RAYMONDVILLE, Texas - A slide in a powerpoint presentation shown to Willacy County commissioners stated that “Soluna develops data centers co-located with renewable power plans, turning their wasted energy into sustainable computing resources.”
The presentation was made by John Tunison, chief financial officer for Soluna Holdings, Inc. Tunison appeared before commissioners in order to make the case for a tax abatement for an $80 million wind-powered 166-megawatt data center in southeast Willacy County.
Another slide stated: “Project Kati will provide lasting benefits to Harlingen, Willacy County, and surrounding communities b y boosting employment, diversifying the economy, supporting renewable energy, and upgrading infrastructure. It is a strategic opportunity to position the region as a leader in the intersection of energy and technology, while providing economic and social benefits.”
When considering the tax abatement, Tunison suggested Willacy County commissioners look at a similar data center project the company is developing in Briscoe County, Texas.
Tunison spoke about Project Dorothy, which is underway in Briscoe, as well as Project Kati, which is slated to be built on the site of the Las Majadas Wind Farm in southeast Willacy County.
“Okay, so what is our proposal? You can look up and see what we've done in Briscoe County, which is our Project Dorothy. It's operated currently in two phases. Dorothy 1A and 1B as well as a Dorothy 2, which is over halfway through its construction phase. That will make it a 100 megawatt facility,” Tunison said.
"Our proposal is modeled after that structure that we have in place with Briscoe, which we think drives a couple of different benefits. One, it gives a flat, predictable revenue scale by the size of the project that I think is beneficial to generate about two and a half million dollars of property tax revenue for the county (Willacy).
“And again, this is Phase 1, 83 megawatts over the next 15 years. And the school tax would generate just shy of a million dollars, about $828,000, again over 15 years. With this structure it works out to approximately a 63.2% abatement on taxes over that period. And we go with a fixed fee per megawatt for the property tax. That fee is $2,000 per megawatt per year. And so at 83 megawatts that will generate $166,000 per year, again over that 15 year item.”
As for the local school district, Tunison said: “It's a percentage paid against a sinking book value of the plant, which is depreciated over that 15 year period.”
Soluna would have to fulfill its part of the bargain, Tunison said.
“We would expect to have to deliver various things and hit certain milestones in order to unlock the continued abatement. Specifically, we would look to create 12 full-time jobs by the end of next year, and 18 by the end of 2028 and it is possible we'll generate even more than that. And we would deploy $25 to 30 million of infrastructure and $40 to 45 Bitcoin minor capital investment by the end of 2026. And if we fail to do that, obviously, we would not expect to continue the tax abatement.”
Tunison continued:
“Maybe I can answer the question, why do we need the abatement? As we bring these project financings together, as we look to secure the land… and we have land explicitly under contract, one of the key milestones is to… we have to get the financial numbers to be kind of at the right level to enable us to hit the financial milestones and the key returns for our project investors in order to proceed. And that's essentially why you know the abatement… it is a significant number (for the county) per year, but it is also for us as well. And again, this for the first 83, I would expect to be back here talking about the next 83 which is an entirely different conversation when we're talking about building plus type investments.”
