Who pays to clear the site at the end of a long ground lease, and how is that secured?
Fermi must, at no cost to Texas Tech, decommission and remove everything it builds, including data centres, power plants, any nuclear plant and transmission lines, and restore the land. From the date its first data centre tenant pays, it puts $10 million a year, rising 3% a year, into a sinking fund held in trust, and $19 million a year if it builds a nuclear plant, capped at $10 billion. Before construction it must post a letter of credit for base rent, indemnities and restoration on early termination, which stays until the sinking fund reaches $10 million. Withdrawals need the landlord’s approval while a material default continues or the fund is below $3 billion.
Randeep Bubbra | Lawyer | Making the next generation of infrastructure financeable · Firm profile ·
What the filed contracts say
Contract
What the filed wording says
Fermi Texas Tech ground lease
The tenant must remove everything it builds, including any nuclear plant, and restore the land at its cost.
Fermi Texas Tech ground lease
$10 million a year, rising 3% a year, goes into a sinking fund in trust; $19 million if a nuclear plant is built.
Fermi Texas Tech ground lease
The landlord must approve withdrawals during a material default or while the fund is below $3 billion.
Fermi Texas Tech ground lease
A letter of credit covers rent, indemnities and restoration until the sinking fund reaches $10 million.
The filed wording
Section 7.01 Reclamation and Decommissioning. Tenant hereby affirmatively covenants and agrees that it shall, at no cost to Landlord, promptly and diligently perform all actions and responsibilities necessary to decommission, dismantle, remove, and remediate all Improvements constructed or placed upon the Premises by Tenant or any Tenant Responsible Party (including, without limitation, all Data Center Facilities, power generation facilities, the Nuclear Facility, transmission lines, and related infrastructure), and to restore the Premises to a condition that is in compliance with all applicable laws, regulations, and Permits and consistent with its obligations under the EIA (the “Reclamation Obligations”).
Fermi 99-year ground lease with the Texas Tech University System for its Amarillo data centre and power campus, section 7.01 · Fermi S-11, Exhibit 10.9
Each extract is quoted from the contract as filed with the SEC, checked against the filed text when it was added; “…” marks words left out. Filers redact commercial terms, so a [***] or [*] is the filer's, not ours. The summaries describe the wording, not how a court would read it, and each contract's defined terms and other clauses can change the effect. General information drawn from public filings. It is not legal advice on any transaction, and using this page does not create a lawyer-client relationship. Views are personal.
InfraCompute Weekly
The week in compute finance, read from the filings.
Deals, terms and the clauses behind them, for the people financing data centres, GPU clouds and the power behind them. By Randeep Bubbra.
