Round Rock City Council approves economic incentive for Switch data center

Round Rock officials approved an economic development agreement with Switch Ltd. in a 7-0 vote Dec. 15.

The agreement will see the data center earn back half of the sales tax revenue it generates for the city, starting in 2027. It is a performance-based agreement and includes clawbacks should the company not fulfill its end of the deal.

City documents state, under the agreement, Switch would be paid 50% of the $0.01 sales tax revenue remitted to the city by the Texas comptroller of public accounts as an economic incentive in exchange for $80 million in real property improvements, business personal property and customer equipment acquisitions.

Assistant City Manager Brooks Bennett said the company plans to make a total of $250 million in investments to its facility under construction on the Dell campus over several years but agreed on a figure of $80 million by Dec. 31, 2026. The company would be reimbursed for 50% of the $0.01 sales and use tax revenue the city has not designated for property tax reduction or economic development.

"If and when they spend that $80 million of taxable value, that will generate [$1.2 million] when it comes to the city, $400,000 of which would you share with Switch, which is performance based," Bennett said. "The more that they spend, the more that comes into the city, and the more that we share back. It's also important to know that based on that $80 million in taxable sales, that also generates $4.8 million to the state of Texas."

Council first approved the rezoning of the property around one of Dell's office buildings in July 2021 with construction starting in early 2022. At the time, the city had to create a new zoning district to facilitate the data center, as it did not previously have such a designation available.

The facility under construction is expected to be a minimum of $150,000 square feet in size and employ 15 people, according to the city.