Recent reports identify that the $85 billion in bonds authorized by the City of Warrenton for the proposed data center project will be repaid by local taxpayers. This is incorrect as the financing mechanism being used for the proposed data center project is Chapter 100 of the Revised Statutes of Missouri, sometimes mistakenly referred to as Missouri Title 100.
These industrial development revenue bonds are issued under Missouri Revised Statutes Chapter 100, frequently mistakenly referred to as Missouri Title 100. Chapter 100 bonds can be used to finance real estate and improvements to real estate, such as buildings, machinery and equipment, as well as other improvements to real estate used for industrial and certain commercial purposes by private companies and entrepreneurs located in a City or County that has adopted Chapter 100.
When most people think of bonds they typically think of a municipality issuing general obligation or revenue bonds to fund road construction, a new school, municipal sewer system or similar public improvement for which taxpayers are ultimately responsible. Chapter 100 industrial development revenue bonds used for an industrial and certain commercial projects funded through a tax-exempt bond issue are a different animal, with different purposes and characteristics. Frequently the largest financial benefit to a developer of a Chapter 100 facility is the very favorable property tax treatment of the improved project for an extended period of time.
Warrenton Authorized Up to $85 Billion in Bonds
On April 14, 2026, Warrenton’s Board of Aldermen considered Bill No. 12-26 in order to approve taxable revenue bonds to finance the Warrenton DC Owner 1 LLC Project, an industrial development project (including improvements thereto) consisting of real estate and Machinery and Equipment to be purchased by the City for the Project.
As for $85 billion being spent, borrowed, or spent by Warrenton in relation to the proposed data center for local taxpayers, the short answer is no.
Again, the amount authorized is a maximum amount which will be needed to finance the Qualifying Project over the life of the project. The actual amount issued as bonds will depend on the amount of Qualifying Property placed in the chapter 100 arrangement. The amounts in the Ordinance refer to the maximum amount which will be authorized as bonds, not necessarily spent or borrowed.
And that is why a description of the authorization of $85 billion in bonds for the proposed data center of Warrenton to help finance its construction bears description in more detail.
Who Is Responsible for Repaying Chapter 100 Bonds?
Missouri law regarding Chapter 100 revenue bonds is clearly outlined in Section 100.100 of the Revised Statutes of Missouri.
In practical terms, Section 100.100 implies that the Chapter 100 revenue bonds issued by a city are not a general obligation of the municipality and the city cannot use its general taxing power to repay such obligations.
First, all Chapter 100 revenue bond transactions are entered into by the State of Missouri Department of Economic Development in consultation with the city and the business. Typically a Chapter 100 revenue bond transaction consists of a municipality issuing the revenue bonds and purchasing the real estate for the project with the bond proceeds. The municipality then leases the project facility to the industrial user of the facility. The user’s lease payments are used to pay the bond service on the revenue bonds issued by the municipality.
A Chapter 100 bond issuer may enter into a financing arrangement with a company that will have the company repaid for the issuer’s bonded debt. A Chapter 100 bond can be issued in a privately placed transaction and held by the issuer, an affiliate of the issuer, or the company financed. Thus, repayment of the issuer’s bonded debt will be provided by the financed company.
This means the company for which the Chapter 100 arrangement has been approved will likely provide all of the money required for repayment of the bonds issued for the Warrenton DC Owner 1 LLC Project. The bonds will be issued by the City in whose name the qualified project property is held.
That is an important difference.
A general obligation bond is financed with a municipality’s credit and/or a municipality’s power to tax. A Chapter 100 revenue bond is not financed with a municipality’s credit and/or taxing power. Warrenton’s ordinance authorizes the issuance of revenue bonds, not general obligation bonds.
What Is the Value of Issuing These Bonds if a Company Agrees to Repay Them?
This is where Chapter 100 becomes particularly interesting, and where residents should pay close attention.
Money for Chapter 100 projects are not written to help pay for a business’s financing for a project. Rather another component of the total financing package of a project is that title to certain qualifying real and personal property is held by a City in a Chapter 100 Revenue Bond project.
Title to real property will be held by the City in a Chapter 100 issue and the property will be dedicated to a public use. Thus, under Missouri law, the real property will be exempt from taxation.
The property will likely be taxed differently when it is owned by a City than if it were owned by a private Developer.
So instead of paying all the property taxes on the data center that he builds (which, as noted above, could be more than $100M in personal property taxes over 20 years on $1B in qualifying computer equipment), the company would pay negotiated payments in lieu of taxes (or “PILOT payments”) in exchange for the opportunity to lease the property from the municipality.
The largest benefit to the developer of the data center in this case is the 75% personal property tax abatement on the qualifying equipment of computer and data-processing equipment.
75% Personal Property Tax Abatement: The project was approved for a 75% personal property tax abatement on qualifying equipment. Real property taxes on the project will be fully paid by the developer. The tax savings on the personal property tax on the massive amount of computer and data-processing equipment will be significant (over $1.6 billion over a 20 year period).
There have been estimates as to the value of a 75% personal property tax abatement on the qualifying data center equipment over a 20 year time period of operation. This would approximate to more than $1.6 billion in personal property tax savings over the 20 year life of the data center operation.
So while the developer may get to use billions of dollars in bond financing, the greatest value to them may be the huge savings in terms of property taxes. We explore this point in more detail below.
Loans have interest and must be repaid. Tax savings do not have to be repaid by the borrower.
Tax Abatement (as opposed to Tax Deferment)
Example – $1 Billion Data Center Installing $1 Billion in Qualifying Computer Equipment.
Personal property taxes for a privately owned business would typically be assessed on qualifying computer equipment at the same rate as other personal property in Missouri and would be subject to local tax rates for the taxing districts in which the property is located.
Tax payments in lieu of taxes, on the other hand, are used under a Chapter 100 structure where the municipality holds legal title to certain equipment and leases that equipment back to a privately owned business in exchange for tax benefits negotiated by the company and mudated in the contract to which the company agrees as a term and condition of the structure.
Again, by way of illustration, if equipment covered by a 75 percent abatement would have generated some $10 million of personal property taxes in a given year, the company would generally be required to pay some $2.5 million of taxes in that year, i.e., 25 percent of the taxes otherwise abated.
Under the 75% abatement scenario above, the value of the personal property taxes that are saved in the first year of a $1 billion installation would be $7.5 million ($10 million * .75). In subsequent years, this amount would decrease by the normal growth in assessable value of such equipment (around 3-4% in the US). Thus, for a $1 billion installation of computer and data processing equipment, the annual savings in personal property taxes would be approximately $2.5 million in the later years of the abatement (after the initial installation).
The company would save $7.5 million for that year.
The repayment of the bonds is not necessarily the end of the tax savings for the Developer, but this is not necessarily money that the taxing districts “get back” that were forgiven in prior years.
Payment by the project of taxes which would otherwise be owed by the developer to the taxing districts does not create an obligation on the part of the developer to repay taxes which were forgiven by the municipality as part of the incentive package.
While these issues can often be lost in the discussion of the terms of a Chapter 100 financing agreement, tax abatement is not tax deferment.
Tax abatement is not tax deferment.
The failure to include terms that require repayment of the forgiven taxes during the abatement period even where there is a “clawback” or other similar obligation, such as a per centage of original amount, means that all such forgiven taxes are forfeited by the taxing districts for all time.
Although the bonds are eventually paid off by the center, the savings from the tax abatement will not come back to the community over the years of the abatement.
Where Do the Payments in Lieu of Taxes Go?
Understanding how a Chapter 100 project will affect all the taxing jurisdictions that rely on revenue from property taxes within a city is important. There are many entities that receive revenue from property taxes, including school districts, county government, fire protection districts, ambulance districts, library districts and others.
For a property located outside of the city, such as a school or county facility, all of the taxing entities for that property would receive distribution of the PILOT funds.
Section 100.050 sets out requirements for the plans for Chapter 100 projects. Such plans shall contain (1) a listing of all taxing districts affected by the Chapter 100 project, (2) an estimate of the value of real and personal property within the project area before development of the project and an estimate of the value of real and personal property within the project area after development of the project, (3) a description of the payment in lieu of taxes (PILOT) that will be made by the developer and/or user(s) of the project, and (4) a description of how such payment(s) will be allocated among the affected taxing districts.
The statute deals with the distribution of PILOTs and with emergency service providers.
This affects not only the residents and mayor of Warrenton but also all the citizens of Warren County.
In addition to the financial impacts within a municipality that approve Chapter 100 incentives, other taxing districts within a County are impacted by a municipality’s approval of a Chapter 100 tax abatement. Typically, the governing body for those taxing districts are not parties to the agreements and have no say in the matter of approval.
Therefore, an examination of all financial impact upon all taxing districts is required and should not be limited to the simple financings of the City of Warrenton.
In addition to the financial impact on the City of Warrenton, the public has a right to know the amount of revenue expected to be distributed to all the taxing districts, the amount of that revenue compared to normal taxes, and whether or not the project will create increased demand for various publicly funded services.
What Happens if the Data Center Project Fails?
Does the developer have to complete the project? Can they cancel the project at some point in time? What are the developer’s financial obligations, and does the developer have the ability to satisfy them?
Section 100.100 R.S.Mo. outlines the responsibilities related to revenue bonds issued in relation to the Chapter 100 financing for a project. However, the bonds issued related to a Chapter 100 project are not the general obligations of a municipality and are to be repaid from revenues generated by the project and not from the municipal taxpayer’s funds.
So there is risk to the community, but that risk is contained to the terms and conditions of the agreement with the developer. A failure on the part of the developer will present public questions regarding the disposition of city held property, unpaid lease obligations to the city, unpaid PILOTs, and uncompleted infrastructure work, among others.
Simply because a contract is entered into by and between the City and a developer does not necessarily mean that all will go well for the community.
A project failure can result in issues related to property that the city has held as developer, lease obligations that were not paid by the developer, outstanding PILOTs, uncompleted infrastructure improvements, and the terms and conditions of development agreements.
Again, this would be determined by the terms of the agreements.
For example, what happens to the land, buildings and extensive equipment if a developer fails? Are there provisions included in the agreements reached by the city and the developer to protect the public should the developer fail to meet his/her obligations regarding the investment of money, number of jobs, etc. anticipated by the developer.
The municipal government is not off the hook for all of its contractual obligations.
Why the $85 Billion Authorization Still Matters
However, some might misread this for taxpayers of Warrenton that there is no risk of the $85 billion authorization of tax-exempt bonds for revenue bonds.
That would be an oversimplification.
The $85 billion authorization will provide insight into the amount of real property to be financed under this Chapter 100 obligation, and the huge amounts of computer equipment in a data center facility is an extraordinary thing.
Unlike most other large industrial facilities which are largely comprised of permanent buildings and relatively permanent machinery, many large data centers contain very large amounts of short lived, change out often equipment such as servers, processors and large amounts of networking equipment and associated electrical and related systems.
Technology can change quickly. Much of the initial investment in industrial-type facilities consists of long lasting buildings and large pieces of machinery. Data centers, on the other hand, are comprised of huge amounts of temporary type equipment such as servers, processors and other computer related hardware as well as large amounts of electrical type equipment and related items which can be replaced on an ongoing basis.
Similarly, it would be helpful to understand the treatment of replacement equipment under the agreement as well as subsequent investment in the property. Will all such equipment qualify for the same abatement? Will there be a limitation on the amount of abated property, and would additional bond issuages require public approval.
Depending on the actual wording of the agreement new equipment such as this could qualify for the same tax abatement thereby continuing to have significant financial effect as the facility grows through construction of additional buildings or through upgrade of and addition of large amounts of new equipment and technology over many years, all up to the agreed upon limits.
Residents of Warrenton should look into whether or not the terms of the approval of the Chapter 100 incentive applies only to that equipment installed during the initial construction of the facility, or to include subsequent installation of equipment as well as construction of future additions and expansions.
How many bond issuances will be authorized by this one agreement and will they need the approval of the public? What measurements will be used to track the abated amount of property and what reporting requirements will be in place to hold the developer to the terms of the agreement?
Again, these are not minor details of administration. These details establish the economic value of an incentive over time.
What Does Warrenton Receive in Exchange?
Tax abatement is another word for incentive to attract investment to our state that might otherwise go to another state. The increased real property values, the single construction period to support local businesses, and the eventual increase in real property tax revenue for a major industrial development like this is tremendous.
Those benefits deserve consideration.
In the agreement, it is reportedly noted that there will be full real property tax payment of taxes on the land and buildings of a large data center like this one which will be put to good use as it will be put to use had someone else spent the huge sum of private money to develop the property in the first place.
However, there are also two sides to Chapter 100 tax abatements and the development that they support.
The amount of permanent employment needed to be maintained by a large data center can be minuscule compared to the capital invested to create the facility and all of the demands the facility places on the town’s infrastructure including the electrical system, water resources, roads, police, fire and emergency medical services and other town systems and services.
Assess the tax abatement in relation to the expected public benefits of the data center in terms of new revenue compared to the tax abatement.
- What will the total amount of new revenue be to the city, county, and all taxing districts in the area (as compared to what they would receive in the absence of an abatement)? What will be the growth in needed infrastructure and services to support this new facility and who will pay for same?
Most importantly, what are the enforceable commitments of the developer in relation to the incentives granted?
An incentive agreement needs to set out in detail the obligations which will be placed on a developer in exchange for tax incentives, rather than simply outlining what may happen.
Transparency Should Be Part of the Agreement
These projects are for public financing authority and public tax incentives, so the residents have an interest to know the details of the deal for the project in question.
Information required to be disclosed for a Chapter 100 project is established by Missouri statute for proposed projects utilizing public financing through Chapter 100.
In the case of the data center to be located in Warrenton, a review of the necessary documentation for this large project would include the project plan, the cost-benefit analysis, the bond documents, the lease agreement, the PILOT agreement and any other development or performance agreements entered into by the developer.
These documents help answer questions that are hard to get answered when a project is explained in a series of public presentations and then a short document is distributed outlining the project.
They can show how bond repayment
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