USDA B&I Feasibility Study Case Study: Rural Edge Colocation Facility on the US Highway 287 Corridor in Dumas, Texas

A 6.63-acre listed commercial lot on US Highway 287 in Dumas, Moore County, Texas, asking $350,000, proposed for a 2.0 MW carrier-neutral edge colocation facility and resized in this study to a 500 kW phase one, because a 2.0 MW build at the 2026 greenfield benchmark of $17.6 million per MW cannot be funded inside the $25 million USDA Business and Industry debt cap. Underwritten under 7 CFR Part 5001 at a total project cost of $11,219,100, a restructured B&I loan of $4,300,000 at 85 percent guaranteed and $6,919,100 of cash equity, with debt service coverage negative in Years 1 and 2, 0.32x in Year 3, 0.95x in Year 4 and 1.28x in Year 5, carried by a $1,927,600 ramp reserve. The 1.00x threshold needs 367 kW contracted against about 180 kW of documented anchor demand, in a city where an incumbent edge operator already serves the largest school district. Determination: not feasible as proposed; conditionally feasible as restructured only on executed anchor contracts for at least 367 kW and an executed utility service agreement, both delivered before the loan note guarantee issues.

Model study prepared by MMCG Invest | Michal Mohelsky, J.D., FMVA | 4 October 2026

MMCG concludes that the project is not feasible as proposed. The 2.0 MW concept costs $35.2 million at the Cushman & Wakefield 2026 all-in greenfield benchmark of $17.6 million per MW (3 September 2026). The B&I cap of $25 million in total debt to one borrower under 7 CFR 5001.406(c), plus the 25 percent equity a new business must contribute when the loan note guarantee issues before construction completion, funds at most $33.3 million, so the concept does not fit the program. Resized to a 500 kW phase one at 75 percent loan-to-cost, the $8,414,300 loan carries $875,800 of annual debt service against $573,100 of stabilized cash flow available for debt service, 0.65x in Year 5.

As restructured, with the loan cut to $4,300,000 and cash equity raised to $6,919,100, the project reaches 1.28x in Year 5 and no earlier. Years 1 through 4 run below 1.00x and are carried by an equity-funded ramp reserve of $1,927,600. The Year 5 figure rests on 400 kW contracted. The documented anchor base in the trade area supports about 180 kW, and Duos Edge AI has operated a pod behind Dumas High School on land leased from Dumas ISD since 25 September 2025. At every coverage threshold the subject must contract more than all of the demand MMCG could identify, while the incumbent holds the largest anchor.

MMCG does not support issuing the guarantee on public evidence alone. The determination becomes favorable only if the following are delivered before the loan note guarantee issues: executed master service agreements or take-or-pay letters of intent for at least 367 kW on terms of three years or longer, the 1.00x threshold, and preferably 397 kW, the 1.25x threshold; an executed Southwestern Public Service electric service agreement stating capacity and an energization date; title in fee to the land, building and equipment in the borrower's name; and the ramp reserve funded at closing.

This is an MMCG model study: a feasibility analysis performed on a real, publicly listed parcel using public data only, prepared to show B&I lenders and rural sponsors how MMCG underwrites a small data center under 7 CFR Part 5001, Appendix A to Subpart D, when the program cap forces a resizing and the demand evidence stops short of the coverage threshold. The sponsor and borrower are hypothetical and unnamed. MMCG has no relationship with the seller or listing broker, and the analysis is not an offer, an appraisal or a recommendation to buy the parcel. Real companies appear only as competitors, cited comparables or the utility of record. Figures drawn from the listing, government sources and company releases are identified as such. Figures labeled MMCG assumption are underwriting inputs set from published benchmarks. Items that could not be verified from a primary source at the study date are listed in Conditions and Limitations rather than estimated silently. Projections run through Year 5, covering two years of stabilized operation as 5001.303(b)(4)(iii) requires.

The borrower would develop, own and operate a single-story hardened facility of about 6,000 square feet with 500 kW of critical IT capacity on the subject parcel, designed for expansion to 2.0 MW on the same site. The electrical design is 2N UPS with N+1 standby generation. Cooling is air-cooled direct expansion with hot-aisle containment and economization, using no evaporative water. The facility is carrier-neutral, with a meet-me room and two diverse fiber entrances. The borrower sells retail colocation by cabinet and cage, cross-connects, remote hands and managed services, and passes power through on a metered basis at the utility tariff with a PUE cap. The borrower holds the land, building and equipment in fee in a single operating entity that is the B&I borrower, with the principals providing the guarantees the program requires. Staffing is four full-time positions: a general manager who carries sales, two critical facility technicians and one NOC and customer technician, with remote monitoring and an on-call rotation covering the 24-hour floor.

Marketing and Sales Strategy

Sales target four groups in the order of their demonstrated need. First, Region 16 member districts and charter schools that still backhaul outside the region; before the first local pod, more than 50 Region 16 schools linked to a data center in Dallas about 500 miles away, and the regional network now reaches 59 of 60 districts. Second, Moore County Hospital District, for disaster recovery and imaging archive. Third, regional ISPs and wireless ISPs seeking a Panhandle aggregation point. Fourth, agricultural processors and oil and gas operators with SCADA and disaster recovery requirements. The general manager carries the sales role and commissions sit in administrative expense. Positioning against the incumbent rests on Tier III redundancy, carrier neutrality and fee-simple ownership.

Amenities

The subject is a 6.63-acre commercial lot on US Highway 287 in Dumas, the seat of Moore County and the core of the Dumas micropolitan area, on the US 287 / US 87 Ports to Plains corridor about 50 road miles north of Amarillo. Moore County's 2025 population estimate is 21,891. The Dumas Economic Development Corporation's 265-acre business park, with concrete roads and full underground utilities, sits on the same corridor; its tenants include a TxDOT district office, the Moore County Appraisal District, Texas DFPS, a Frito-Lay distribution facility and Blue Knight's crude terminal, and the EDC states it will consider deeding land to qualifying projects. Moore County Airport lies two miles west of the business district, and the EDC reports an expanded rail yard and trans-load facility.

Comparable land evidence brackets the asking price: 35 acres north of Dumas on US 287 listed at $5,500 per acre (9 November 2024), and 15.52 acres at 119 N Meredith Avenue at $931,200, or $60,000 per acre (LoopNet, accessed 4 October 2026). The subject's $52,790 per acre sits at the corridor-commercial end of that range. The parcel's APN, dimensions, topography, flood zone and hazard screens were not retrieved and are carried as conditions; MMCG expects 7 CFR Part 1970 review at the environmental assessment level for new construction on undeveloped land.

The City of Dumas Code of Ordinances, Chapter 14, Article 14.05, establishes 19 use classes including the J and K Industrial, L First Manufacturing, M Second Manufacturing and PD Planned Development districts. The L district permits manufacturing or industrial operations of any kind not reserved to the M district, with a side yard of at least 3 feet if provided; the PD district allows industrial parks on tracts of 10 acres or more. A data center is not a listed use. MMCG's judgement is that a carrier-neutral facility with standby generation is an industrial operation within the L or J and K districts, and the City must confirm that classification in writing before closing. Rezoning, if required, follows the planning recommendation, public hearing and City Commission ordinance sequence recorded for Ordinance No. 1240. The subject's current district, height and coverage limits, generator noise limits and screening standards were not retrieved. MMCG carries a 3 to 4 month entitlement window if rezoning is needed and none if the use is classed as permitted (MMCG assumption).

Electric. Southwestern Public Service Company (Xcel Energy) serves Dumas and added capacity at its Demon Substation northeast of the city on 15 May 2023. Service is under Primary General Service, Sheet IV-173, Revision 12, PUCT Docket 54634, approved 23 January 2024: a $76.13 monthly service availability charge, energy at $0.007731 per kWh plus the fuel cost recovery factor, and demand charges of $19.55 per kW in summer (June through September) and $16.57 per kW in winter. Billing demand is the highest 30-minute kW in the month. The sheet carries no ratchet, minimum billing demand or capacity commitment charge. SPS may require a contract above 200 kW with a minimum period and year-to-year renewal, and line extensions fall under its standard policy, with the cost split unquantified. SPS requested a fuel factor change in September 2026 that was not approved at the study date; MMCG carries $0.030 per kWh (MMCG assumption). SPS's proposed large-load tariff, filed September 2026, applies above 75 MW, and the utility stated it had no Panhandle data center proposals before it; the subject sits far below the threshold and carries no tariff floor, collateral or fixed charge. Capacity and an energization date at the parcel are not documented and are treated as a scenario.

Water, sewer and fuel. The City of Dumas supplies water and sewer; a listing on US 287 south documents a 10-inch domestic water main and an 8-inch sewer main on the corridor. Rates and connection fees were not retrieved. The design uses no evaporative water, and staff water comes from the City system, so no Safe Drinking Water Act public water system classification arises.

Fiber. FiberLight built the Region 16 10 Gbps education network under a contract dated 13 August 2024, added about 1,000 route miles across Texas (28 October 2025) and committed a further $350 million for about 1,400 route miles in West Texas (23 February 2026). Dumas ISD describes major carriers co-located at the local edge pod. A second carrier at the parcel is not verified. Dual diverse laterals are carried at $250,000 (MMCG assumption).

Property tax. The Moore County Appraisal District appraises real and business personal property at market value as of 1 January under the Texas Property Tax Code; machinery and equipment are taxed as business personal property and no freeport treatment applies. The combined rate inside the city is 2.380462 per $100 on the component rates MMCG compiled: Moore County 0.467100, Dumas ISD 1.106400, City of Dumas 0.480631 (2023, MCAD), Moore County Hospital District 0.236230 (adopted 24 September 2025), Palo Duro River Water District 0.013630, North Plains Groundwater Conservation District 0.027966 and Amarillo College District 0.048505. The EDC's 2020-21 table showed 2.604138; MMCG uses the newer component rates. Moore County adopted a 2026 rate raising maintenance and operations taxes by 3.04 percent, not retrieved. The study models assessed value at 60 percent of land, hard and equipment cost ($8,699,000 × 60 percent = $5,219,400) for $124,200 a year (MMCG assumption on the value ratio). No Chapter 312 abatement guidelines were found for the County or City; the EDC's Community Investment Program offers negotiated incentives under a performance agreement, not modeled.

State incentives. The Texas data center sales and use tax exemption under Tax Code 151.359 requires a single-occupant building of at least 100,000 square feet, at least 20 qualifying jobs at 120 percent or more of the county average wage and at least $200 million of investment over five years; the large-project tier under 151.3595 requires $500 million, 40 jobs and a 20 MW transmission contract. The subject misses every threshold. Combined local sales tax is 8.25 percent and applies to equipment purchases.

The trade area is defined by latency, not county lines: a round-trip radius of about 5 milliseconds, roughly 250 fiber route miles (MMCG assumption), which covers the 26,000-square-mile Region 16 territory along US 287 south to Amarillo and US 385 and US 60 southwest to Hereford. Region 16 Education Service Center serves 60 public school districts and three charter schools, 226 campuses, average daily attendance above 83,000 and more than 12,800 staff (Region 16 release, 5 March 2025). Dumas ISD's 2025 maintenance and operations taxable value is $2.307 billion (Texas Comptroller). County income and labor figures were not compiled; for the subject, the demographic question is the institutional and commercial customer base, not the resident population.

Institutional census. Region 16 ESC in Amarillo, 60 districts and 226 campuses, hosted since March 2025 by a Duos pod at 5800 Bell Street. Dumas ISD, approximately 4,300 students and staff across seven campuses, hosted by the Duos pod behind Dumas High School, which the district's IT director told KAMR will serve about 53 Panhandle schools as a central point for connectivity, internet access and secured data transfer. Hereford ISD, more than 4,000 students across 900 square miles, served by a Duos pod since 14 January 2026. Moore County Hospital District, a critical access hospital with 80 total and 49 certified beds on an older federal profile, 201 to 500 employees, and a 47-bed nursing home. Moore County government, the TxDOT district office and Texas DFPS.

Commercial demand. JBS USA's Cactus beef plant employs more than 3,700 team members and partners and pays $2.9 billion a year for livestock (KFDA, 4 February 2025); its $150 million expansion broke ground 27 February 2026 and is due to open in 2027. Valero, Blue Knight Energy Partners and the drilling operators the EDC names (Apache, Chesapeake, ConocoPhillips, BP, Pioneer) carry SCADA and disaster recovery requirements. No WISP subscriber counts, bank or credit union recovery mandates, or AI inference demand with a documented basis were found.

Load-inquiry evidence. SPS stated on 28 September 2026 that it had no data center proposals before it in the Panhandle. The only large-load activity found is hyperscale: Fermi America's Project Matador near Amarillo, planned at 11 GW by the mid-2030s with TensorWave signed as anchor in August 2026. Hyperscale activity of that kind says nothing about retail edge demand.

Penetration test. Named anchor demand is about 180 kW, an MMCG estimate built from observed pod sizes: one education-consortium pod-equivalent of 90 kW (15 cabinets at 6 kW, the Duos profile DCD reported), hospital disaster recovery and imaging at 40 kW, county and state agencies at 20 kW, and ISP and WISP aggregation at 30 kW.

At every threshold the subject must contract more than all of the identified demand, while an incumbent already holds the largest anchor. Public evidence identifies the institutions but not their kW. A letter of intent or master service agreement would have to show contracted kW and cabinet count, the monthly recurring charge, a term of 36 months or more, a take-or-pay or early-termination payment at least equal to remaining base rent, a start-date quarter and, for school districts, E-rate eligibility of the related transport.

MMCG identified six competing facilities and the incumbent alternative. No competitor publishes a rate card that MMCG could verify on the operator's own site, so price comparisons rest on national achieved figures.

Competitor Number 1 Duos Edge AI, Dumas EDC This facility is located at 421 W 4th Street, Dumas, behind Dumas High School, on land Dumas ISD leases to the operator. It became operational on 25 September 2025 and serves Dumas ISD, with about 53 Panhandle schools expected to use it. Region 16's release describes Duos pods at 100 kW-plus per cabinet capability, 90-day deployment and placement within 12 miles of end users; DCD describes each pod as 15 cabinets in a 55-foot by 13-foot enclosure at typical loads of 5 to 6 kW per cabinet and up to 300 kW with a cooling change. Carrier count and cross-connect pricing are not published. No rate card.

Competitor Number 2 Duos Edge AI, Amarillo EDC (Region 16 ESC) This facility is located at 5800 Bell Street, Amarillo, described as Tier 2 with full SOC compliance, interconnecting to major carriers, built with FiberLight. Grand opening 18 March 2025. No rate card.

Competitor Number 3 Duos Edge AI, Amarillo (Potter County site) This facility is located at 810 to 814 S Tyler Street, Amarillo, on Potter County land, deployed in March 2026 beside an AT&T facility and AW Broadband. No rate card.

Competitor Number 4 Lumen Amarillo 1 This facility is located at 512 SE 8th Avenue, Amarillo, with 5,000 square feet total and 1,731 square feet of colocation space, carrier-owned with diverse fiber, listing HIPAA, ISO 27001, PCI DSS, SOC 1 and SOC 2. No public rate card.

Competitor Number 5 Duos Edge AI, Hereford EDC This facility is located at 601 N 25 Mile Avenue, Hereford, at the Hereford ISD administration site, operational since 14 January 2026, using no water for cooling. No rate card.

Competitor Number 6 Dallas metro carrier hotels (incumbent alternative) The Dallas INFOMART at 1950 N Stemmons Freeway is the region's principal carrier hotel and the kind of distant site Panhandle schools backhauled to before the local pods, about 500 miles away. Rate cards not retrieved.

Edge capital in the radius is flowing to the incumbent rather than to new entrants. Duos announced a $176 million GPU-as-a-service agreement in September 2025, partners with Fortress Investment Group through Duos Energy to power four 50 MW data centers at the Pampa Energy Center with up to 500 MW of self-generated natural gas power and up to 200 MW of wind, and targeted 15 pods by the end of 2025. No new retail edge facility under construction or approved in Moore County other than the incumbent's was identified.

Anchor quarters are MMCG assumptions for hypothetical contracts; no LOI exists: an education consortium of Region 16 member districts at 100 kW from Q2 Year 1, hospital disaster recovery at 40 kW from Q3 Year 1, ISP and WISP aggregation at 30 kW from Q4 Year 1, public agencies at 20 kW from Q2 Year 2, and commercial retail across agricultural processing, energy and MSPs for the balance of the ramp in Years 2 through 5.

Location: Highway 287, Dumas, Moore County, Texas 79029 Site: 6.63 acres | Building: about 6,000 square feet | Critical IT load: 500 kW

Source: Marshall & Swift CoreLogic, MMCG

The annual retention fee of 0.55 percent is an operating cost and sits in the operating budget. No letter of credit is required because the SPS Primary General Service sheet sets no collateral; the utility deposit is a sources-and-uses item. The reserve equals cash flow available for debt service less debt service, summed over Years 1 through 4: $930,300, $669,100, $304,100 and $24,100.

Before financial cost the subject costs $17.40 million per MW, at the Cushman & Wakefield all-in greenfield benchmark of $17.6 million per MW excluding chips (3 September 2026) and inside its reported range of $8.9 million to $23.3 million. The subject's figure is a full-scope turnkey build and is not comparable to JLL's shell-and-core figure of about $11.3 million per MW, which excludes the mechanical and electrical plant. Electrical plus interconnection is 26.3 percent of total cost, close to Cushman's 21 percent for power infrastructure. Including the ramp reserve, all-in cost is $22.44 million per MW; the premium is the price of a small build with a slow ramp.

Loan Assumptions

Twenty years blends the building's useful life of 30 to 40 years with the 15 to 20 year lives of the UPS, generator and cooling plant, inside the 40-year ceiling. The guarantee percentage moves from 80 to 85 percent because the restructured loan falls below $5 million (91 FR 11272). No non-cash equity is admitted; EDC-deeded land would count at appraised value but is not modeled.

The Year 5 operating budget at 400 kW contracted and 500 kW commissioned is built by line for an owner-operated edge facility in the Texas Panhandle.

The margin sits below the 40 to 50 percent retail colocation range for three reasons. Payroll of 4 FTE on 0.5 MW equals 800 per 100 MW against a benchmark of 20 to 30, because a 24-hour critical facility needs a minimum crew at any scale, and payroll is 21 percent of revenue. Property tax at a combined 2.38 percent on business personal property with no abatement is 7 percent of revenue. Pass-through power earns only the 5 percent administration margin, which dilutes the percentage. Purchased power is carried at the SPS tariff with a $0.030 fuel factor, a 65 percent IT load factor and $35,000 of annual house load (MMCG assumptions).

Restructured case.

The ramp reserve of $1,927,600 funds the Years 1 through 4 deficits with no margin. No fixed charge coverage ratio applies, because the tariff carries no minimum bill. The as-proposed phase one, with $875,800 of debt service, produces 0.65x in Year 5.

At Year 5 rates, each contracted kW contributes $3,779.60 a year to cash flow available for debt service, and fixed costs including the reserve are $938,700.

The 1.25x threshold sits 3 kW under the forecast. That is the credit fact: the facility covers the program's expected coverage only at 79 percent utilization, and the identified demand supports 36 percent.

Coverage is driven by demand: rent, utilization and anchor retention. Power cost has little effect because the tariff has no floor and costs pass through. A 12-month energization delay would also need about $448,000 of additional carry that the capital stack does not fund.

The determination is subject to the following conditions precedent:

The following items could not be verified from a primary source at the study date and are disclosed: the subject listing ID, broker, days on market, APN, coordinates and dimensions; the Rural Development Property Eligibility Map result, the 2020 census population for Dumas and the urbanized-area boundary printout; FEMA, seismic, wind, wildfire, radon, wetlands, historic and species screens; the parcel's zoning district, data center use classification, height, coverage, noise and screening limits; the SPS fuel factor for October 2026, parcel capacity, line extension cost split and energization date; City of Dumas water and sewer rates and connection fees; the second fiber carrier at the parcel, lateral cost and FCC Broadband Data Collection coverage; 2025 and 2026 tax rates for all units except the hospital district, and Chapter 312 availability; every competitor's rate card; the hospital bed count and employee band, which come from secondary profiles; the text of 7 CFR 5001.118(b); and the FY2027 B&I fee notice, none having been published as of 4 October 2026.

Assumptions that are judgement calls rather than sourced figures: the 500 kW phase one scope and 2.0 MW expansion path; every cost line other than the land price; the 1.50 percent spread, 8.50 percent rate and 20-year amortization; the $0.030 fuel factor, $35,000 house load and 65 percent IT load factor; design PUE and the 1.45 cap with a 5 percent administration margin; the rate card, escalator, term and churn; the ramp and anchor quarters; the 180 kW anchor estimate and its split; cross-connect, managed services and remote hands pricing; assessed value at 60 percent of cost and the use of 2023 component rates; 4 FTE and all operating expense amounts; the $10 lifecycle reserve; the 250-mile latency radius; the zoning classification and entitlement timeline; the 5001.115(g) conclusion; and about 40 peak construction jobs.

The lender did not receive executed customer contracts, an SPS service agreement, an appraisal, a Phase I ESA or a title commitment. Each is a condition of any favorable determination.

This model study applies the methodology described on MMCG's Data Center Feasibility Study and USDA Data Center Feasibility Study pages. MMCG prepares data center feasibility studies for SBA 7(a) and 504, USDA Business and Industry and REAP, and conventional lenders nationwide, with engagements from $4,900 and delivery in 9 to 16 business days.