Judge Voids Leesburg, Microsoft Non-Disclosure Agreement

Circuit Court Judge Douglas L. Fleming, Jr. on Friday voided a non-disclosure agreement Town of Leesburg and Microsoft that was designed to keep certain pieces of the tech company’s data center development plans out of the public eye.

According to Fleming’s order, the town has until 5 p.m. today to provide Dave Gregory, the owner of the 131-acre Graydon Manor property, with the information he sought in a Freedom of Information Act request—information related to how much excess capacity the town’s sewer system contains and how much sewer service Microsoft requested from the town.

On Nov. 26, the Town Council voted to provide the Microsoft campus, which sits outside the town limits in the Compass Creek development but could be annexed into the town limits, with water and sewer service. A month later, following Gregory’s FOIA request, the council voted to approve a five-year non-disclosure agreement with Microsoft to protect proprietary information related to the tech company’s security systems and utility usage at the proposed data center complex. Four days later, Gregory sued the town.

Gregory said he made the FOIA request because he wants to know how much sewer service the town intends to provide Microsoft. He said the town has treated him unfairly by approving a utility expansion to Microsoft, but pushing back on his request for additional sewer service for his plans to develop 239 co-housing units, brewery and winery on the Graydon Manor property. The town has served the property with sewer since 1963 at a daily rate of 765 gallons.

Gregory said that, while his proposed development’s total daily sewer usage requirement would be about 100,000 gallons, it’s his understanding that Microsoft’s data center would require 10 to 20 times more daily sewer service.

According to a Dec. 30 posting byWater Technology,water demand and wastewater generation in data centers can rise to millions of gallons each day. Microsoft data center is expected to use hundreds of thousands of gallons of water daily to cool its servers. Areport from the US Department of Energy’s Lawrence Berkeley National Laboratoryfound that an average data center uses 0.48 gallons of water to cool every kilowatt hour consumed.

Gregory’s lawsuit charged that the town has “weaponized its utility system as a means of extorting owners of properties outside its jurisdiction to agree to be annexed into the town, particularly properties that provide promise of a lucrative tax base … such as data center parcels owned by Microsoft Corporation.”

The lawsuit notes that the town, in its efforts to become the sole provider of utility services in areas outside its corporate limits, has engaged in a legal battle with the county government. On July 7, 2019, the Town Council voted to bring a legal action against the county challenging comprehensive plan amendments made by the Board of Supervisors in June that grantedLoudoun Water, rather than thetown, the right to extend utility services to theJoint Land Management Area—area surrounding the town where county policies typically allow the town to provide water and sewer service.

“I think they’ve been treating us criminally … I think this is a contrived new effort, county and town, to prohibit Graydon’s development,” Gregory said.

In addition to battling with the town, Gregory also has sued the county government, claiming a determination that his co-housing project is not allowed is a misinterpretation of the zoning ordinance. A trial in that case is set for April.

Gregory’s lawsuit highlights Mayor Kelly Burk opposition to Gregory’s proposed development on Graydon Manor. In a May 16, 2019 email to a Sara Gallagher, Burk wrote that the town is legally obligated to convey sewer service to Graydon Manor, since the property’s deed states that the easement is perpetual and runs with the land. “So we cannot stop the sewer from the project. Damn,” Burk wrote.

While it’s still unclear exactly how much sewer service Graydon Manor or Microsoft will require from the town, revenue in the forms of utility system upgrades and connection fees from both are more certain.

Leesburg Utilities Director Amy Wyks said in September that, although she was unsure whether the town would need to install more or larger sewer pipes to provide Graydon Manor with the added sewer capacity, she said the existing 56-year-old pipe that extends to the property might need to be repaired. While that tab would most likely fall in the town’s lap, Gregory said he would “happily pay it.”

If the town were to extend additional sewer service on Graydon Manor, Gregory would also be required to pay connection fees.

Meanwhile, according to Councilman Josh Thiel at the Nov. 26 council meeting, Microsoft plans to pay for the design and construction of the utility extension needed to connect its data center with the town’s system. It also plans to pay $2.4 million in water and sewer connection fees.

Gregory said that, while he’s confident the town’s response to his FOIA request this afternoon will contain redacted information, which could put both parties back in front of a judge, he’s hoping the matter won’t be too dragged out. “We are in it until it’s done,” he said.

As the town and Gregory continue their dispute, the Town Council is focusing on annexing the entire 550-acre Compass Creek development, which features a Walmart Supercenter and the ION International Training Center, and is approved for construction of 2.5 million square feet of office space, 550,000 square feet of retail development, 300,000 square feet of flex-industrial uses and a hotel. The Town Council is additionally expected to soon review a rezoning and special exception applications that would bring four drive-through restaurants to the development.


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