1043-00002 · Ironhaven Data Centers LLC · Entitlements & Land Use

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

TO: Douglas Fairchild, Partner, Calderwood & Harkness LLP Leonard Castellano, EVP Development, Ironhaven Data Centers LLC

FROM: Cynthia Ho, Calderwood & Harkness LLP Thomas Ashcroft, Ashcroft & Wynn, P.C.

DATE: May 20, 2025

RE: Proffer Negotiation Strategy — Stonebridge Data Center Campus ZMOD Application (Docket No. ZMOD-2025-0038)

Matter No.: 1043-00002

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I. Executive Summary

The purpose of this memorandum is to analyze and recommend a comprehensive proffer strategy in connection with the Zoning Modification Application ("ZMOD") for data center use on the approximately 81.4-acre Stonebridge Data Center Campus (the "Campus" or the "Project"). The Campus is comprised of two contiguous parcels: (i) the 62.0-acre Stonebridge Parcel, Loudoun County Tax Map Reference /95-4A-1///, and (ii) the 19.4-acre Meridian Parcel, Tax Map Reference /95-4A-2///, located at the northeast corner of Belmont Ridge Road and Stonebridge Boulevard, in unincorporated Loudoun County, Virginia 20148.

The applicant is Ironhaven Data Centers LLC ("IHDC"), a Delaware limited liability company headquartered at 44680 Prentice Drive, Suite 200, Ashburn, Virginia 20147. IHDC will seek the ZMOD to authorize "data center" as a permitted use within the existing PD-IP (Planned Development – Industrial Park) zoning designation applicable to both parcels. The ZMOD application is targeted for filing on May 30, 2025, with an anticipated public hearing before the Loudoun County Board of Supervisors in October 2025.

The Campus, as currently designed, will consist of four data center buildings (Buildings A through D), each approximately 120,000 gross square feet ("GFA"), for a total campus GFA of approximately 480,000 square feet. Based on our analysis of comparable recent data center proffers approved by the Loudoun County Board of Supervisors, and in consultation with local zoning counsel and land use advisors, we recommend an initial proffer offer of $5.00 per square foot of GFA, yielding a total estimated proffer amount of $2,400,000. This figure falls at the lower end of the median range for recent comparable approvals in Loudoun County, which is supportable given the existing PD-IP baseline zoning, the Campus's distance from sensitive residential areas, and the significant fiscal benefits the Project will generate for the County.

This memorandum sets forth the following: (1) an overview of the Virginia proffer statutory framework and Loudoun County's proffer guidelines for data center uses; (2) a detailed analysis of five comparable recent data center proffer approvals in Loudoun County; (3) the recommended proffer amount and negotiation range, including a ceiling of $5.75 per square foot ($2,760,000 maximum); (4) the recommended allocation of proffers across specific categories (capital facilities, transportation, environmental/stormwater, noise mitigation, visual screening, and community amenities); (5) a phased payment structure tied to building-by-building certificate of occupancy milestones; and (6) negotiation strategies and talking points for use with County staff and the Board of Supervisors.

This memorandum has been prepared in coordination with Cornerstone Land Use Consulting, LLC (Alan Mercer, Principal Consultant), which has conducted comparable proffer research and will prepare the supporting fiscal impact analysis and visual exhibits for the Board hearing, and with local zoning counsel Ashcroft & Wynn, P.C. (Thomas Ashcroft, Lead Partner, 25 West Market Street, Leesburg, Virginia 20176), which will serve as counsel of record for the ZMOD application and will present the proffer statement at the pre-application conference and all subsequent public hearings.

II. Background on Loudoun County Proffer Framework

A. Legal Basis for Proffers in Virginia

Virginia's proffer system is governed by Virginia Code § 15.2-2303 et seq., which authorizes localities in certain high-growth areas of the Commonwealth — including Loudoun County — to accept voluntary proffers in connection with conditional zoning applications. The proffer statute reflects a legislative recognition that rezoning and zoning modification decisions can impose new or increased demands on public infrastructure and services, and that applicants may voluntarily offer conditions (proffers) to mitigate those impacts as part of the legislative zoning process.

Under the statute, proffers must satisfy three fundamental requirements. First, proffers must be voluntarily offered by the applicant; the locality may not compel or mandate specific proffer amounts as a condition of approval. Second, proffers must be reasonably related to the rezoning or zoning modification being sought — that is, there must be a rational nexus between the impacts generated by the proposed development and the conditions offered. Third, proffers must be designed to offset the reasonably anticipated impacts of the proposed development on public facilities, infrastructure, and services. These requirements are grounded in both the statutory text and in the constitutional constraints imposed by the Takings Clause and the principles articulated in Dolan v. City of Tigard, 512 U.S. 374 (1994), and its progeny.

It is important to distinguish between proffers offered in connection with a legislative rezoning or ZMOD application and conditions of site plan approval. Proffers are legislative in nature — they are offered voluntarily by the applicant, accepted by the governing body as part of the legislative zoning action, and recorded as covenants running with the land. Conditions of site plan approval, by contrast, are administrative and are imposed by the planning director or designee as conditions of the development permit. The two processes are legally distinct, and proffers cannot substitute for compliance with applicable site plan requirements or development standards. However, in practice, the proffer negotiation process often anticipates and mirrors certain site plan conditions, particularly in areas such as transportation improvements, stormwater management, and landscaping.

A critical practical reality is that while the County cannot legally require specific proffer amounts as a precondition to ZMOD approval, County staff and individual Board of Supervisors members will communicate expectations during the review process — both formally through staff reports and informally through pre-hearing meetings and work sessions. These signals, while not binding, are powerful indicators of the proffer level that will be necessary to secure a favorable vote. Accordingly, our negotiation strategy must be calibrated to these practical dynamics while preserving IHDC's legal position that its proffers are voluntary and reasonable.

B. Loudoun County Proffer Guidelines

Loudoun County has historically been among the most active jurisdictions in Virginia in the use of proffers, and its proffer framework has evolved significantly in recent years as data centers have become the dominant land use application type in the County. Over the past decade, Loudoun County has emerged as the largest data center market in the world, with approximately seventy percent of the world's internet traffic reportedly passing through data centers located in the County. This concentration has made data center proffers a recurring and increasingly sophisticated element of the County's land use process.

Current County proffer expectations for data center uses generally fall within a range of $4.00 to $7.00 per square foot of GFA, with the precise expectation varying based on several factors: (i) the location of the project within the County (eastern Loudoun projects along the Route 7 and Waxpool Road corridors tend to have established market expectations; western Loudoun projects near residential communities face higher expectations); (ii) proximity to residential areas and the associated sensitivity of neighbors; (iii) the infrastructure burden imposed by the project, including traffic generation, utility demand, and stormwater impacts; and (iv) the scale and phasing of the development.

Proffer categories in Loudoun County data center approvals typically include the following:

• Fiscal Impact / Capital Facilities Contributions: General-purpose payments to the County's capital facilities fund, intended to offset the fiscal impact of the development on County infrastructure and services. These payments are typically the largest single component of the proffer package.

• Transportation Improvements: Contributions toward road improvements, including turn lanes, signal modifications, road widening, and pedestrian and bicycle infrastructure in the vicinity of the project site.

• Environmental / Stormwater Mitigation: Commitments to enhanced stormwater management beyond minimum code requirements, including low-impact development techniques, stream buffer restoration, and coordination with regional stormwater facilities.

• Noise and Visual Screening: Commitments to noise attenuation measures (sound walls, generator enclosures, restricted testing hours) and enhanced visual screening (landscape buffers, architectural design standards) to mitigate the impacts of data center operations on surrounding properties.

• Community Amenities: Smaller allocations for community benefit, which may include broadband infrastructure contributions, public trail connections, or contributions to community facilities.

A significant factor in data center proffer negotiations is the fiscal impact analysis. Data centers are among the most valuable per-acre land uses in Loudoun County, primarily because of the County's computer equipment tax, which is levied at a rate of $1.25 per $100 of assessed value on the personal property (IT equipment, power infrastructure, cooling systems) housed within the facility. A fully built-out data center campus of the scale proposed for Stonebridge can generate millions of dollars annually in equipment tax revenue, which substantially offsets the relatively modest public service demands of data center operations. This fiscal dynamic is a central element of our proffer negotiation strategy, as discussed in Section VI below.

C. Relevance of the Existing PD-IP Zoning

The Stonebridge and Meridian Parcels are currently zoned PD-IP (Planned Development – Industrial Park), a zoning designation that permits a range of industrial park uses including light manufacturing, warehousing, distribution, office, and research and development. However, the existing PD-IP zoning does not specifically authorize "data center" as a permitted use, and Loudoun County has determined that data center use requires an affirmative ZMOD approval.

The ZMOD application (Docket No. ZMOD-2025-0038) will seek to add "data center" as a permitted use within the existing PD-IP framework. This approach is strategically preferable to a full rezoning for several reasons. First, the ZMOD process is generally faster and involves fewer discretionary considerations than a full rezoning from a fundamentally different zoning category (such as residential or agricultural). Second, the ZMOD preserves the existing PD-IP zoning structure and its associated development standards, which reduces the scope of conditions the Board may impose. Third, the existing PD-IP zoning provides a favorable baseline for proffer negotiations, because the permitted industrial uses under PD-IP already contemplate the types of infrastructure impacts (traffic, utilities, stormwater) that a data center would generate.

This last point is particularly important. In proffer negotiations, the relevant question is the incremental impact of the proposed use over and above the impacts that could occur under the existing by-right or already-approved zoning. Because the PD-IP zoning already permits high-intensity industrial uses, many of which would generate comparable or even greater traffic, noise, and infrastructure demands than a data center, the incremental impact of the ZMOD is relatively modest. Data center operations, in fact, typically generate significantly less traffic and require fewer employees per square foot than traditional industrial park uses such as manufacturing or distribution. This baseline comparison strongly supports a proffer level at the lower end of the County's range, which is the central thesis of our recommended strategy.

Board expectations for ZMOD proffers are generally somewhat lower than for a full rezoning from residential or agricultural zoning, where the change in character is more dramatic and the incremental impacts are correspondingly greater. However, Board expectations for data center ZMODs have been rising in recent years as the political dynamics around data center growth in Loudoun County have intensified. Several current Board members have publicly expressed concerns about the pace and concentration of data center development, and we should anticipate that these broader political dynamics will influence the proffer negotiation process for the Stonebridge Campus.

III. Comparable Recent Data Center Proffers in Loudoun County

A. Methodology

To establish a defensible benchmark for the Stonebridge Campus proffer, we conducted a comprehensive review of recent data center ZMOD and rezoning approvals in Loudoun County. This research was undertaken jointly by Cornerstone Land Use Consulting, LLC (Alan Mercer, Principal Consultant) and Ashcroft & Wynn, P.C. (Thomas Ashcroft), drawing upon publicly available Loudoun County Board of Supervisors records, staff reports, recorded proffer statements, and planning commission referral materials for data center applications approved between 2022 and early 2025.

From this research, we identified five comparable projects that provide useful precedents for the Stonebridge Campus proffer negotiation. These comparables were selected based on a range of criteria, including the scale of the project (GFA and MW capacity), the location within Loudoun County, the nature of the zoning action (ZMOD vs. full rezoning), the proximity to residential uses, and the structure and phasing of the proffer package. Each comparable is discussed below, followed by a summary table.

B. Comparable Project Analysis

Comparable 1 — Ashcroft Point Data Campus (ZMOD-2022-0114)

The Ashcroft Point Data Campus was a three-building data center development located on a 44-acre parcel in eastern Loudoun County along the Waxpool Road corridor near the intersection of Waxpool Road and Pacific Boulevard. The applicant, Clearpath Digital Holdings, LLC, sought a ZMOD to add data center use to an existing PD-GI (Planned Development – General Industry) zoning designation. The project included approximately 330,000 square feet of GFA with a total critical IT load capacity of approximately 60 MW.

The total proffer amount approved was $1,485,000, representing a rate of approximately $4.50 per square foot of GFA. The proffer was allocated primarily across two categories: a capital facilities contribution of $900,000 and road improvements along Waxpool Road totaling $585,000, including a dedicated right-turn lane at the site entrance and a proportional contribution to a planned signal upgrade at the Waxpool/Pacific intersection.

The Board of Supervisors approved the ZMOD unanimously in June 2022 without significant opposition. The relatively modest proffer rate was attributable to the site's eastern Loudoun location within the established data center corridor, the lack of residential adjacency, and the existing GI baseline zoning. Staff had initially suggested a proffer level in the $5.00 per square foot range, but the applicant successfully argued that the PD-GI baseline zoning already permitted uses with comparable or greater impacts, and the Board accepted the $4.50 rate without further negotiation.

Comparable 2 — Dominion Gate Technology Park (ZREZ-2023-0021)

Dominion Gate Technology Park was a full rezoning application filed by Quantum Colocation Partners, Inc. for a 36-acre site along the Route 7 corridor in central Loudoun County. The project proposed two data center buildings totaling approximately 240,000 square feet of GFA with a critical IT load capacity of approximately 48 MW. The prior zoning was PD-CC (Planned Development – Commercial Center), and the applicant sought rezoning to PD-IP with data center use specifically authorized.

The total proffer amount approved was $1,260,000, reflecting a rate of approximately $5.25 per square foot of GFA. The proffer was structured across three categories: a transportation contribution of $500,000 earmarked for improvements along the Route 7/Belmont Ridge Road interchange area, a stormwater management enhancement contribution of $260,000 for regional stormwater infrastructure improvements, and a community amenity fund contribution of $500,000 directed toward the County's public broadband infrastructure initiative.

The Board of Supervisors approved the rezoning by a 7-2 vote in September 2023. Two Board members dissented, citing concerns about the cumulative traffic impact of data center development along the Route 7 corridor. However, the proffer package was not the primary source of contention; the dissenting members objected more broadly to the rezoning from commercial to industrial use. The $5.25 per square foot rate was consistent with staff recommendations and was not contested during the hearing.

Comparable 3 — Ridgeview Crossing Data Center (ZMOD-2023-0082)

The Ridgeview Crossing Data Center was a single-campus data center development proposed by Apex Hyperscale Development, LLC on a 28-acre parcel in western Loudoun County, approximately 1,200 feet from the established Ridgeview Glen residential subdivision. The project proposed a single large data center building of approximately 180,000 square feet of GFA with a critical IT load capacity of approximately 36 MW. The ZMOD sought to add data center use to an existing PD-IP zoning designation.

Due to the project's proximity to the Ridgeview Glen residential community, the application generated significant community opposition. Residents expressed concerns about noise from backup generators, visual impact, light pollution, and the perceived incompatibility of a large-scale data center with the adjacent residential neighborhood. In response, the applicant offered a substantially enhanced proffer package totaling $1,170,000, reflecting a rate of approximately $6.50 per square foot of GFA — the highest per-square-foot rate in our comparable set.

The proffer categories included a capital facilities contribution ($520,000), noise mitigation measures ($300,000, including construction of an eight-foot sound attenuation wall around the generator yard and commitment to limit generator testing to weekday daytime hours), and enhanced landscaping buffers ($350,000, including a 100-foot vegetated buffer with a mix of evergreen and deciduous plantings along the property boundary adjacent to the residential community). The Board of Supervisors approved the ZMOD by a 6-3 vote in March 2024 after a contentious public hearing that included testimony from over thirty residents of the Ridgeview Glen neighborhood.

This comparable is relevant to the Stonebridge Campus primarily as a demonstration of the upper end of the proffer range for projects located near residential areas with significant community opposition. The Stonebridge Campus is not similarly situated — it is located in an established industrial/commercial corridor along Belmont Ridge Road with no immediately adjacent residential subdivisions — and accordingly the Ridgeview Crossing proffer level should not be viewed as precedent for this application.

Comparable 4 — Briarfield Technology Campus (ZMOD-2024-0019)

The Briarfield Technology Campus is the most directly analogous comparable to the Stonebridge Campus in our data set. Located on a 72-acre site in the Dulles area of eastern Loudoun County along Loudoun County Parkway, the project was developed by Vertex Data Investments, LP and comprised a four-building data center campus totaling approximately 520,000 square feet of GFA with a combined critical IT load capacity of approximately 104 MW. The ZMOD sought to add data center use to an existing PD-IP zoning designation.

The total proffer amount approved was $2,600,000, reflecting a rate of approximately $5.00 per square foot of GFA. Critically for our purposes, the Briarfield proffer included a phased payment structure tied to building-by-building certificate of occupancy milestones: 25% of the total proffer was due upon issuance of the certificate of occupancy for the first building, with the remaining 75% paid in three equal installments upon issuance of certificates of occupancy for the subsequent three buildings. This phased structure was negotiated between the applicant and County staff during the review period and was accepted by the Board without objection.

The proffer categories included a capital facilities contribution ($1,400,000), transportation improvements ($650,000, including turn lane construction along Loudoun County Parkway), stormwater enhancements ($300,000), and visual screening/landscaping ($250,000). The Board of Supervisors approved the ZMOD unanimously in July 2024.

The Briarfield comparable is significant for two reasons. First, it establishes a $5.00 per square foot benchmark for a campus-scale, multi-building data center ZMOD on a site with existing PD-IP zoning — precisely the profile of the Stonebridge Campus. Second, it provides direct precedent for the phased proffer payment structure that we recommend for the Stonebridge application.

Comparable 5 — Fieldstone Innovation Hub (ZMOD-2024-0056)

The Fieldstone Innovation Hub was a smaller, single-building data center project developed by Keystone Digital Infrastructure, Inc. on a 14-acre parcel in central Loudoun County near the Ashburn Village area. The project proposed a single data center building of approximately 80,000 square feet of GFA with a critical IT load capacity of approximately 16 MW. The ZMOD sought to add data center use to an existing PD-OP (Planned Development – Office Park) zoning designation.

The total proffer amount approved was $460,000, reflecting a rate of approximately $5.75 per square foot of GFA. Despite the smaller total proffer amount, the per-square-foot rate was higher than the Briarfield Campus, demonstrating a pattern observed in several recent approvals: smaller projects may face proportionally higher per-square-foot proffer expectations. This dynamic likely reflects the fixed costs of County review and processing, as well as the Board's expectation that even smaller projects should make meaningful contributions to community infrastructure.

The proffer categories included a capital facilities contribution ($280,000), transportation improvements ($100,000), and community amenity contributions ($80,000, earmarked for pedestrian trail improvements in the Ashburn Village area). The Board of Supervisors approved the ZMOD by an 8-1 vote in December 2024.

C. Summary Table of Comparables

The range of comparable proffer rates is $4.50 to $6.50 per square foot, with the median falling approximately in the $5.00 to $5.25 per square foot range. The higher end of the range (Ridgeview Crossing at $6.50/sq ft) is attributable to the project's proximity to a residential community and significant community opposition — factors not present at the Stonebridge Campus. The lower end (Ashcroft Point at $4.50/sq ft) reflects a project with existing GI zoning in the established eastern Loudoun data center corridor with no residential adjacency.

Based on this analysis, the Stonebridge Campus proffer at $5.00 per square foot ($2,400,000) falls at the lower end of the median range, which is supportable given the existing PD-IP baseline zoning, the absence of immediate residential adjacency, and the significant fiscal benefits that the project will generate for Loudoun County through equipment tax revenue and capital investment.

IV. Recommended Proffer Amount and Cap

A. Proffer Calculation

The total campus GFA is calculated as follows:

• Building A: 120,000 sq ft

• Building B: 120,000 sq ft

• Building C: 120,000 sq ft

• Building D: 120,000 sq ft

• Total Campus GFA: 480,000 sq ft

At the recommended initial offer rate of $5.00 per square foot, the total proffer amount is calculated as:

480,000 sq ft × $5.00/sq ft = $2,400,000

This amount should be presented as IHDC's initial proffer offer, with the expectation that County staff or individual Board members may seek a modest upward adjustment during the review and negotiation period. The initial offer is positioned at the median of comparable approvals (consistent with Comparable 4, the Briarfield Technology Campus) and should be defensible in the face of staff comments.

B. Recommended Negotiation Range

We recommend the following negotiation parameters:

• Floor (Initial Offer): $5.00 per square foot ($2,400,000 total)

• Ceiling / Maximum Authorized Amount: $5.75 per square foot ($2,760,000 total)

The rationale for the $5.75 ceiling is as follows:

First, the site's existing PD-IP zoning already contemplates high-intensity industrial use with similar or greater traffic, utility, and infrastructure impacts than a data center. The incremental impact of adding data center use via ZMOD is modest compared to the by-right development potential under PD-IP.

Second, data center use actually generates significantly less traffic and lower public-service demand than many of the industrial uses permitted under PD-IP. A standard data center of the scale proposed for Stonebridge will generate approximately 300 to 500 vehicle trips per day (predominantly employee and vendor traffic), compared to a manufacturing or distribution facility of equivalent size, which could generate several thousand daily trips. Similarly, a data center requires minimal public services — it does not generate school-age children, does not place material demands on fire/EMS services (beyond the standard industrial profile), and does not create demand for parks, recreation, or community facilities.

Third, and most significantly, the Project will generate substantial fiscal revenue for Loudoun County through the County's computer equipment tax, levied at a rate of $1.25 per $100 of assessed value on all IT equipment, power infrastructure, and cooling systems within the facility. Based on an estimated $2.5 million per MW of installed IT equipment value across 96 MW of critical IT load, the annual equipment tax revenue generated by the fully built-out Campus could exceed $3,000,000 per year — an amount that would recoup the entire proffer obligation within the first year of stabilized operations.

The delta between floor and ceiling is $360,000 (from $2,400,000 to $2,760,000). This delta is manageable within the $14,200,000 Entitlements, Proffers & Soft Costs line item in the overall $600,000,000 project budget. Even at the ceiling, the proffer represents less than 0.5% of the total project budget. The negotiation authority between $5.00 and $5.25 per square foot may be exercised at the discretion of the legal team; any amount above $5.25 per square foot should require express authorization from IHDC management (Marcus Thorne, CEO, and Priya Dasgupta, CFO).

C. Proffer Categories — Recommended Allocation

Within the total proffer amount, we recommend the following category-by-category allocation. These allocations are presented as ranges to provide flexibility during the negotiation process. The specific dollar amounts shown below are based on the $2,400,000 initial offer level; actual amounts will scale proportionally if the total proffer is negotiated upward within the authorized range.

Capital Facilities / Fiscal Impact Contribution — Approximately 50–55% of the total proffer ($1,200,000 – $1,320,000). This is the largest single component and will consist of a general-purpose contribution to the County's capital facilities fund. This category is standard across all of the comparables in our data set and is the least contentious element of the proffer. The capital facilities contribution is intended to offset the general fiscal impact of the development on County infrastructure and services, although as noted above, data centers are net positive fiscal contributors to the County.

Transportation Improvements — Approximately 20–25% of the total proffer ($480,000 – $600,000). This category will fund specific road improvements along Belmont Ridge Road and Stonebridge Boulevard in the vicinity of the Campus, including construction of dedicated right-turn and left-turn lanes at the Campus entrance, signal modifications at the Belmont Ridge Road/Stonebridge Boulevard intersection, and pedestrian infrastructure improvements (sidewalks and crosswalks) to meet current County design standards. The specific improvements will be identified in coordination with the Virginia Department of Transportation ("VDOT") and the County's Department of Transportation and Capital Infrastructure ("DTCI") during the staff review period. We anticipate that the transportation proffer will require the submission of a Traffic Impact Analysis ("TIA"), which Lumen Ridge Engineering, PLLC (Carlos Esteban, PE) is preparing for inclusion with the ZMOD application.

Environmental / Stormwater — Approximately 10% of the total proffer ($240,000). This category will fund enhanced stormwater management commitments beyond the minimum requirements of the County's Facility Standards Manual, including the installation of low-impact development features, bioretention facilities, and enhanced maintenance of the Campus's stormwater management system. This commitment will be coordinated with the stormwater management easement and maintenance agreement to be recorded in connection with the site plan approval. The stormwater proffer is particularly important given the Campus's scale (81.4 acres) and the environmental sensitivity of downstream drainage areas.

Noise Mitigation — Approximately 5–10% of the total proffer ($120,000 – $240,000). This category will fund the construction of sound attenuation walls or enhanced screening around the generator yards and mechanical equipment areas for each of the four buildings. Each building will be equipped with a 2N diesel generator configuration, meaning that the generator yards will contain substantial backup power equipment that must be periodically tested. The noise mitigation proffer should include commitments regarding the design and height of sound walls, the enclosure of generator sets, and the scheduling of generator testing (restricted to weekday daytime hours, Monday through Friday, 8:00 a.m. to 5:00 p.m., except in emergency situations). These commitments are consistent with the approach taken at Ridgeview Crossing (Comparable 3), although the scope can be more modest at Stonebridge given the absence of adjacent residential uses.

Visual Screening / Landscaping — Approximately 5% of the total proffer ($120,000). This category will fund enhanced landscape buffers along the Belmont Ridge Road frontage and along any other publicly visible perimeter of the Campus. The proffer should include commitments to architectural design standards for the visible facades of the data center buildings, including articulation, material variation, and massing treatments to reduce the visual monotony that is often associated with large-scale data center construction. These commitments should be coordinated with the architectural design for the buildings, which will be finalized during the site plan process.

Community Amenity / Other — A small residual allocation (up to $60,000–$120,000, depending on the total proffer level) for community benefit contributions. The most likely form of this contribution is a broadband infrastructure contribution to support the extension or improvement of high-speed broadband service in the surrounding area — a category that aligns with IHDC's core business and has been favorably received by the Board in prior approvals (see Comparable 2, Dominion Gate Technology Park). Alternatively, this allocation could be directed toward a public trail connection or other community facility identified by the relevant Board member during the pre-hearing engagement process.

V. Phasing of Proffer Payments

A. Rationale for Phased Payments

The Stonebridge Campus is a phased development, with four buildings to be constructed over a 24-month period commencing from Notice to Proceed ("NTP"), which is targeted for November 1, 2025. Building A is currently scheduled for Substantial Completion on August 1, 2027, with Buildings B through D reaching Substantial Completion on November 1, 2027. Certificate of occupancy milestones for each building will follow Substantial Completion by a period of weeks to months, depending on the County inspection and permitting process.

A lump-sum proffer payment at the time of ZMOD approval or at land closing would front-load a $2,400,000 cost obligation well before any revenue generation from the Campus. The stabilization target for the Campus (85% leased) is not anticipated until Q2 2028, and the project's cash flow profile during the construction and initial lease-up period is heavily negative. Requiring a lump-sum proffer payment early in the project timeline would impose an unnecessary and disproportionate burden on the project's capitalization.

By contrast, a phased proffer payment structure tied to building-by-building certificate of occupancy milestones aligns the payment obligation with the project's progression toward revenue-generating operations. This approach is consistent with the precedent established in Comparable 4 (Briarfield Technology Campus), where a virtually identical phased structure was negotiated and approved by the Board without objection.

From a lender perspective, Summit National Bank, N.A. and the lending syndicate providing the $390,000,000 construction loan facility will need to account for proffer payment obligations in the construction loan draw budget. Phased proffer payments that are triggered by certificate of occupancy milestones — events that occur near the end of the construction process for each building — allow the lender to budget for these obligations within the later draws of the construction loan, reducing the burden on early draws and preserving liquidity during the most capital-intensive phase of construction.

B. Recommended Phasing Structure

We recommend the following four-phase proffer payment structure, with each phase representing 25% of the total proffer obligation:

Phase 1 — Building A: Twenty-five percent (25%) of the total proffer ($600,000 at the $2,400,000 initial offer level) due and payable upon issuance of the certificate of occupancy for Building A. Based on the current construction schedule, the certificate of occupancy for Building A is anticipated to follow Substantial Completion (targeted for August 1, 2027) by approximately four to eight weeks, placing the Phase 1 payment trigger in the September–October 2027 timeframe.

Phase 2 — Building B: Twenty-five percent (25%) of the total proffer ($600,000) due and payable upon issuance of the certificate of occupancy for Building B. The certificate of occupancy for Building B is anticipated to follow the Substantial Completion date for Buildings B–D (targeted for November 1, 2027), placing the Phase 2 payment trigger in the late 2027 to early 2028 timeframe.

Phase 3 — Building C: Twenty-five percent (25%) of the total proffer ($600,000) due and payable upon issuance of the certificate of occupancy for Building C. This payment is anticipated in the same general timeframe as Phase 2, subject to the sequencing of final inspections and certificate of occupancy issuance by the County.

Phase 4 — Building D: Twenty-five percent (25%) of the total proffer ($600,000) due and payable upon issuance of the certificate of occupancy for Building D. This is anticipated to be the final proffer payment, occurring in the late 2027 to early 2028 timeframe.

If the total proffer is negotiated upward during the review period, the phased payments will adjust proportionally. At the $2,760,000 ceiling, each phase would represent $690,000.

Alternative Scenario — Partial Upfront Payment: It is possible that County staff or individual Board members may push for an initial proffer payment at the time of ZMOD approval or at site plan approval, with the balance phased to certificate of occupancy milestones. We recommend resisting any upfront payment requirement as a general matter, consistent with the Briarfield precedent. However, if an upfront payment proves necessary to secure Board approval, we recommend offering no more than ten percent (10%) of the total proffer ($240,000 at the initial offer level) at the time of final site plan approval, with the remaining ninety percent (90%) phased to certificate of occupancy milestones in four equal installments. This alternative structure preserves the essential benefit of phasing while making a de minimis concession to the County's preference for early payment.

C. Security for Proffer Obligations

The County may require financial security — typically in the form of a letter of credit or surety bond — to guarantee the applicant's performance of outstanding proffer obligations. This is a common requirement in Loudoun County, particularly for phased proffer structures where the full payment obligation extends over multiple years. We should evaluate the cost implications of providing such security, including letter of credit fees (typically 1–2% of face amount annually) and the impact on IHDC's borrowing capacity and collateral availability.

Regardless of whether financial security is required, proffer obligations run with the land and bind all successors and assigns. The approved proffer statement will be recorded as a covenant in the land records of Loudoun County following Board approval. This covenant will need to be reflected in the deed of trust and other lender documents, including the collateral assignment of permits and approvals to Summit National Bank, N.A. as Administrative Agent for the lending syndicate. We should coordinate with Victor Redmond (Redmond & Calloway LLP, lender's counsel) to ensure that the proffer obligations are properly accounted for in the loan documentation and that the lender's security interest encompasses the applicant's rights and obligations under the proffer statement.

VI. Key Negotiation Strategies and Talking Points

A. Favorable Factors for IHDC

The following factors favor IHDC's negotiating position and should be emphasized in all communications with County staff and the Board of Supervisors:

Existing Industrial Zoning. The PD-IP zoning already contemplates high-intensity industrial use on the Campus. Data center use is arguably less impactful than many permitted PD-IP uses in terms of traffic generation (data centers produce far fewer vehicle trips per day than manufacturing, distribution, or warehousing facilities of equivalent size), employee density (data centers employ approximately 50–100 full-time employees for a campus of this scale, compared to several hundred or more for a manufacturing facility), and noise (data center operations are generally quieter than manufacturing operations, provided that generator and HVAC systems are properly mitigated). The ZMOD therefore represents a relatively modest change in the intensity and character of use on the site, and the proffer should be calibrated to reflect this limited incremental impact.

Significant Fiscal Contribution. The Loudoun County computer equipment tax at $1.25 per $100 of assessed value on IT equipment represents a major revenue source for the County, and data centers are among the highest per-acre tax revenue generators in Loudoun County. Based on an estimated installed IT equipment value of approximately $2.5 million per MW across the Campus's 96 MW of critical IT load capacity, the total assessed value of equipment within the Campus could reach approximately $240,000,000 at full deployment. At the $1.25/$100 tax rate, this would generate approximately $3,000,000 per year in equipment tax revenue alone — a figure that exceeds the entire proposed proffer amount within the first year of stabilized operations. This fiscal analysis should be the centerpiece of our presentation to County staff and the Board.

Job Creation. The Project will create significant employment, both during the 24-month construction period (hundreds of construction jobs) and on a permanent basis. IHDC will be required to maintain a minimum of 50 new full-time positions at the Campus as a condition of qualification for the Virginia sales tax exemption for data center equipment under Virginia Code § 58.1-609.3(18). These permanent jobs — which will include data center technicians, facilities engineers, security personnel, and management staff — support the County's economic development objectives and diversify the local employment base.

Capital Investment. The total project budget of $600,000,000 represents one of the largest single-project capital investments in Loudoun County. This level of investment brings substantial economic multiplier effects, including procurement of construction materials and services from local and regional vendors, and long-term investment in the County's commercial tax base through the real property value of the completed Campus.

Infrastructure Improvements. IHDC is funding a $18,500,000 line extension contribution to Vantage Power Cooperative for the construction of a dedicated 230kV/34.5kV substation on the Meridian Parcel. While this substation is being constructed primarily to serve the Campus, it will also benefit the regional power grid by adding capacity and redundancy to the local transmission network. This investment should be highlighted as a voluntary infrastructure contribution that benefits the broader community.

Low Public Service Demand. Data centers require minimal public services compared to virtually any other form of development at equivalent acreage. Unlike residential development, data centers do not generate school-age children, do not materially increase demand for parks and recreation facilities, and do not create the types of public safety demands associated with high-density residential or commercial uses. The fire/EMS impact of a data center is comparable to a standard industrial facility, and the absence of a permanent residential population on the site eliminates the most cost-intensive categories of County service demand.

B. Potential County Concerns to Address

Notwithstanding the strong affirmative case for the Project, we should anticipate and prepare to address the following concerns that County staff and Board members are likely to raise:

Cumulative Impact of Data Centers. Loudoun County has experienced extraordinary data center growth over the past decade, and several Board members have publicly expressed concern about what they perceive as an over-concentration of data center uses in the County. Some Board members have advocated for a more diversified development mix, including additional residential, retail, and mixed-use projects. While this concern is primarily a policy-level objection rather than a site-specific issue, we should be prepared to address it by emphasizing the Project's compatibility with the existing PD-IP zoning and the fact that the Stonebridge/Belmont Ridge corridor has long been planned for industrial and commercial development. We should also be prepared to distinguish the Stonebridge Campus from other recent data center proposals that have sought to rezone residential or agricultural land.

Visual Impact. Data center buildings can be architecturally monotonous — large, flat-roofed structures with minimal fenestration and limited articulation. County staff and Board members have increasingly emphasized the importance of design quality and visual compatibility with the surrounding landscape. The proffer should include specific commitments to architectural design standards for the visible facades of the Campus buildings, including requirements for material range (e.g., a combination of precast concrete, composite metal panels, and masonry), articulation and massing variation, screened rooftop equipment, and downward-directed exterior lighting to minimize light spill and sky glow.

Noise. Backup generators and HVAC systems are the primary noise sources at data center facilities. Each building on the Stonebridge Campus will be equipped with a 2N diesel generator configuration, meaning that each building will have a dedicated generator yard with substantial emergency power equipment. Generator testing, while infrequent, can produce significant noise levels. The proffer should address noise through commitments to sound attenuation walls or barriers around generator yards, sound-attenuated generator enclosures, and a testing schedule limited to weekday daytime hours (Monday through Friday, 8:00 a.m. to 5:00 p.m.) except in emergency conditions. IHDC should also consider commissioning a noise study to demonstrate that operational noise levels at the property boundary will comply with County noise standards.

Water Use. Data center cooling systems can have significant water demand, particularly if the Campus employs evaporative cooling technologies. County staff may raise concerns about the Project's impact on local water resources. IHDC should be prepared to address this concern by committing to the use of water-efficient cooling technologies (such as air-cooled chiller systems or hybrid cooling systems that minimize evaporative water consumption) and by demonstrating that the Project's water demand is within the capacity of the Loudoun Water service area.

Traffic During Construction. The 24-month construction period will generate substantial truck traffic for concrete, steel, and equipment deliveries, particularly during the foundation and structural phases of construction. While construction traffic is a temporary impact, it can be a significant concern for County staff and adjacent property owners. The proffer should include a commitment to prepare and implement a Construction Traffic Management Plan ("CTMP") that specifies designated haul routes, delivery hours, flagging and traffic control measures, and coordination with VDOT and the County's DTCI. The CTMP should be submitted to the County for approval prior to the commencement of construction.

C. Supervisor Engagement Strategy

The Stonebridge Campus is located within either the Broad Run or Dulles election district of the Loudoun County Board of Supervisors, depending on the most recent redistricting. The Supervisor representing the relevant district will be the most influential individual decision-maker in the ZMOD approval process, and their support is essential to securing Board approval. We recommend the following engagement strategy:

First, identify the relevant Supervisor(s) and confirm their current positions on data center development. Thomas Ashcroft and Alan Mercer are best positioned to make this identification based on their ongoing relationships with County officials and their familiarity with the current Board composition. Preliminary indications are that the relevant Supervisor has been generally supportive of data center development in the established industrial corridors but has also expressed interest in enhanced proffer commitments and design standards.

Second, schedule a pre-hearing meeting with the relevant Supervisor and their land use staff as soon as practicable after the ZMOD filing. This meeting should be attended by Thomas Ashcroft (as counsel of record), Alan Mercer (as land use consultant), and Leonard Castellano (as IHDC's senior development representative). Douglas Fairchild and Cynthia Ho should participate in a preparatory strategy session but need not attend the Supervisor meeting absent specific circumstances.

Third, present the fiscal impact analysis demonstrating the Project's net positive contribution to County revenues. This analysis, to be prepared by Cornerstone Land Use Consulting with support from Fielding & Associates, CPAs, should quantify the annual equipment tax revenue, real property tax revenue, and business personal property tax revenue generated by the Campus, and compare these revenues to the estimated annual cost of County services attributable to the Project. The net fiscal surplus should be substantial and should be the lead data point in all presentations.

Fourth, engage Cornerstone Land Use Consulting to prepare professional-quality presentation materials for the Board hearing, including site plan exhibits, architectural renderings (if available), landscape buffer visualizations, and a proffer summary chart. These materials should be designed for the lay audience that will be present at the public hearing, and should communicate the Project's benefits clearly and effectively.

Fifth, coordinate messaging with IHDC's Leonard Castellano (EVP, Development) and Ridgeline Capital Management's Julian Hargrove (managing equity sponsor) to ensure that all client communications with County officials are consistent and unified. All communications with County staff and Board members regarding the Project should be channeled through Thomas Ashcroft as counsel of record, with Alan Mercer and Leonard Castellano as the designated client-side spokespeople.

VII. Coordination with Other Workstreams

A. Impact on Project Budget and Financing

The proffer obligations of $2,400,000 (estimated) are budgeted within the $14,200,000 Entitlements, Proffers & Soft Costs line item in the overall $600,000,000 project budget. This line item also includes ZMOD application fees, permit fees, impact fees, design and engineering costs, environmental assessments, legal and consulting fees, and other soft costs associated with project entitlement and pre-construction activities. The proffer allocation within this line item is approximately $3,000,000, providing a cushion above the $2,400,000 initial offer to accommodate negotiation upward within the authorized range.

If proffers are negotiated up to the $2,760,000 ceiling, the additional $360,000 can be absorbed within the existing budget line without impacting other cost categories or requiring a reallocation from contingency or other line items. However, if the total proffer exceeds $2,760,000 — a scenario we regard as unlikely but not impossible if extraordinary political circumstances arise — the overage would need to be addressed through budget reallocation or contingency drawdown, which would require IHDC management and Ridgeline Capital Management approval.

Proffer payment timing must be carefully coordinated with the construction loan draw schedule. The $390,000,000 construction loan facility from Summit National Bank, N.A. (with syndicate participation) provides for a 36-month draw period from the first advance, with the first advance anticipated on or about October 15, 2025 (the construction loan closing date). Under the recommended phased proffer payment structure, proffer payments would be triggered by certificate of occupancy milestones occurring approximately 22–25 months after NTP, which would fall within the draw period and can be incorporated into the approved construction budget as later-phase draw items.

Proffer amounts and the recommended phasing structure should be communicated to Karen Ellsworth (Managing Director, Summit National Bank, N.A.) and to Victor Redmond (Redmond & Calloway LLP, lender's counsel) for incorporation into the construction budget approved by the lender. The proffer obligations should be reflected as a line item in the approved project budget and in the draw request procedures, and the phased payment triggers should be aligned with the milestone-based draw schedule.

B. Relationship to Land Closing Timeline

The land closing target for both the Stonebridge Parcel and the Meridian Parcel is September 15, 2025. The ZMOD approval target is the October 2025 Board of Supervisors hearing. This sequencing means that the land closings may need to proceed before ZMOD approval is obtained, creating a risk that IHDC acquires the parcels without confirmed zoning authorization for data center use.

This risk is mitigated by several factors. First, the purchase and sale agreements for both parcels include a zoning contingency provision that permits IHDC to delay closing if the ZMOD has not been approved by a specified date. The terms and implications of this contingency are analyzed in a separate internal memorandum (re: Conditional Zoning Approval — Impact on Land Closing and Financing), which should be cross-referenced in connection with the overall transaction timeline.

Second, proffers become binding only upon ZMOD approval by the Board of Supervisors. The proffer statement, once approved, will be recorded as a covenant running with the land in the land records of Loudoun County. Until ZMOD approval is obtained, the proffer statement remains a proposed document with no legal effect. Accordingly, IHDC will not incur any proffer obligation by closing on the land before ZMOD approval.

Third, contingency planning is essential. If ZMOD approval is delayed beyond October 2025 — for example, due to a Board deferral, additional staff review requirements, or political complications — the delay could impact the following downstream milestones:

• Construction Loan Closing: Targeted for October 15, 2025. The construction loan documents will likely include a condition precedent requiring evidence that the ZMOD has been approved or is reasonably expected to be approved. A delay in ZMOD approval could delay the construction loan closing.

• EPC Contract Execution: Targeted for October 20, 2025, with Titan-McAllister JV under a Guaranteed Maximum Price ("GMP") contract of $412,000,000. The EPC contract execution is contingent on construction loan closing, and a delay in either would cascade to the EPC timeline.

• Notice to Proceed: Targeted for November 1, 2025. A delay in NTP would push out the 24-month construction schedule and the associated Substantial Completion dates, which in turn would delay certificate of occupancy milestones and proffer payment triggers.

We will continue to monitor the ZMOD review timeline closely and will provide updated risk assessments as the application proceeds through the staff review period. If it becomes apparent that a delay beyond October 2025 is likely, we will advise on alternative strategies, including the possibility of seeking a November or December 2025 Board hearing or, if necessary, proceeding with land closing under the zoning contingency provisions.

C. EPC and Construction Considerations

Several of the recommended proffer commitments have direct implications for the EPC Agreement and the construction process, and must be coordinated with the Titan-McAllister JV team and the civil/site design by Lumen Ridge Engineering, PLLC:

Transportation Improvements. The proffer commitments regarding turn lanes, signal modifications, and pedestrian infrastructure along Belmont Ridge Road and Stonebridge Boulevard will likely need to be completed before or concurrent with campus construction. The timing and phasing of these improvements must be coordinated with VDOT and the County's DTCI, and the scope of work should be confirmed as either (i) included within the EPC Agreement scope, (ii) performed by a separate contractor under IHDC's direct supervision, or (iii) funded through the proffer contribution with the County managing the construction. We recommend that the transportation improvements be structured as a proffer contribution (i.e., a cash payment to the County or to a County-designated escrow) rather than as a proffer-in-kind (i.e., a commitment by IHDC to construct the improvements directly), as the latter approach introduces significant complexity in terms of bonding, VDOT permitting, and warranty obligations.

Noise Mitigation. The noise mitigation proffers — including sound attenuation walls around generator yards and sound-attenuated generator enclosures — must be confirmed as consistent with the EPC Agreement scope. Under the GMP contract with Titan-McAllister ($412,000,000), the scope of generator yard construction, including enclosures and any perimeter walls, should already be included. However, if the proffer negotiation results in enhanced noise mitigation requirements beyond what is currently included in the EPC scope (e.g., higher walls, additional acoustic treatment, or more extensive enclosures), the incremental cost should be identified and either incorporated into the EPC scope through a change order or funded separately as a proffer fulfillment cost outside the EPC GMP. This determination should be made in consultation with the EPC team and with Lumen Ridge Engineering.

Visual Screening and Landscaping. The proffer commitments for enhanced landscape buffers and architectural design standards must be coordinated with the civil/site design being prepared by Lumen Ridge Engineering, PLLC (Carlos Esteban, PE). The landscape buffer design, planting specifications, and installation timeline should be integrated into the overall site plan, and the associated costs should be captured in either the EPC scope or a separate landscaping contract. We note that the current EPC GMP may include basic landscaping but likely does not include the enhanced buffers and architectural treatments that the proffer may require; any incremental costs should be budgeted separately.

D. Tax Implications

Proffer payments are generally treated as deductible development costs that factor into the cost basis of the improvements for federal and state income tax purposes. This treatment is consistent with IRS guidance on pre-construction development expenditures and with the capitalization rules under IRC § 263A.

The proffer payments should be included in the overall cost segregation analysis being prepared for the Campus. We recommend coordinating with Sylvia Hartwell (Calderwood & Harkness, Tax Department) and Fielding & Associates, CPAs (Robert Fielding, engagement partner) to confirm the proper treatment of the proffer payments in the cost segregation study, including the allocation of proffer payments across the relevant asset categories (land improvements, building improvements, infrastructure) for depreciation purposes. Proper categorization could yield meaningful tax benefits through accelerated depreciation of the infrastructure-related proffer components under the Modified Accelerated Cost Recovery System ("MACRS").

Additionally, to the extent that proffer payments are characterized as capital facility contributions or transportation improvement contributions, they may qualify as indirect costs subject to the uniform capitalization rules, and their recovery through depreciation should be analyzed in conjunction with the broader project cost allocation.

VIII. Draft Proffer Statement — Overview and Next Steps

A. Status of Draft Proffer Statement

A draft proffer statement has been prepared by Ashcroft & Wynn, P.C. in coordination with Calderwood & Harkness LLP for submission with the ZMOD application. The draft proffer statement is targeted for filing as part of the ZMOD application package on May 30, 2025 (Docket No. ZMOD-2025-0038).

The draft proffer statement reflects the following key parameters:

• Proffer rate: $5.00 per square foot of GFA

• Total campus GFA: 480,000 square feet

• Total proffer amount: $2,400,000

• Proffer categories addressed: fiscal impact/capital facilities contribution, transportation improvements, environmental/stormwater management, noise mitigation, visual screening and landscaping, and community ame

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Douglas Fairchild, Partner, Calderwood & Harkness LLP Leonard Castellano, EVP Development, Ironhaven Data Centers LLC
FROM: Cynthia Ho, Calderwood & Harkness LLP Thomas Ashcroft, Ashcroft & Wynn, P.C.
DATE: May 20, 2025
RE: Proffer Negotiation Strategy — Stonebridge Data Center Campus ZMOD Application (Docket No. ZMOD-2025-0038)
Matter No.: 1043-00002
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I. Executive Summary
The purpose of this memorandum is to analyze and recommend a comprehensive proffer strategy in connection with the Zoning Modification Application ("ZMOD") for data center use on the approximately 81.4-acre Stonebridge Data Center Campus (the "Campus" or the "Project"). The Campus is comprised of two contiguous parcels: (i) the 62.0-acre Stonebridge Parcel, Loudoun County Tax Map Reference /95-4A-1///, and (ii) the 19.4-acre Meridian Parcel, Tax Map Reference /95-4A-2///, located at the northeast corner of Belmont Ridge Road and Stonebridge Boulevard, in unincorporated Loudoun County, Virginia 20148.
The applicant is Ironhaven Data Centers LLC ("IHDC"), a Delaware limited liability company headquartered at 44680 Prentice Drive, Suite 200, Ashburn, Virginia 20147. IHDC will seek the ZMOD to authorize "data center" as a permitted use within the existing PD-IP (Planned Development – Industrial Park) zoning designation applicable to both parcels. The ZMOD application is targeted for filing on May 30, 2025, with an anticipated public hearing before the Loudoun County Board of Supervisors in October 2025.
The Campus, as currently designed, will consist of four data center buildings (Buildings A through D), each approximately 120,000 gross square feet ("GFA"), for a total campus GFA of approximately 480,000 square feet. Based on our analysis of comparable recent data center proffers approved by the Loudoun County Board of Supervisors, and in consultation with local zoning counsel and land use advisors, we recommend an initial proffer offer of $5.00 per square foot of GFA, yielding a total estimated proffer amount of $2,400,000. This figure falls at the lower end of the median range for recent comparable approvals in Loudoun County, which is supportable given the existing PD-IP baseline zoning, the Campus's distance from sensitive residential areas, and the significant fiscal benefits the Project will generate for the County.
This memorandum sets forth the following: (1) an overview of the Virginia proffer statutory framework and Loudoun County's proffer guidelines for data center uses; (2) a detailed analysis of five comparable recent data center proffer approvals in Loudoun County; (3) the recommended proffer amount and negotiation range, including a ceiling of $5.75 per square foot ($2,760,000 maximum); (4) the recommended allocation of proffers across specific categories (capital facilities, transportation, environmental/stormwater, noise mitigation, visual screening, and community amenities); (5) a phased payment structure tied to building-by-building certificate of occupancy milestones; and (6) negotiation strategies and talking points for use with County staff and the Board of Supervisors.
This memorandum has been prepared in coordination with Cornerstone Land Use Consulting, LLC (Alan Mercer, Principal Consultant), which has conducted comparable proffer research and will prepare the supporting fiscal impact analysis and visual exhibits for the Board hearing, and with local zoning counsel Ashcroft & Wynn, P.C. (Thomas Ashcroft, Lead Partner, 25 West Market Street, Leesburg, Virginia 20176), which will serve as counsel of record for the ZMOD application and will present the proffer statement at the pre-application conference and all subsequent public hearings.
II. Background on Loudoun County Proffer Framework
A. Legal Basis for Proffers in Virginia
Virginia's proffer system is governed by Virginia Code § 15.2-2303 et seq., which authorizes localities in certain high-growth areas of the Commonwealth — including Loudoun County — to accept voluntary proffers in connection with conditional zoning applications. The proffer statute reflects a legislative recognition that rezoning and zoning modification decisions can impose new or increased demands on public infrastructure and services, and that applicants may voluntarily offer conditions (proffers) to mitigate those impacts as part of the legislative zoning process.
Under the statute, proffers must satisfy three fundamental requirements. First, proffers must be voluntarily offered by the applicant; the locality may not compel or mandate specific proffer amounts as a condition of approval. Second, proffers must be reasonably related to the rezoning or zoning modification being sought — that is, there must be a rational nexus between the impacts generated by the proposed development and the conditions offered. Third, proffers must be designed to offset the reasonably anticipated impacts of the proposed development on public facilities, infrastructure, and services. These requirements are grounded in both the statutory text and in the constitutional constraints imposed by the Takings Clause and the principles articulated in Dolan v. City of Tigard, 512 U.S. 374 (1994), and its progeny.
It is important to distinguish between proffers offered in connection with a legislative rezoning or ZMOD application and conditions of site plan approval. Proffers are legislative in nature — they are offered voluntarily by the applicant, accepted by the governing body as part of the legislative zoning action, and recorded as covenants running with the land. Conditions of site plan approval, by contrast, are administrative and are imposed by the planning director or designee as conditions of the development permit. The two processes are legally distinct, and proffers cannot substitute for compliance with applicable site plan requirements or development standards. However, in practice, the proffer negotiation process often anticipates and mirrors certain site plan conditions, particularly in areas such as transportation improvements, stormwater management, and landscaping.
A critical practical reality is that while the County cannot legally require specific proffer amounts as a precondition to ZMOD approval, County staff and individual Board of Supervisors members will communicate expectations during the review process — both formally through staff reports and informally through pre-hearing meetings and work sessions. These signals, while not binding, are powerful indicators of the proffer level that will be necessary to secure a favorable vote. Accordingly, our negotiation strategy must be calibrated to these practical dynamics while preserving IHDC's legal position that its proffers are voluntary and reasonable.
B. Loudoun County Proffer Guidelines
Loudoun County has historically been among the most active jurisdictions in Virginia in the use of proffers, and its proffer framework has evolved significantly in recent years as data centers have become the dominant land use application type in the County. Over the past decade, Loudoun County has emerged as the largest data center market in the world, with approximately seventy percent of the world's internet traffic reportedly passing through data centers located in the County. This concentration has made data center proffers a recurring and increasingly sophisticated element of the County's land use process.
Current County proffer expectations for data center uses generally fall within a range of $4.00 to $7.00 per square foot of GFA, with the precise expectation varying based on several factors: (i) the location of the project within the County (eastern Loudoun projects along the Route 7 and Waxpool Road corridors tend to have established market expectations; western Loudoun projects near residential communities face higher expectations); (ii) proximity to residential areas and the associated sensitivity of neighbors; (iii) the infrastructure burden imposed by the project, including traffic generation, utility demand, and stormwater impacts; and (iv) the scale and phasing of the development.
Proffer categories in Loudoun County data center approvals typically include the following:
• Fiscal Impact / Capital Facilities Contributions: General-purpose payments to the County's capital facilities fund, intended to offset the fiscal impact of the development on County infrastructure and services. These payments are typically the largest single component of the proffer package.
• Transportation Improvements: Contributions toward road improvements, including turn lanes, signal modifications, road widening, and pedestrian and bicycle infrastructure in the vicinity of the project site.
• Environmental / Stormwater Mitigation: Commitments to enhanced stormwater management beyond minimum code requirements, including low-impact development techniques, stream buffer restoration, and coordination with regional stormwater facilities.
• Noise and Visual Screening: Commitments to noise attenuation measures (sound walls, generator enclosures, restricted testing hours) and enhanced visual screening (landscape buffers, architectural design standards) to mitigate the impacts of data center operations on surrounding properties.
• Community Amenities: Smaller allocations for community benefit, which may include broadband infrastructure contributions, public trail connections, or contributions to community facilities.
A significant factor in data center proffer negotiations is the fiscal impact analysis. Data centers are among the most valuable per-acre land uses in Loudoun County, primarily because of the County's computer equipment tax, which is levied at a rate of $1.25 per $100 of assessed value on the personal property (IT equipment, power infrastructure, cooling systems) housed within the facility. A fully built-out data center campus of the scale proposed for Stonebridge can generate millions of dollars annually in equipment tax revenue, which substantially offsets the relatively modest public service demands of data center operations. This fiscal dynamic is a central element of our proffer negotiation strategy, as discussed in Section VI below.
C. Relevance of the Existing PD-IP Zoning
The Stonebridge and Meridian Parcels are currently zoned PD-IP (Planned Development – Industrial Park), a zoning designation that permits a range of industrial park uses including light manufacturing, warehousing, distribution, office, and research and development. However, the existing PD-IP zoning does not specifically authorize "data center" as a permitted use, and Loudoun County has determined that data center use requires an affirmative ZMOD approval.
The ZMOD application (Docket No. ZMOD-2025-0038) will seek to add "data center" as a permitted use within the existing PD-IP framework. This approach is strategically preferable to a full rezoning for several reasons. First, the ZMOD process is generally faster and involves fewer discretionary considerations than a full rezoning from a fundamentally different zoning category (such as residential or agricultural). Second, the ZMOD preserves the existing PD-IP zoning structure and its associated development standards, which reduces the scope of conditions the Board may impose. Third, the existing PD-IP zoning provides a favorable baseline for proffer negotiations, because the permitted industrial uses under PD-IP already contemplate the types of infrastructure impacts (traffic, utilities, stormwater) that a data center would generate.
This last point is particularly important. In proffer negotiations, the relevant question is the incremental impact of the proposed use over and above the impacts that could occur under the existing by-right or already-approved zoning. Because the PD-IP zoning already permits high-intensity industrial uses, many of which would generate comparable or even greater traffic, noise, and infrastructure demands than a data center, the incremental impact of the ZMOD is relatively modest. Data center operations, in fact, typically generate significantly less traffic and require fewer employees per square foot than traditional industrial park uses such as manufacturing or distribution. This baseline comparison strongly supports a proffer level at the lower end of the County's range, which is the central thesis of our recommended strategy.
Board expectations for ZMOD proffers are generally somewhat lower than for a full rezoning from residential or agricultural zoning, where the change in character is more dramatic and the incremental impacts are correspondingly greater. However, Board expectations for data center ZMODs have been rising in recent years as the political dynamics around data center growth in Loudoun County have intensified. Several current Board members have publicly expressed concerns about the pace and concentration of data center development, and we should anticipate that these broader political dynamics will influence the proffer negotiation process for the Stonebridge Campus.
III. Comparable Recent Data Center Proffers in Loudoun County
A. Methodology
To establish a defensible benchmark for the Stonebridge Campus proffer, we conducted a comprehensive review of recent data center ZMOD and rezoning approvals in Loudoun County. This research was undertaken jointly by Cornerstone Land Use Consulting, LLC (Alan Mercer, Principal Consultant) and Ashcroft & Wynn, P.C. (Thomas Ashcroft), drawing upon publicly available Loudoun County Board of Supervisors records, staff reports, recorded proffer statements, and planning commission referral materials for data center applications approved between 2022 and early 2025.
From this research, we identified five comparable projects that provide useful precedents for the Stonebridge Campus proffer negotiation. These comparables were selected based on a range of criteria, including the scale of the project (GFA and MW capacity), the location within Loudoun County, the nature of the zoning action (ZMOD vs. full rezoning), the proximity to residential uses, and the structure and phasing of the proffer package. Each comparable is discussed below, followed by a summary table.
B. Comparable Project Analysis
Comparable 1 — Ashcroft Point Data Campus (ZMOD-2022-0114)
The Ashcroft Point Data Campus was a three-building data center development located on a 44-acre parcel in eastern Loudoun County along the Waxpool Road corridor near the intersection of Waxpool Road and Pacific Boulevard. The applicant, Clearpath Digital Holdings, LLC, sought a ZMOD to add data center use to an existing PD-GI (Planned Development – General Industry) zoning designation. The project included approximately 330,000 square feet of GFA with a total critical IT load capacity of approximately 60 MW.
The total proffer amount approved was $1,485,000, representing a rate of approximately $4.50 per square foot of GFA. The proffer was allocated primarily across two categories: a capital facilities contribution of $900,000 and road improvements along Waxpool Road totaling $585,000, including a dedicated right-turn lane at the site entrance and a proportional contribution to a planned signal upgrade at the Waxpool/Pacific intersection.
The Board of Supervisors approved the ZMOD unanimously in June 2022 without significant opposition. The relatively modest proffer rate was attributable to the site's eastern Loudoun location within the established data center corridor, the lack of residential adjacency, and the existing GI baseline zoning. Staff had initially suggested a proffer level in the $5.00 per square foot range, but the applicant successfully argued that the PD-GI baseline zoning already permitted uses with comparable or greater impacts, and the Board accepted the $4.50 rate without further negotiation.
Comparable 2 — Dominion Gate Technology Park (ZREZ-2023-0021)
Dominion Gate Technology Park was a full rezoning application filed by Quantum Colocation Partners, Inc. for a 36-acre site along the Route 7 corridor in central Loudoun County. The project proposed two data center buildings totaling approximately 240,000 square feet of GFA with a critical IT load capacity of approximately 48 MW. The prior zoning was PD-CC (Planned Development – Commercial Center), and the applicant sought rezoning to PD-IP with data center use specifically authorized.
The total proffer amount approved was $1,260,000, reflecting a rate of approximately $5.25 per square foot of GFA. The proffer was structured across three categories: a transportation contribution of $500,000 earmarked for improvements along the Route 7/Belmont Ridge Road interchange area, a stormwater management enhancement contribution of $260,000 for regional stormwater infrastructure improvements, and a community amenity fund contribution of $500,000 directed toward the County's public broadband infrastructure initiative.
The Board of Supervisors approved the rezoning by a 7-2 vote in September 2023. Two Board members dissented, citing concerns about the cumulative traffic impact of data center development along the Route 7 corridor. However, the proffer package was not the primary source of contention; the dissenting members objected more broadly to the rezoning from commercial to industrial use. The $5.25 per square foot rate was consistent with staff recommendations and was not contested during the hearing.
Comparable 3 — Ridgeview Crossing Data Center (ZMOD-2023-0082)
The Ridgeview Crossing Data Center was a single-campus data center development proposed by Apex Hyperscale Development, LLC on a 28-acre parcel in western Loudoun County, approximately 1,200 feet from the established Ridgeview Glen residential subdivision. The project proposed a single large data center building of approximately 180,000 square feet of GFA with a critical IT load capacity of approximately 36 MW. The ZMOD sought to add data center use to an existing PD-IP zoning designation.
Due to the project's proximity to the Ridgeview Glen residential community, the application generated significant community opposition. Residents expressed concerns about noise from backup generators, visual impact, light pollution, and the perceived incompatibility of a large-scale data center with the adjacent residential neighborhood. In response, the applicant offered a substantially enhanced proffer package totaling $1,170,000, reflecting a rate of approximately $6.50 per square foot of GFA — the highest per-square-foot rate in our comparable set.
The proffer categories included a capital facilities contribution ($520,000), noise mitigation measures ($300,000, including construction of an eight-foot sound attenuation wall around the generator yard and commitment to limit generator testing to weekday daytime hours), and enhanced landscaping buffers ($350,000, including a 100-foot vegetated buffer with a mix of evergreen and deciduous plantings along the property boundary adjacent to the residential community). The Board of Supervisors approved the ZMOD by a 6-3 vote in March 2024 after a contentious public hearing that included testimony from over thirty residents of the Ridgeview Glen neighborhood.
This comparable is relevant to the Stonebridge Campus primarily as a demonstration of the upper end of the proffer range for projects located near residential areas with significant community opposition. The Stonebridge Campus is not similarly situated — it is located in an established industrial/commercial corridor along Belmont Ridge Road with no immediately adjacent residential subdivisions — and accordingly the Ridgeview Crossing proffer level should not be viewed as precedent for this application.
Comparable 4 — Briarfield Technology Campus (ZMOD-2024-0019)
The Briarfield Technology Campus is the most directly analogous comparable to the Stonebridge Campus in our data set. Located on a 72-acre site in the Dulles area of eastern Loudoun County along Loudoun County Parkway, the project was developed by Vertex Data Investments, LP and comprised a four-building data center campus totaling approximately 520,000 square feet of GFA with a combined critical IT load capacity of approximately 104 MW. The ZMOD sought to add data center use to an existing PD-IP zoning designation.
The total proffer amount approved was $2,600,000, reflecting a rate of approximately $5.00 per square foot of GFA. Critically for our purposes, the Briarfield proffer included a phased payment structure tied to building-by-building certificate of occupancy milestones: 25% of the total proffer was due upon issuance of the certificate of occupancy for the first building, with the remaining 75% paid in three equal installments upon issuance of certificates of occupancy for the subsequent three buildings. This phased structure was negotiated between the applicant and County staff during the review period and was accepted by the Board without objection.
The proffer categories included a capital facilities contribution ($1,400,000), transportation improvements ($650,000, including turn lane construction along Loudoun County Parkway), stormwater enhancements ($300,000), and visual screening/landscaping ($250,000). The Board of Supervisors approved the ZMOD unanimously in July 2024.
The Briarfield comparable is significant for two reasons. First, it establishes a $5.00 per square foot benchmark for a campus-scale, multi-building data center ZMOD on a site with existing PD-IP zoning — precisely the profile of the Stonebridge Campus. Second, it provides direct precedent for the phased proffer payment structure that we recommend for the Stonebridge application.
Comparable 5 — Fieldstone Innovation Hub (ZMOD-2024-0056)
The Fieldstone Innovation Hub was a smaller, single-building data center project developed by Keystone Digital Infrastructure, Inc. on a 14-acre parcel in central Loudoun County near the Ashburn Village area. The project proposed a single data center building of approximately 80,000 square feet of GFA with a critical IT load capacity of approximately 16 MW. The ZMOD sought to add data center use to an existing PD-OP (Planned Development – Office Park) zoning designation.
The total proffer amount approved was $460,000, reflecting a rate of approximately $5.75 per square foot of GFA. Despite the smaller total proffer amount, the per-square-foot rate was higher than the Briarfield Campus, demonstrating a pattern observed in several recent approvals: smaller projects may face proportionally higher per-square-foot proffer expectations. This dynamic likely reflects the fixed costs of County review and processing, as well as the Board's expectation that even smaller projects should make meaningful contributions to community infrastructure.
The proffer categories included a capital facilities contribution ($280,000), transportation improvements ($100,000), and community amenity contributions ($80,000, earmarked for pedestrian trail improvements in the Ashburn Village area). The Board of Supervisors approved the ZMOD by an 8-1 vote in December 2024.
C. Summary Table of Comparables
The range of comparable proffer rates is $4.50 to $6.50 per square foot, with the median falling approximately in the $5.00 to $5.25 per square foot range. The higher end of the range (Ridgeview Crossing at $6.50/sq ft) is attributable to the project's proximity to a residential community and significant community opposition — factors not present at the Stonebridge Campus. The lower end (Ashcroft Point at $4.50/sq ft) reflects a project with existing GI zoning in the established eastern Loudoun data center corridor with no residential adjacency.
Based on this analysis, the Stonebridge Campus proffer at $5.00 per square foot ($2,400,000) falls at the lower end of the median range, which is supportable given the existing PD-IP baseline zoning, the absence of immediate residential adjacency, and the significant fiscal benefits that the project will generate for Loudoun County through equipment tax revenue and capital investment.
IV. Recommended Proffer Amount and Cap
A. Proffer Calculation
The total campus GFA is calculated as follows:
• Building A: 120,000 sq ft
• Building B: 120,000 sq ft
• Building C: 120,000 sq ft
• Building D: 120,000 sq ft
• Total Campus GFA: 480,000 sq ft
At the recommended initial offer rate of $5.00 per square foot, the total proffer amount is calculated as:
480,000 sq ft × $5.00/sq ft = $2,400,000
This amount should be presented as IHDC's initial proffer offer, with the expectation that County staff or individual Board members may seek a modest upward adjustment during the review and negotiation period. The initial offer is positioned at the median of comparable approvals (consistent with Comparable 4, the Briarfield Technology Campus) and should be defensible in the face of staff comments.
B. Recommended Negotiation Range
We recommend the following negotiation parameters:
• Floor (Initial Offer): $5.00 per square foot ($2,400,000 total)
• Ceiling / Maximum Authorized Amount: $5.75 per square foot ($2,760,000 total)
The rationale for the $5.75 ceiling is as follows:
First, the site's existing PD-IP zoning already contemplates high-intensity industrial use with similar or greater traffic, utility, and infrastructure impacts than a data center. The incremental impact of adding data center use via ZMOD is modest compared to the by-right development potential under PD-IP.
Second, data center use actually generates significantly less traffic and lower public-service demand than many of the industrial uses permitted under PD-IP. A standard data center of the scale proposed for Stonebridge will generate approximately 300 to 500 vehicle trips per day (predominantly employee and vendor traffic), compared to a manufacturing or distribution facility of equivalent size, which could generate several thousand daily trips. Similarly, a data center requires minimal public services — it does not generate school-age children, does not place material demands on fire/EMS services (beyond the standard industrial profile), and does not create demand for parks, recreation, or community facilities.
Third, and most significantly, the Project will generate substantial fiscal revenue for Loudoun County through the County's computer equipment tax, levied at a rate of $1.25 per $100 of assessed value on all IT equipment, power infrastructure, and cooling systems within the facility. Based on an estimated $2.5 million per MW of installed IT equipment value across 96 MW of critical IT load, the annual equipment tax revenue generated by the fully built-out Campus could exceed $3,000,000 per year — an amount that would recoup the entire proffer obligation within the first year of stabilized operations.
The delta between floor and ceiling is $360,000 (from $2,400,000 to $2,760,000). This delta is manageable within the $14,200,000 Entitlements, Proffers & Soft Costs line item in the overall $600,000,000 project budget. Even at the ceiling, the proffer represents less than 0.5% of the total project budget. The negotiation authority between $5.00 and $5.25 per square foot may be exercised at the discretion of the legal team; any amount above $5.25 per square foot should require express authorization from IHDC management (Marcus Thorne, CEO, and Priya Dasgupta, CFO).
C. Proffer Categories — Recommended Allocation
Within the total proffer amount, we recommend the following category-by-category allocation. These allocations are presented as ranges to provide flexibility during the negotiation process. The specific dollar amounts shown below are based on the $2,400,000 initial offer level; actual amounts will scale proportionally if the total proffer is negotiated upward within the authorized range.
Capital Facilities / Fiscal Impact Contribution — Approximately 50–55% of the total proffer ($1,200,000 – $1,320,000). This is the largest single component and will consist of a general-purpose contribution to the County's capital facilities fund. This category is standard across all of the comparables in our data set and is the least contentious element of the proffer. The capital facilities contribution is intended to offset the general fiscal impact of the development on County infrastructure and services, although as noted above, data centers are net positive fiscal contributors to the County.
Transportation Improvements — Approximately 20–25% of the total proffer ($480,000 – $600,000). This category will fund specific road improvements along Belmont Ridge Road and Stonebridge Boulevard in the vicinity of the Campus, including construction of dedicated right-turn and left-turn lanes at the Campus entrance, signal modifications at the Belmont Ridge Road/Stonebridge Boulevard intersection, and pedestrian infrastructure improvements (sidewalks and crosswalks) to meet current County design standards. The specific improvements will be identified in coordination with the Virginia Department of Transportation ("VDOT") and the County's Department of Transportation and Capital Infrastructure ("DTCI") during the staff review period. We anticipate that the transportation proffer will require the submission of a Traffic Impact Analysis ("TIA"), which Lumen Ridge Engineering, PLLC (Carlos Esteban, PE) is preparing for inclusion with the ZMOD application.
Environmental / Stormwater — Approximately 10% of the total proffer ($240,000). This category will fund enhanced stormwater management commitments beyond the minimum requirements of the County's Facility Standards Manual, including the installation of low-impact development features, bioretention facilities, and enhanced maintenance of the Campus's stormwater management system. This commitment will be coordinated with the stormwater management easement and maintenance agreement to be recorded in connection with the site plan approval. The stormwater proffer is particularly important given the Campus's scale (81.4 acres) and the environmental sensitivity of downstream drainage areas.
Noise Mitigation — Approximately 5–10% of the total proffer ($120,000 – $240,000). This category will fund the construction of sound attenuation walls or enhanced screening around the generator yards and mechanical equipment areas for each of the four buildings. Each building will be equipped with a 2N diesel generator configuration, meaning that the generator yards will contain substantial backup power equipment that must be periodically tested. The noise mitigation proffer should include commitments regarding the design and height of sound walls, the enclosure of generator sets, and the scheduling of generator testing (restricted to weekday daytime hours, Monday through Friday, 8:00 a.m. to 5:00 p.m., except in emergency situations). These commitments are consistent with the approach taken at Ridgeview Crossing (Comparable 3), although the scope can be more modest at Stonebridge given the absence of adjacent residential uses.
Visual Screening / Landscaping — Approximately 5% of the total proffer ($120,000). This category will fund enhanced landscape buffers along the Belmont Ridge Road frontage and along any other publicly visible perimeter of the Campus. The proffer should include commitments to architectural design standards for the visible facades of the data center buildings, including articulation, material variation, and massing treatments to reduce the visual monotony that is often associated with large-scale data center construction. These commitments should be coordinated with the architectural design for the buildings, which will be finalized during the site plan process.
Community Amenity / Other — A small residual allocation (up to $60,000–$120,000, depending on the total proffer level) for community benefit contributions. The most likely form of this contribution is a broadband infrastructure contribution to support the extension or improvement of high-speed broadband service in the surrounding area — a category that aligns with IHDC's core business and has been favorably received by the Board in prior approvals (see Comparable 2, Dominion Gate Technology Park). Alternatively, this allocation could be directed toward a public trail connection or other community facility identified by the relevant Board member during the pre-hearing engagement process.
V. Phasing of Proffer Payments
A. Rationale for Phased Payments
The Stonebridge Campus is a phased development, with four buildings to be constructed over a 24-month period commencing from Notice to Proceed ("NTP"), which is targeted for November 1, 2025. Building A is currently scheduled for Substantial Completion on August 1, 2027, with Buildings B through D reaching Substantial Completion on November 1, 2027. Certificate of occupancy milestones for each building will follow Substantial Completion by a period of weeks to months, depending on the County inspection and permitting process.
A lump-sum proffer payment at the time of ZMOD approval or at land closing would front-load a $2,400,000 cost obligation well before any revenue generation from the Campus. The stabilization target for the Campus (85% leased) is not anticipated until Q2 2028, and the project's cash flow profile during the construction and initial lease-up period is heavily negative. Requiring a lump-sum proffer payment early in the project timeline would impose an unnecessary and disproportionate burden on the project's capitalization.
By contrast, a phased proffer payment structure tied to building-by-building certificate of occupancy milestones aligns the payment obligation with the project's progression toward revenue-generating operations. This approach is consistent with the precedent established in Comparable 4 (Briarfield Technology Campus), where a virtually identical phased structure was negotiated and approved by the Board without objection.
From a lender perspective, Summit National Bank, N.A. and the lending syndicate providing the $390,000,000 construction loan facility will need to account for proffer payment obligations in the construction loan draw budget. Phased proffer payments that are triggered by certificate of occupancy milestones — events that occur near the end of the construction process for each building — allow the lender to budget for these obligations within the later draws of the construction loan, reducing the burden on early draws and preserving liquidity during the most capital-intensive phase of construction.
B. Recommended Phasing Structure
We recommend the following four-phase proffer payment structure, with each phase representing 25% of the total proffer obligation:
Phase 1 — Building A: Twenty-five percent (25%) of the total proffer ($600,000 at the $2,400,000 initial offer level) due and payable upon issuance of the certificate of occupancy for Building A. Based on the current construction schedule, the certificate of occupancy for Building A is anticipated to follow Substantial Completion (targeted for August 1, 2027) by approximately four to eight weeks, placing the Phase 1 payment trigger in the September–October 2027 timeframe.
Phase 2 — Building B: Twenty-five percent (25%) of the total proffer ($600,000) due and payable upon issuance of the certificate of occupancy for Building B. The certificate of occupancy for Building B is anticipated to follow the Substantial Completion date for Buildings B–D (targeted for November 1, 2027), placing the Phase 2 payment trigger in the late 2027 to early 2028 timeframe.
Phase 3 — Building C: Twenty-five percent (25%) of the total proffer ($600,000) due and payable upon issuance of the certificate of occupancy for Building C. This payment is anticipated in the same general timeframe as Phase 2, subject to the sequencing of final inspections and certificate of occupancy issuance by the County.
Phase 4 — Building D: Twenty-five percent (25%) of the total proffer ($600,000) due and payable upon issuance of the certificate of occupancy for Building D. This is anticipated to be the final proffer payment, occurring in the late 2027 to early 2028 timeframe.
If the total proffer is negotiated upward during the review period, the phased payments will adjust proportionally. At the $2,760,000 ceiling, each phase would represent $690,000.
Alternative Scenario — Partial Upfront Payment: It is possible that County staff or individual Board members may push for an initial proffer payment at the time of ZMOD approval or at site plan approval, with the balance phased to certificate of occupancy milestones. We recommend resisting any upfront payment requirement as a general matter, consistent with the Briarfield precedent. However, if an upfront payment proves necessary to secure Board approval, we recommend offering no more than ten percent (10%) of the total proffer ($240,000 at the initial offer level) at the time of final site plan approval, with the remaining ninety percent (90%) phased to certificate of occupancy milestones in four equal installments. This alternative structure preserves the essential benefit of phasing while making a de minimis concession to the County's preference for early payment.
C. Security for Proffer Obligations
The County may require financial security — typically in the form of a letter of credit or surety bond — to guarantee the applicant's performance of outstanding proffer obligations. This is a common requirement in Loudoun County, particularly for phased proffer structures where the full payment obligation extends over multiple years. We should evaluate the cost implications of providing such security, including letter of credit fees (typically 1–2% of face amount annually) and the impact on IHDC's borrowing capacity and collateral availability.
Regardless of whether financial security is required, proffer obligations run with the land and bind all successors and assigns. The approved proffer statement will be recorded as a covenant in the land records of Loudoun County following Board approval. This covenant will need to be reflected in the deed of trust and other lender documents, including the collateral assignment of permits and approvals to Summit National Bank, N.A. as Administrative Agent for the lending syndicate. We should coordinate with Victor Redmond (Redmond & Calloway LLP, lender's counsel) to ensure that the proffer obligations are properly accounted for in the loan documentation and that the lender's security interest encompasses the applicant's rights and obligations under the proffer statement.
VI. Key Negotiation Strategies and Talking Points
A. Favorable Factors for IHDC
The following factors favor IHDC's negotiating position and should be emphasized in all communications with County staff and the Board of Supervisors:
Existing Industrial Zoning. The PD-IP zoning already contemplates high-intensity industrial use on the Campus. Data center use is arguably less impactful than many permitted PD-IP uses in terms of traffic generation (data centers produce far fewer vehicle trips per day than manufacturing, distribution, or warehousing facilities of equivalent size), employee density (data centers employ approximately 50–100 full-time employees for a campus of this scale, compared to several hundred or more for a manufacturing facility), and noise (data center operations are generally quieter than manufacturing operations, provided that generator and HVAC systems are properly mitigated). The ZMOD therefore represents a relatively modest change in the intensity and character of use on the site, and the proffer should be calibrated to reflect this limited incremental impact.
Significant Fiscal Contribution. The Loudoun County computer equipment tax at $1.25 per $100 of assessed value on IT equipment represents a major revenue source for the County, and data centers are among the highest per-acre tax revenue generators in Loudoun County. Based on an estimated installed IT equipment value of approximately $2.5 million per MW across the Campus's 96 MW of critical IT load capacity, the total assessed value of equipment within the Campus could reach approximately $240,000,000 at full deployment. At the $1.25/$100 tax rate, this would generate approximately $3,000,000 per year in equipment tax revenue alone — a figure that exceeds the entire proposed proffer amount within the first year of stabilized operations. This fiscal analysis should be the centerpiece of our presentation to County staff and the Board.
Job Creation. The Project will create significant employment, both during the 24-month construction period (hundreds of construction jobs) and on a permanent basis. IHDC will be required to maintain a minimum of 50 new full-time positions at the Campus as a condition of qualification for the Virginia sales tax exemption for data center equipment under Virginia Code § 58.1-609.3(18). These permanent jobs — which will include data center technicians, facilities engineers, security personnel, and management staff — support the County's economic development objectives and diversify the local employment base.
Capital Investment. The total project budget of $600,000,000 represents one of the largest single-project capital investments in Loudoun County. This level of investment brings substantial economic multiplier effects, including procurement of construction materials and services from local and regional vendors, and long-term investment in the County's commercial tax base through the real property value of the completed Campus.
Infrastructure Improvements. IHDC is funding a $18,500,000 line extension contribution to Vantage Power Cooperative for the construction of a dedicated 230kV/34.5kV substation on the Meridian Parcel. While this substation is being constructed primarily to serve the Campus, it will also benefit the regional power grid by adding capacity and redundancy to the local transmission network. This investment should be highlighted as a voluntary infrastructure contribution that benefits the broader community.
Low Public Service Demand. Data centers require minimal public services compared to virtually any other form of development at equivalent acreage. Unlike residential development, data centers do not generate school-age children, do not materially increase demand for parks and recreation facilities, and do not create the types of public safety demands associated with high-density residential or commercial uses. The fire/EMS impact of a data center is comparable to a standard industrial facility, and the absence of a permanent residential population on the site eliminates the most cost-intensive categories of County service demand.
B. Potential County Concerns to Address
Notwithstanding the strong affirmative case for the Project, we should anticipate and prepare to address the following concerns that County staff and Board members are likely to raise:
Cumulative Impact of Data Centers. Loudoun County has experienced extraordinary data center growth over the past decade, and several Board members have publicly expressed concern about what they perceive as an over-concentration of data center uses in the County. Some Board members have advocated for a more diversified development mix, including additional residential, retail, and mixed-use projects. While this concern is primarily a policy-level objection rather than a site-specific issue, we should be prepared to address it by emphasizing the Project's compatibility with the existing PD-IP zoning and the fact that the Stonebridge/Belmont Ridge corridor has long been planned for industrial and commercial development. We should also be prepared to distinguish the Stonebridge Campus from other recent data center proposals that have sought to rezone residential or agricultural land.
Visual Impact. Data center buildings can be architecturally monotonous — large, flat-roofed structures with minimal fenestration and limited articulation. County staff and Board members have increasingly emphasized the importance of design quality and visual compatibility with the surrounding landscape. The proffer should include specific commitments to architectural design standards for the visible facades of the Campus buildings, including requirements for material range (e.g., a combination of precast concrete, composite metal panels, and masonry), articulation and massing variation, screened rooftop equipment, and downward-directed exterior lighting to minimize light spill and sky glow.
Noise. Backup generators and HVAC systems are the primary noise sources at data center facilities. Each building on the Stonebridge Campus will be equipped with a 2N diesel generator configuration, meaning that each building will have a dedicated generator yard with substantial emergency power equipment. Generator testing, while infrequent, can produce significant noise levels. The proffer should address noise through commitments to sound attenuation walls or barriers around generator yards, sound-attenuated generator enclosures, and a testing schedule limited to weekday daytime hours (Monday through Friday, 8:00 a.m. to 5:00 p.m.) except in emergency conditions. IHDC should also consider commissioning a noise study to demonstrate that operational noise levels at the property boundary will comply with County noise standards.
Water Use. Data center cooling systems can have significant water demand, particularly if the Campus employs evaporative cooling technologies. County staff may raise concerns about the Project's impact on local water resources. IHDC should be prepared to address this concern by committing to the use of water-efficient cooling technologies (such as air-cooled chiller systems or hybrid cooling systems that minimize evaporative water consumption) and by demonstrating that the Project's water demand is within the capacity of the Loudoun Water service area.
Traffic During Construction. The 24-month construction period will generate substantial truck traffic for concrete, steel, and equipment deliveries, particularly during the foundation and structural phases of construction. While construction traffic is a temporary impact, it can be a significant concern for County staff and adjacent property owners. The proffer should include a commitment to prepare and implement a Construction Traffic Management Plan ("CTMP") that specifies designated haul routes, delivery hours, flagging and traffic control measures, and coordination with VDOT and the County's DTCI. The CTMP should be submitted to the County for approval prior to the commencement of construction.
C. Supervisor Engagement Strategy
The Stonebridge Campus is located within either the Broad Run or Dulles election district of the Loudoun County Board of Supervisors, depending on the most recent redistricting. The Supervisor representing the relevant district will be the most influential individual decision-maker in the ZMOD approval process, and their support is essential to securing Board approval. We recommend the following engagement strategy:
First, identify the relevant Supervisor(s) and confirm their current positions on data center development. Thomas Ashcroft and Alan Mercer are best positioned to make this identification based on their ongoing relationships with County officials and their familiarity with the current Board composition. Preliminary indications are that the relevant Supervisor has been generally supportive of data center development in the established industrial corridors but has also expressed interest in enhanced proffer commitments and design standards.
Second, schedule a pre-hearing meeting with the relevant Supervisor and their land use staff as soon as practicable after the ZMOD filing. This meeting should be attended by Thomas Ashcroft (as counsel of record), Alan Mercer (as land use consultant), and Leonard Castellano (as IHDC's senior development representative). Douglas Fairchild and Cynthia Ho should participate in a preparatory strategy session but need not attend the Supervisor meeting absent specific circumstances.
Third, present the fiscal impact analysis demonstrating the Project's net positive contribution to County revenues. This analysis, to be prepared by Cornerstone Land Use Consulting with support from Fielding & Associates, CPAs, should quantify the annual equipment tax revenue, real property tax revenue, and business personal property tax revenue generated by the Campus, and compare these revenues to the estimated annual cost of County services attributable to the Project. The net fiscal surplus should be substantial and should be the lead data point in all presentations.
Fourth, engage Cornerstone Land Use Consulting to prepare professional-quality presentation materials for the Board hearing, including site plan exhibits, architectural renderings (if available), landscape buffer visualizations, and a proffer summary chart. These materials should be designed for the lay audience that will be present at the public hearing, and should communicate the Project's benefits clearly and effectively.
Fifth, coordinate messaging with IHDC's Leonard Castellano (EVP, Development) and Ridgeline Capital Management's Julian Hargrove (managing equity sponsor) to ensure that all client communications with County officials are consistent and unified. All communications with County staff and Board members regarding the Project should be channeled through Thomas Ashcroft as counsel of record, with Alan Mercer and Leonard Castellano as the designated client-side spokespeople.
VII. Coordination with Other Workstreams
A. Impact on Project Budget and Financing
The proffer obligations of $2,400,000 (estimated) are budgeted within the $14,200,000 Entitlements, Proffers & Soft Costs line item in the overall $600,000,000 project budget. This line item also includes ZMOD application fees, permit fees, impact fees, design and engineering costs, environmental assessments, legal and consulting fees, and other soft costs associated with project entitlement and pre-construction activities. The proffer allocation within this line item is approximately $3,000,000, providing a cushion above the $2,400,000 initial offer to accommodate negotiation upward within the authorized range.
If proffers are negotiated up to the $2,760,000 ceiling, the additional $360,000 can be absorbed within the existing budget line without impacting other cost categories or requiring a reallocation from contingency or other line items. However, if the total proffer exceeds $2,760,000 — a scenario we regard as unlikely but not impossible if extraordinary political circumstances arise — the overage would need to be addressed through budget reallocation or contingency drawdown, which would require IHDC management and Ridgeline Capital Management approval.
Proffer payment timing must be carefully coordinated with the construction loan draw schedule. The $390,000,000 construction loan facility from Summit National Bank, N.A. (with syndicate participation) provides for a 36-month draw period from the first advance, with the first advance anticipated on or about October 15, 2025 (the construction loan closing date). Under the recommended phased proffer payment structure, proffer payments would be triggered by certificate of occupancy milestones occurring approximately 22–25 months after NTP, which would fall within the draw period and can be incorporated into the approved construction budget as later-phase draw items.
Proffer amounts and the recommended phasing structure should be communicated to Karen Ellsworth (Managing Director, Summit National Bank, N.A.) and to Victor Redmond (Redmond & Calloway LLP, lender's counsel) for incorporation into the construction budget approved by the lender. The proffer obligations should be reflected as a line item in the approved project budget and in the draw request procedures, and the phased payment triggers should be aligned with the milestone-based draw schedule.
B. Relationship to Land Closing Timeline
The land closing target for both the Stonebridge Parcel and the Meridian Parcel is September 15, 2025. The ZMOD approval target is the October 2025 Board of Supervisors hearing. This sequencing means that the land closings may need to proceed before ZMOD approval is obtained, creating a risk that IHDC acquires the parcels without confirmed zoning authorization for data center use.
This risk is mitigated by several factors. First, the purchase and sale agreements for both parcels include a zoning contingency provision that permits IHDC to delay closing if the ZMOD has not been approved by a specified date. The terms and implications of this contingency are analyzed in a separate internal memorandum (re: Conditional Zoning Approval — Impact on Land Closing and Financing), which should be cross-referenced in connection with the overall transaction timeline.
Second, proffers become binding only upon ZMOD approval by the Board of Supervisors. The proffer statement, once approved, will be recorded as a covenant running with the land in the land records of Loudoun County. Until ZMOD approval is obtained, the proffer statement remains a proposed document with no legal effect. Accordingly, IHDC will not incur any proffer obligation by closing on the land before ZMOD approval.
Third, contingency planning is essential. If ZMOD approval is delayed beyond October 2025 — for example, due to a Board deferral, additional staff review requirements, or political complications — the delay could impact the following downstream milestones:
• Construction Loan Closing: Targeted for October 15, 2025. The construction loan documents will likely include a condition precedent requiring evidence that the ZMOD has been approved or is reasonably expected to be approved. A delay in ZMOD approval could delay the construction loan closing.
• EPC Contract Execution: Targeted for October 20, 2025, with Titan-McAllister JV under a Guaranteed Maximum Price ("GMP") contract of $412,000,000. The EPC contract execution is contingent on construction loan closing, and a delay in either would cascade to the EPC timeline.
• Notice to Proceed: Targeted for November 1, 2025. A delay in NTP would push out the 24-month construction schedule and the associated Substantial Completion dates, which in turn would delay certificate of occupancy milestones and proffer payment triggers.
We will continue to monitor the ZMOD review timeline closely and will provide updated risk assessments as the application proceeds through the staff review period. If it becomes apparent that a delay beyond October 2025 is likely, we will advise on alternative strategies, including the possibility of seeking a November or December 2025 Board hearing or, if necessary, proceeding with land closing under the zoning contingency provisions.
C. EPC and Construction Considerations
Several of the recommended proffer commitments have direct implications for the EPC Agreement and the construction process, and must be coordinated with the Titan-McAllister JV team and the civil/site design by Lumen Ridge Engineering, PLLC:
Transportation Improvements. The proffer commitments regarding turn lanes, signal modifications, and pedestrian infrastructure along Belmont Ridge Road and Stonebridge Boulevard will likely need to be completed before or concurrent with campus construction. The timing and phasing of these improvements must be coordinated with VDOT and the County's DTCI, and the scope of work should be confirmed as either (i) included within the EPC Agreement scope, (ii) performed by a separate contractor under IHDC's direct supervision, or (iii) funded through the proffer contribution with the County managing the construction. We recommend that the transportation improvements be structured as a proffer contribution (i.e., a cash payment to the County or to a County-designated escrow) rather than as a proffer-in-kind (i.e., a commitment by IHDC to construct the improvements directly), as the latter approach introduces significant complexity in terms of bonding, VDOT permitting, and warranty obligations.
Noise Mitigation. The noise mitigation proffers — including sound attenuation walls around generator yards and sound-attenuated generator enclosures — must be confirmed as consistent with the EPC Agreement scope. Under the GMP contract with Titan-McAllister ($412,000,000), the scope of generator yard construction, including enclosures and any perimeter walls, should already be included. However, if the proffer negotiation results in enhanced noise mitigation requirements beyond what is currently included in the EPC scope (e.g., higher walls, additional acoustic treatment, or more extensive enclosures), the incremental cost should be identified and either incorporated into the EPC scope through a change order or funded separately as a proffer fulfillment cost outside the EPC GMP. This determination should be made in consultation with the EPC team and with Lumen Ridge Engineering.
Visual Screening and Landscaping. The proffer commitments for enhanced landscape buffers and architectural design standards must be coordinated with the civil/site design being prepared by Lumen Ridge Engineering, PLLC (Carlos Esteban, PE). The landscape buffer design, planting specifications, and installation timeline should be integrated into the overall site plan, and the associated costs should be captured in either the EPC scope or a separate landscaping contract. We note that the current EPC GMP may include basic landscaping but likely does not include the enhanced buffers and architectural treatments that the proffer may require; any incremental costs should be budgeted separately.
D. Tax Implications
Proffer payments are generally treated as deductible development costs that factor into the cost basis of the improvements for federal and state income tax purposes. This treatment is consistent with IRS guidance on pre-construction development expenditures and with the capitalization rules under IRC § 263A.
The proffer payments should be included in the overall cost segregation analysis being prepared for the Campus. We recommend coordinating with Sylvia Hartwell (Calderwood & Harkness, Tax Department) and Fielding & Associates, CPAs (Robert Fielding, engagement partner) to confirm the proper treatment of the proffer payments in the cost segregation study, including the allocation of proffer payments across the relevant asset categories (land improvements, building improvements, infrastructure) for depreciation purposes. Proper categorization could yield meaningful tax benefits through accelerated depreciation of the infrastructure-related proffer components under the Modified Accelerated Cost Recovery System ("MACRS").
Additionally, to the extent that proffer payments are characterized as capital facility contributions or transportation improvement contributions, they may qualify as indirect costs subject to the uniform capitalization rules, and their recovery through depreciation should be analyzed in conjunction with the broader project cost allocation.
VIII. Draft Proffer Statement — Overview and Next Steps
A. Status of Draft Proffer Statement
A draft proffer statement has been prepared by Ashcroft & Wynn, P.C. in coordination with Calderwood & Harkness LLP for submission with the ZMOD application. The draft proffer statement is targeted for filing as part of the ZMOD application package on May 30, 2025 (Docket No. ZMOD-2025-0038).
The draft proffer statement reflects the following key parameters:
• Proffer rate: $5.00 per square foot of GFA
• Total campus GFA: 480,000 square feet
• Total proffer amount: $2,400,000
• Proffer categories addressed: fiscal impact/capital facilities contribution, transportation improvements, environmental/stormwater management, noise mitigation, visual screening and landscaping, and community ame

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