$45M tax break for Beltline data center under fire, shelved for now

Fulton board to revisit matter within the next two weeks
August 31, 2022 Atlanta - Photo shows expansion construction site of QTS’s Atlanta Data Center Campus in Atlanta on Wednesday, August 31, 2022. QTS Mega Data Center campus, featuring its own on-site Georgia Power substations and direct fiber access to a wide variety of carrier alternatives. (Hyosub Shin / Hyosub.Shin@ajc.com)

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

August 31, 2022 Atlanta - Photo shows expansion construction site of QTS’s Atlanta Data Center Campus in Atlanta on Wednesday, August 31, 2022. QTS Mega Data Center campus, featuring its own on-site Georgia Power substations and direct fiber access to a wide variety of carrier alternatives. (Hyosub Shin / Hyosub.Shin@ajc.com)

A data center developer has temporarily shelved its request for a $45 million tax break for an expansion of its Atlanta campus after intense pushback from residents and city leaders.

Kansas-based Quality Technology Services is seeking the 10-year tax break from the Development Authority of Fulton County (DAFC) for a 50-acre expansion to its Atlanta data center campus near West Marietta Street. But QTS asked Tuesday for its request to be paused for about two weeks so it can provide more information to the board.

Some 100 residents near the west Atlanta site wrote DAFC in opposition. The incentive, known as a tax abatement, is intended to induce new jobs and investment. But critics slammed DAFC for considering incentives for a project that’s already under development.

“The assertion that we need in some way to incentivize them to come in is false,” said Arthur Toal, who leads the Howell Station Neighborhood Association. “They’re already here. They’ve already determined it would be profitable for them.”

The tax break was also opposed in letters by leaders of the Beltline and Invest Atlanta, the city’s development authority.

State Sen. Brandon Beach, R-Alpharetta, who serves as DAFC vice chairman, said the board will call a special meeting within the next 10 to 14 days to reconsider the proposal. Beach said DAFC board members will meet with QTS and residents ahead of that next meeting.

Beach said the number of jobs to be created by the data center expansion —15 to 20 — is relatively small, but the project would help support metro Atlanta’s expanding technology sector.

DAFC board member Tom Tidwell said QTS is building the third-largest data center complex in the world, meaning they’re already supplying the infrastructure to serve tech companies.

Tidwell called that particular argument in favor of the deal “a red herring.”

QTS, which is owned by investment giant Blackstone, has expanded its Jefferson Street site over the past 15 years. The two existing data centers on the campus span roughly 1.5 million square feet. The $1.3 billion expansion — for which QTS is pursuing the tax break — would add roughly 755,000 square feet of data center space.

Supporters noted rising interest rates as a headwind facing the project. DAFC Executive Director Sarah-Elizabeth Langford said the incentive would allow QTS to offer more competitive rental rates to businesses that would rent space in the facility.

DAFC has taken fire over the years for tax breaks critics say were unnecessary because the projects awarded would likely have been built anyway. A 2021 Atlanta Journal-Constitution investigation found DAFC provided preliminary or final approval for more than $328 million in tax breaks in a three-year period, largely in fast-growing areas like the Beltline or Midtown with few public benefits.

QTS has further plans beyond the data center expansion. A later phase could add 350 apartments, 50 townhomes and 250,000 square feet of offices to the company’s campus. Firm plans for those future phases have not yet moved forward.

In other action on Tuesday, a mixed-use project set to be the cornerstone of a new Johns Creek town center did win support of the board. DAFC granted initial approval to a $13.4 million tax break for the 42-acre Medley mixed-use project by Toro Development Co.

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Credit: HYOSUB SHIN / AJC

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