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Staff recommends advancing data center and Agri‑Park annexation for further review after Level 2 analysis
Summary
City staff presented a Level 2 annexation analysis covering roughly 2,903 acres (775 city‑owned; 2,128 private) for potential data centers and an R6 Agri‑Park, estimated utility needs and fiscal impacts, and recommended moving the areas forward in the annexation map process while noting significant policy questions about water, character, and infrastructure costs.
City staff presented a detailed Level 2 analysis Sept. 23 for possible annexation of land to serve proposed data center developments and an R6 Agri‑Park, recommending the Council allow the areas to advance in the annexation review process but flagging multiple policy considerations.
City Administrator Seth Atkinson said the Level 2 areas include about 2,903 acres across 31 full parcels and three partial parcels; roughly 775 acres are city‑owned and 2,128 acres are private land proposed for data center and Agri‑Park development. Atkinson described utility needs and constraints: data center domestic use was estimated at about 40 acre‑feet per year (comparable to a subdivision of roughly 45 homes), while associated power generation facilities could demand between about 220 and 436 acre‑feet per year. Staff recommended that any water for generation be provided by the developer, either by purchasing water rights and deeding them to the city or by participating in the Central Utah Water Conservancy pipeline project.
Atkinson said Nephi City's membership in the Utah Municipal Power Agency and its interconnect with PacifiCorp make the area attractive for large power users; developers would be expected to pay for necessary utility extensions and high‑pressure natural gas infrastructure, which would then be maintained by the city. Sewer connections could likely be engineered but may require lift stations; Meadow Lane (a county road) provides frontage and would need negotiations on maintenance and ownership. Because the proposed annexation area is not contiguous with city limits, the staff noted it would be an "island" annexation, which requires County Commission approval before proceeding.
The analysis included fiscal illustrations: staff used an example $7,000,000,000 assessed value for a data center to show potential property tax revenue to the city of about $3,528,000 annually if assessed at 100%; using an Inland Port Authority tax‑increment financing model that diverts most incremental revenue, the city's share at a hypothetical 25% capture would be about $882,000 annually. Staff noted current city property tax receipts total roughly $500,000 annually. Staff advised caution about relying on a single large payer and recommended treating utility dividends conservatively.
The staff report outlined policy tradeoffs: potential to strengthen utility infrastructure and diversify revenue sources versus the risk of altering the city's rural character, uncertainty about long‑term population effects (data centers typically employ few permanent workers; Agri‑Park businesses could add jobs), and the scale of infrastructure maintenance the city would assume over time. The report concluded that while there are substantial pros and cons, staff recommended allowing the areas to proceed through the annexation area process (the minutes record the staff recommendation). The minutes contain a textual inconsistency: the header lists the meeting date as Sept. 23, 2025, while the minutes certification line states the meeting was held July 8, 2025. The staff report also contains wording that refers to "Level 2 analysis" but later states a recommendation "to allow these areas to move to a Level 1 in the annexation area map," a discrepancy noted in the minutes.
