Butte economic board wrestles with 'elephants in the room' on business park development

Todd Tregidga called the REC Silicon and Sabey Data Centers agenda items “the elephants in the room.”

There was practically a herd.

News broke this week that REC Silicon had alerted Butte-Silver Bow County earlier this month of the company’s plans to buy land in the Montana Connections Business Development Park. That property was previously included within the footprint of a proposed Sabey Data Centers facility.

Specifically, REC Silicon, a tenant in the park west of Butte, announced it intends to exercise a right of first refusal agreement from 1996 to purchase acreage likely earmarked for the Sabey project.

For better or worse, the announcement threatened to upset applecarts. Data center opponents celebrated the news.

Yet it sounds like the Sabey Data Centers facility might not be dead in the water. It might get by with fewer acres than previously included in a purchase and sale agreement between the company and Butte-Silver Bow.

The Butte Council of Commissioners agreed a year ago to sell 606 acres to Sabey Data Centers. In early February, commissioners approved extending until Aug. 11 Sabey’s deadline for closing on the land deal.

Then, Sabey’s due diligence discovered that REC Silicon had a right of first refusal agreement on much of the land Sabey wanted to purchase from Butte-Silver Bow. The discovery came as a complete surprise to city-county officials.

REC Silicon has a large facility in the business park and the agreement essentially gives it the first opportunity to buy the land on the same terms as Sabey was slated to receive.

The right of first refusal notice identified 627.8 acres at a price of $2,000 per acre, for a total of $1,255,606 that REC Silicon would pay Butte-Silver Bow County. A right of first refusal stipulation in a real estate property agreement grants its holder the first opportunity to make an offer on a property and buy it if it goes on the market, according to the National Association of Realtors.

At noon Friday, Tregidga, other board members for the Targeted Economic Development District, or TEDD, and city-county staff met to discuss these and other issues affecting current and potential tenants at the Montana Connections Business Development Park.

A TEDD is a designated area that utilizes Tax Increment Financing to fund public infrastructure improvements aimed at supporting industrial, technology-based or other businesses.

Neither REC Silicon nor Sabey attended the meeting. Neither responded to requests for comment.

Another company entered the discussion. Cenate is a battery materials company based in Norway that could readily secure raw materials from REC Silicon if it moved to the business park.

Kayla Lappin is the economic development coordinator for TEDD.

“We have met with REC, Cenate and Sabey, sort of talking through what this means for all the parties,” she said.

Lappin said Cenate’s business reliance on REC Silicon increases the importance of the companies being in proximity.

Karen Byrnes, community development director, said Butte-Silver Bow is in the process of negotiating a purchase and sale agreement with REC Silicon.

“The county attorney’s office is reviewing that agreement right now,” she said. “Terms and conditions can be put into that purchase and sale agreement. Our goal is to make sure that we position ourselves in the right way for economic prosperity for Butte-Silver Bow.”

The TEDD and Butte-Silver Bow Council of Commissioners would review the agreement.

Byrnes added, “I just want to reiterate that we are in communication with all of the affected companies.”

Tregidga asked whether the city-county could claw back the land if REC Silicon doesn’t comply with negotiated agreements about development of the acreage. The answer was yes.

Meanwhile, Lappin described communication with Sabey.

“We have been actively talking with Sabey Data Centers about what does this mean for their project going forward,” Lappin said. “So, we are just working with them to identify, you know, additional opportunities for them in the park.”

The discovery of the right of first refusal agreement stirred some ambivalent reactions during Friday’s meeting.

But Evan Barrett, who spent 18 years shepherding economic development in Butte as executive director of the Butte Local Development Corporation, suggested a silver lining. He said the earlier agreement to sell Sabey 606 acres for just a few permanent jobs was a bad economic development choice.

“I urge you to keep an eye on a smaller, properly sized transaction with Sabey,” Barrett said.

Earlier this month, Hanwha Solutions, headquartered in South Korea, announced it has become the largest shareholder of REC Silicon. It’s not yet clear what that transaction might mean for the facility in Butte-Silver Bow County.