, saying they were excited for how it would transform the county. 

“The development of a new data center campus will bolster our county’s infrastructure and connectivity and provide a stable foundation for our economy,” said IDA Chairman Brad Watson in a statement. “I believe when this project is completed, it will be transformative for our community.”

Those comments were echoed by new Board of Supervisors Chairman Bill Jenkins. 

“(This) announcement marks a significant milestone in Prince Edward County’s ongoing economic development efforts,” Jenkins said.  “I commend the members of the Industrial Development Authority and the project team for their hard work and due diligence as this process unfolded.”