Leesburg Council Approves Microsoft’s Phase 2 Utility Extension; Town, County Eye Tax Share Deal

The Leesburg Town Council last week approved the extension of water and sanitary sewer service to phase 2 of Microsoft’s data center project in the Compass Creek development south of town. The project includes plans for four additional data centers and administrative uses. 

In 2018, Microsoft purchased 332 acres, a majority of the Compass Creek property, from Peterson Companies for a reported $73 million. The first phase of the project includes one data center.

One noteworthy change during last week’s approval was that the approved resolution removed the boundary line adjustment requirement as a condition of approval. The town and county are in the midst of negotiating a sometimes contentious annexation that would bring the Compass Creek development into town limits. The development falls into the Joint Land Management Area, where the town and county have traditionally cooperated on land development.

According to the staff report, “[t]he attached resolution provides that, based on the extensions of Town water and sanitary sewer service to Microsoft Phase I and Phase II, the Town anticipates that the Microsoft Phase I and Phase II areas will be incorporated into the Town boundaries in the future, either by Boundary Line Adjustment or Annexation, or that the Town and the County will enter into an economic development and revenue sharing/joint exercise of powers agreement with respect to the Microsoft property.”

The approved resolution goes on to say, “the Town and the County are negotiating a proposed economic development and revenue sharing/joint exercise of powers agreement that would provide for the County to share certain personal property tax revenues from the Microsoft property with the Town.”

The Aug. 11 action followed a lengthy closed session on the JLMA.

With its data center projects, Microsoft is expected to pay approximately $7.6 million in availability fees and $1.6 million in water pro-rata payments to the town. The staff report says the town has adequate capacity in its utility system to serve both phases of Microsoft’s site, based on the company’s projections. The council approved the utility extension to the phase 1 Microsoft project in November.

The staff report notes that the data centers may be brought online as early as September 2021.

While construction advances at Microsoft’s Leesburg campus, the company is continuing to expand its presences in Loudoun’s data center corridor. The company recently closed on the purchase of the 66-acre Quail Ridge Farm west of Arcola for a record $1.4 million per acre. The property, to be developed as the Arcola Tech Park, is zoned for up to 1.6 million square feet of data center uses.

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