Payne County approves 25-year tax abatement for data center project

The Payne County Board of Commissioners voted 2-1 Tuesday to approve a 25-year tax incentive agreement for a proposed data center project in Stillwater, sparking debate over its potential economic benefits and long-term fiscal impact.

The agreement with Kipper LLC provides a 100% property tax exemption for up to six data centers, each requiring $500 million in private investment. In exchange, the company will make annual payments in lieu of taxes (PILOTs) to local taxing entities.

The Payne County Health Board is the last taxing entity to vote on the agreement. Their next meeting is at Noon this Thursday.

Commissioner Rhonda Markum, who cast the dissenting vote, expressed reservations about the lengthy tax deferment.

"I have several constituents that are not in agreement with the 25-year tax deferment," Markum said. "They're really not in agreement with the data center either, but they're not for the 25-year tax deferment.”

Under the agreement, Stillwater Public Schools will receive $624,023 annually per data center, with payments increasing by 1% each year. Stillwater City Manager Brady Moore emphasized that the city negotiated a 20% increase in PILOT payments to the school district.

"We looked at other projects around the state and wanted to make sure Stillwater was getting the best, not just around the state, around the nation," Moore said.

Moore also noted that PILOT payments go directly to the school's general fund and does not impact their State funding formula.

Reflecting on his motion to approve the agreement, Commissioner Seth Condley mentioned that he received several emails from individuals urging him to vote no. However, considering his background as a former educator and a still the soccer coach at Stillwater Public Schools, he felt compelled to cast his vote in favor of the agreement.

Commissioner Zach Cavett raised concerns about potential eminent domain issues for future power infrastructure expansion, particularly regarding the Cimarron Link project.

"My only concern is I don't want there to be any eminent domain, people getting their land taken in association with the data center," Cavett said.

Moore assured commissioners that the project is not related to Cimarron Link and that any future easements would need to be negotiated privately.

The absence of a Kipper LLC representative at the meeting drew questions from Cavett. Stillwater Mayor Will Joyce explained the company's approach.

"I find it better that they're not here trying to advocate for a community decision that we've got to make on our own," Joyce said. "They didn't speak at our city council meeting on this subject. They didn't speak at the school board meeting, even though they had a guy sitting in the room."

Supporters of the project argue it will bring significant economic benefits to the area. Moore suggested the data center could potentially lower electricity rates for Stillwater residents.

Loren Smith, Stillwater's Electric Utility Director, echoed this sentiment. "Typically, a high load factor load like this, which means that it's pulling about 90% of its peak capacity at all times, the more kilowatt hours you sell, it typically drives down the cost of energy," Smith said.

Commissioner Cavett pondered the alternative of the data center being built elsewhere. "If, for whatever reason they decided not to build in Payne County, say they put it in Sapulpa, still going to be on OG&E, still going to be running transmission lines to power it, but Payne County won't be getting any benefit from it," he said.

Despite the approval, concerns remain about the long-term impact on local tax revenues. The 25-year abatement period means it could be decades before the county sees full tax benefits from the project.

Jason Gomez, Payne County Assessor, clarified that any personal property involved with the construction process that does not belong to the company (property owner), like contractor equipment and job trailers as of Jan. 1, 2026 is subject to ad valorem tax.

The first two phases of the project are expected to be completed within the next few years, pending approval from the Payne County Health Board, who would receive an initial payment of $17,961.33 (2.07% share) from the first phase. PILOT payments show the Health Department would receive $1,045,779 for the first two phases over 25 years.

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