(TNS) — A new study commissioned by the Maryland Tech Council estimates that Quantum Loophole's planned data center campus would annually generate almost $41 million in county tax revenue and employ 1,700 in its data center facilities.
The study, done by Sage Policy Group for the council, analyzes the campus' economic and fiscal impacts on Frederick County and Maryland during its estimated 15-year construction phase and after completion, which is tentatively slated for 2038.
The study estimates that the campus will annually generate about $40.9 million in tax revenue once completed. About $37.7 million is estimated to come from real estate tax and about $3.2 million from income tax.
The study also estimates that the campus will generate nearly $197 million in tax revenue for the entire state.
The Maryland Tech Council is the largest technology and life sciences trade association in the state, according to its website.
Quantum Loophole purchased the former site of the Alcoa Eastalco aluminum smelting plant near Adamstown in 2021 to build a campus of data centers.
In May, the Maryland Department of the Environment revoked approval for Quantum Loophole's environmental management plan following numerous environmental and work violations.
No installation of utilities can continue on the site until a new environmental management plan has been approved and Quantum Loophole has obtained permits to discharge contained groundwater, according to MDE spokesperson Jay Apperson.
During a hearing before the Frederick County Council on Oct. 17, Kraig Walsleben of Rodgers Consulting, speaking on behalf of Quantum Loophole, said the company is still operating under a "stop work order" from the department.
Apperson did not immediately respond to requests for comment on Wednesday on whether Quantum Loophole submitted a revised environmental management plan.
Estimated costs for construction of the campus will be about $2 billion, according to the study, which study authors say is an "extremely conservative cost estimate" for 16 million square feet of development.
Total investment in the campus, including equipment, is estimated to exceed $25 billion.
Zack Fritz, one of the study authors, said it calculated the estimated number of employees by assuming one job per 9,370 square feet of development, meaning 1,708 jobs for 16 million square feet.
Rowan Digital Infrastructure, a Colorado-based company, plans to build a 750,000-square-foot data center on the campus. Rowan's project team said it expects the facility to be completed in the summer of 2025 and estimates 100 full-time employees working there.
Rowan's employment estimates assume one job per 7,500 square feet.
Quantum Loophole spokesperson Steve Kearney said the study's projections for job growth and economic investment "appear reasonably conservative and in line with our industry experience in other states."
Lara Fritts, the Frederick County economic and workforce development executive director, did not respond to requests for comment last week and this week asking if the county had its own job and tax revenue projections for the campus.
Rick Weldon, the president and CEO of the Frederick County Chamber of Commerce, said the employment and tax revenue projections from the council's study appear reasonable. However, he emphasized that the study's findings are projections and not concrete.
"We're talking about what might be as opposed to what we know will be, so I take all of these things, all of these statistics, with just a little bit of hesitation," he said. "I think it's important to take existing data in place where there have been a lot of data centers constructed. ... There, we're looking at taxes paid as opposed to anticipated or estimated in the future."
On Oct. 25, Aligned Data Centers, which planned to build four data centers on Quantum Loophole's campus, announced it will not proceed with its project after the Maryland Public Service Commission didn't grant it an exemption from obtaining a specific certificate.
With that exemption, Aligned would have been able to install 168 three-megawatt diesel generators as backup power for its planned facilities.
Kelly Schulz, the CEO of the Maryland Tech Council, said Wednesday that the study's job and tax revenue estimates aren't affected by Aligned's decision to not proceed with its project.
While she said she believes Aligned's decision won't stop any future data centers from coming to Maryland, "it definitely puts up a red flag when it ... appear[s] that policy leaders are not on the same page."
"The data center business is a new industry that is being created in Maryland, and we have an opportunity to make sure that it's done well," said Schulz, who was secretary of commerce and labor under Gov. Larry Hogan. "We should not, as a state, do things that are gonna put up artificial barriers to businesses that want to come to do business in our state."
DATA CENTERS NEARBYNeighboring Loudoun County in Virginia has about 31 million square feet of data centers, according to Buddy Rizer, the executive director for the Loudoun County Department of Economic Development.
He estimates about 4,000 people are directly employed by Loudoun County data centers.
He said the Maryland Tech Council's study's projection of 1,700 jobs for Quantum Loophole's entire campus seems realistic.
In Virginia, counties can administer personal property taxes on business equipment, including data centers.
In 2020, the state of Maryland passed a law allowing data centers to apply to be exempt from the state's sales and use tax on data centers' personal property for up to 20 years.
The program is intended to incentivize data center development in Maryland, according to the Maryland Department of Commerce's website. Frederick County also does not administer a personal property tax, according to the study.
Rizer said Loudoun County received $735 million in fiscal year 2023 in tax revenue from data centers. About $624 million, or 85%, came from personal property tax and about $110 million, or 15%, came from real estate tax.
Rizer said diesel is the standard for backup generation for data centers because it currently is the only method that can quickly provide power if there's a data center power outage.
Currently, he said, all data centers in Loudoun County use diesel fuel as backup power. However, the industry is making progress with other alternatives like industrial batteries, green hydrogen and gas turbines. Rizer said some companies with facilities in Loudoun County are working on pilot programs using other backup power alternatives.
Rizer said he can't remember the last time there was a power outage in the county in which all of a data center's diesel generation had to run together.
"The only time that these things are usually used is when they have to be tested," he said.
Rizer said he believes data centers can be "transformational" for communities. He said tax revenue from data centers allowed Loudoun County to reduce its real estate property tax rate by about 41 cents.
"It really has meant millions of dollars for roads and schools and public services," Rizer said. "Managed properly and taxed properly, data centers can be a huge impact in a positive way on a community."
ADDITIONAL FINDINGS
Quantum Loophole's campus is expected to start being operational in 2026 and estimated to be completed by 2038, according to the Maryland Tech Council study.
In addition to directly employing about 1,700 individuals at data center facilities annually, the study stated, the campus will support about 6,300 secondary jobs in the county and remainder of Maryland.
The secondary jobs would be in multiple sectors, such as office administrative services, computer systems design services, and accounting and tax preparation.
The construction phase of Quantum Loophole's campus is estimated to support more than 48,000 jobs in Frederick County from 2023 to 2037, as well as about 4,000 jobs in the rest of the state.
The study's authors said the construction phase will support secondary jobs in almost 200 different industry sectors, including restaurants, hospitals, wholesale trade, truck transportation and retail.
The study stated the construction phase is estimated to generate about $25.8 million in tax revenue for Frederick County, $24.4 million of which will be from income tax. The construction phase is also estimated to bring in about $247 million in tax revenue for the state.
Schulz said the study is a "community information type of a document" to help policy leaders and community members understand the economic benefits and revenues the campus may generate.
"I don't think most people had any idea of the amount of revenues that can be generated from this," she said. "I think it's important for the community to know."
© 2023 The Frederick News-Post (Frederick, Md.). Distributed by Tribune Content Agency, LLC.
