Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the Loudoun County computer equipment and peripherals tax — commonly referred to as the "data center equipment tax" — as it applies to the Stonebridge Data Center Campus currently being developed by Ironhaven Data Centers LLC ("IHDC") in unincorporated Loudoun County, Virginia. This analysis is intended to inform IHDC's financial planning, leasing stra

II. Legal Framework A. Virginia Code Authority The authority for local taxation of tangible personal property in Virginia derives from the Virginia Code, specifically Title 58.1, Chapter 35 (Tangible Personal Property). Virginia Code § 58.1-3501 et seq. establishes the framework for the classification and assessment of tangible personal property for local taxation purposes. Under this statutory scheme, the Virginia G

III. Assessment Methodology A. Valuation Approach The Loudoun County Commissioner of Revenue employs a standardized valuation methodology for the assessment of computer equipment and peripherals. Understanding this methodology is essential for accurate tax projection and for identifying potential areas of overassessment that may warrant appeal. Original Capitalized Cost. The starting basis for personal property asses

IV. Projected Annual Tax Burden A. Assumptions. The following projections are based on assumptions derived from IHDC's current development plan, the Stonebridge Campus operating pro forma, and our understanding of current market conditions for wholesale data center leasing in Northern Virginia. These projections are intended to provide a reasonable estimate of the annual equipment tax burden under various scenarios a

V. Potential Abatement, Exemption, and Incentive Opportunities A. Loudoun County Economic Development Incentives Loudoun County has historically offered voluntary incentive agreements to attract and retain large-scale data center investments that generate significant capital investment and employment within the County. These agreements are typically negotiated directly between the data center operator and the Loudoun

VI. Impact on Project Economics and Budgeting The annual equipment tax expense represents a meaningful component of the Stonebridge Campus's ongoing operating cost structure and must be properly modeled in IHDC's pro forma operating budget. The key considerations are as follows: Direct Impact to IHDC. If the wholesale colocation model is implemented as planned — with tenants owning and bearing the tax on their own IT

VII. Compliance and Reporting Obligations IHDC's compliance and reporting obligations with respect to the Loudoun County equipment tax are summarized below. Timely and accurate compliance is essential to avoid penalties, interest, and adverse assessment adjustments, and to preserve IHDC's right to appeal assessments that exceed fair market value. Annual Tax Return Filing. IHDC must file the Loudoun County Business Ta

VIII. Recommendations Based on the analysis set forth in this memorandum, we offer the following recommendations for IHDC's consideration:

1. Engage Fielding & Associates Early. Robert Fielding, CPA, and his team should be engaged promptly to establish equipment tracking protocols, design the asset register system, and coordinate with IHDC's accounting staff on the personal property tax filing process. The first assessment date will be January 1, 2028, for equipment deployed during calendar year 2027. Because Building A is targeted for Substantial Compl

2. Maximize Real Property Classification. IHDC should take affirmative steps to maximize the amount of infrastructure equipment classified as real property rather than personal property. This includes, in particular, the permanently installed 2N diesel generators, central utility plant equipment, switchgear, and transformers. Classification should be documented at the time of installation through proper engineering a

3. Negotiate Lease Provisions Carefully. IHDC's lease agreements with tenants should contain clear, unambiguous provisions that (a) delineate ownership of equipment between IHDC and the tenant, (b) allocate the tangible personal property tax obligation to the tenant for all tenant-owned equipment, (c) require tenants to file directly with Loudoun County and provide copies of filings to IHDC, and (d) include appropria

4. Explore Incentive Discussions with Loudoun County. IHDC should initiate preliminary discussions with the Loudoun County Department of Economic Development regarding a potential equipment tax abatement or reduced rate agreement for the Stonebridge Campus. The campus's $600 million total project budget, 96 MW critical IT capacity, and anticipated job creation position IHDC as a strong candidate for a negotiated ince

5. Integrate Equipment Tax Projections into the Project Pro Forma. The equipment tax projections presented in this memorandum should be incorporated into IHDC's operating pro forma for the Stonebridge Campus, including the stabilization pro forma to be provided to the lender group under the Construction Loan Agreement. The projections should be reflected as a known operating expense for DSCR testing purposes, and the

6. Coordinate with ZMOD Fiscal Impact Analysis. IHDC should work with Ashcroft & Wynn, P.C. (Thomas Ashcroft) and Cornerstone Land Use Consulting, LLC (Alan Mercer) to incorporate the equipment tax revenue projections into the fiscal impact analysis accompanying the ZMOD application (expected docket ZMOD-2025-0038). The annual equipment tax revenue generated by the campus — projected at $1.2 million to $3.6 million p

7. Monitor Legislative Developments. The Virginia General Assembly and the Loudoun County Board of Supervisors periodically consider adjustments to data center equipment tax rates and related incentive programs. Any change in the applicable tax rate — whether an increase or a decrease — could materially affect IHDC's projected tax burden and the campus's competitive positioning. We recommend that IHDC and this firm a

8. Establish an Annual Assessment Appeal Process. IHDC should implement a standing process for the annual review of assessment notices issued by the Commissioner of Revenue. Upon receipt of each year's assessment notice, IHDC (in coordination with Fielding & Associates) should compare the Commissioner's assessed values against IHDC's own records, verify that the correct depreciation factors have been applied, confirm

IX. Conclusion The Loudoun County equipment tax at $1.25 per $100 of assessed value will represent a meaningful and recurring operating cost for the Stonebridge Data Center Campus. At full deployment, the aggregate annual tax burden across the campus could range from approximately $600,000 (for IHDC-owned infrastructure equipment only) to $3.6 million (including tenant-owned IT equipment at initial deployment values)