STRATEGIC PRIORITY: Growing
AGENDA DATE: June 11, 2025
COUNCIL DISTRICT(S): 14
DEPARTMENT: Office of Economic Development
EXECUTIVE: Robin Bentley
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SUBJECT
Title
Authorize an amendment to the Business Personal Property Tax Abatement and Chapter 380 Grant Agreement (“Agreement”) between the City of Dallas and Digital Realty Trust, L.P. (“Digital”), previously authorized by City Council Resolutions Nos. 21-0444 and 21-0616 on February 24, 2021 and April 14, 2021, respectively, related to the multiple-phase expansion and renovation of Digital’s data center and offices (“Project”) located at 2323 Bryan Street in the central business district to (1) delete the Business Personal Property Tax Abatement; (2) reduce Digital’s minimum investment requirement from $104 million to $13 million; (3) reduce the amount of the Chapter 380 economic development grant from $1,000.00 to $290.00 for each new full-time permanent job for a total reduction of $150,000.00 (from $200,000.00 for a total amount not to exceed $50,000.00); (4) increase the required minimum number of full-time permanent jobs created at 2323 Bryan Street with a minimum average annual salary requirement of $120,000.00 from 143 full-time permanent jobs to 175 full-time permanent jobs; and (5) reduce the minimum local hiring requirement from 35% to 25%, in accordance with the City’s Economic Development Incentive Policy - Not to exceed $50,000.00 - Financing: Public Private Partnership Fund (see Fiscal Information)
Body
BACKGROUND
In 2021, in consideration of the Project, City Council authorized an economic development incentive agreement between the City of Dallas and Digital related to the expansion and renovation of Digital’s data center and offices located at 2323 Bryan Street that included:
1. A 50% business personal property tax abatement on added applicable business personal property tax for a period of five years
2. A Chapter 380 economic development grant equal to $1,000.00 for each new permanent full-time job created by December 31, 2025, in a total amount not to exceed $200,000.00.
Digital also received a $2 million Texas Enterprise Fund (TEF) grant in FY2020 - 2021 from the State of Texas in support of the Project.
Digital owns the building at 2323 Bryan Street and in 2021 intended to make more than $100 million in capital improvements to expand both corporate staffing and data center capacity on site, including $87.5 million for data center upgrades, $14.7 million for office improvements, and $2.4 million for enhancements to common areas to include the parking garage, elevators, and lobby. However, due to unforeseen circumstances and technical challenges related to the expansion of the data center capacity, Digital no longer intends to move forward with more than $100 million in capital investment. Instead, Digital has completed a small renovation of approximately $13 million. Additionally, to-date, Digital has created or retained 143 jobs at 2323 Bryan Street with an average salary that exceeded the required minimum salary of $120,000.00.
As such, on March 25, 2025, Digital submitted a formal request to the Office of Economic Development (OED) seeking to amend the Agreement in order to accommodate substantial changes in Digital’s renovation and expansion plans at 2323 Bryan Street and to maintain eligibility for the State’s TEF funding.
Following staff negotiation and review, OED recommends the following substantive changes to the Agreement:
1. Delete the Business Personal Property Tax Abatement.
2. Reduce Digital’s minimum investment requirement from $104 million to $13 million.
3. Reduce the amount of the Chapter 380 economic development grant from $1,000.00 to $290.00 for each new full-time permanent job for a total reduction of $150,000.00 (from $200,000.00 for a total amount not to exceed $50,000.00.
4. Increase the required minimum number of full-time permanent jobs to be created at 2323 Bryan Street with a minimum average annual salary requirement of $120,000.00 from 143 full-time permanent jobs to 175 full-time permanent jobs (i.e. increase the required minimum number of full-time permanent jobs by 32).
5. Reduce the minimum local hiring requirement from 35% to 25% city of Dallas residents (i.e. reduce from 50 positions to 44 positions) and clarify that any hybrid work positions assigned to 2323 Bryan Street shall count toward the local hiring requirement.
This amendment would enable Digital to remain on track with its commitment to creating and retaining well-paying jobs for Dallas residents while also maintaining eligibility for the State’s TEF grant.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
The Economic Development Committee was briefed by memorandum regarding this matter on June 2, 2025. <https://cityofdallas.legistar.com/View.ashx?M=F&ID=14256980&GUID=6EE71243-83B4-48D1-B3CF-3E90C7842B6E>
FISCAL INFORMATION
Reduction in contract of $150,000.00 from $200,000.00 to $50,000.00.
OWNER/EXECUTIVE(S)
Digital Realty Trust, L.P.
Rafal Rak, Vice President, Portfolio Group