HERMANTOWN — In the two months since it became public that Google was behind a controversial data center proposed in Hermantown, additional discussion and debate has arisen.
The prospect of new jobs and more property tax dollars are being weighed with concerns about the neighborhood, the environment and the grid.
And there’s a new lawsuit from the citizen group Stop the Hermantown Data Center questioning whether city officials broke state law and failed to honor their comprehensive plan.
The Hermantown City Council is considering tax abatement and land development agreements with Google.
The city is also redoing its environmental review for the proposal.
An alternative urban areawide review last fall described the project as “light industrial development” near the Minnesota Power Arrowhead substation but did not specify that the development would be a data center. The revised one currently being considered includes more details and is also classified as light industrial development.
The Hermantown City Council voted on accepting a scoping document, in preparation of starting the draft version of the AUAR, at its Monday, May 18, meeting.
Google’s proposal includes $40 million contributed to Hermantown’s school district over 28 years, and $130 million invested into the public infrastructure needed for the campus build-out, which is expected to be done in four phases.
In return, Hermantown is offering to abate the company’s taxes over a 28-year period: meaning, it will discount Google’s payable property taxes, returning 85% of taxes paid after keeping the first $100,000.
“[Google will] pay those until 2052 or until the payments [to Google] reach a cap of $80 million,” explained Hermantown Economic Development Director Chad Ronchetti at a May 4 meeting. “That $80 million is the future value of money, the value of money in 2052.”
Ronchetti said Google’s new data center, after abatement, would generate $448,000 each year in property taxes.
During the meeting, members of Jobs for Minnesotans took to the lectern urging the Council to approve Google’s proposal, including former DFL state lawmaker Dave Lislegard.
“I want to congratulate you. I have never seen or heard of a deal this good coming to a community,” Lislegard said. “As I speak with people all over our region, from school districts to communities and other counties, they're all cutting. It's like you guys got the golden ticket.”
Several Hermantown residents spoke out against or questioned the project as well as the abatement agreement, such as Dawn LaPointe.
“What tax-based projections would allow a tax abatement of $4 million a year for a single company?” she asked. “And more importantly, why would Hermantown offer to give back our most valuable revenue resource, property taxes, for a project like this?”
After hours of public comment, the Council tabled the discussion. It’s expected members will not move forward on the abatement and development agreement until the AUAR process is complete.
Liz Schwab is head of market development and policy for Google’s data center division and presented at the Hermantown meeting. In a May 5 phone interview, she thanked the people who showed up to talk about the data center, especially those in opposition.
“Their questions, their concerns. and things they've raised to City Council and the mayor and staff will help to make this a better project, right?” she said.
Schwab said noise levels at the center would be at or below state standards, and outdoor lighting would have shades casting light downward, preventing new light pollution. She said Google is committed to complying with Minnesota’s 2040 clean energy goals. And backup generators would not be used to operate the data center, according to Schwab.
“They're actually just there to ensure that emergency backup lighting can turn on or, you know, the chips don't melt and cause a fire. They're really just for like lifesaving and emergency purposes, similar to what a hospital or police station might have,” Schwab said. “So, we would not run the data center in the event of a grid outage.”
She said the Hermantown data center would use a waterless coolant system, which operates a lot like an air conditioner. How the proposed data center would impact water resources has been a major point of contention among opponents.
“Using air cooling does actually use more electricity. And that is why we pursue water cooling in some locations in the first place, because it allows us to lower our electricity burden," Schwab said. “But in Hermantown, we are incredibly confident in our clean energy procurement with Minnesota Power.”
The 50,000 gallons a day in the proposed development agreement is the maximum water permitted to flow into the facility once it's built, which city and Google officials assert is for worker sanitation needs and emergency fire suppression.
Schwab said Google is a leader in climate and sustainability, and it reports several metrics on its website.
“We report our water globally at a site level annually. We report at what percentage of clean energy we are running on around the globe and every grid where we operate,” she said.
The nondisclosure agreements associated with this project and others have raised some public scrutiny, prompting legislative discussion this session on banning public officials from signing NDAs. Schwab said NDAs allow developers to be transparent with local officials in the initial stages.
“Once we do have commercial certainty — that we have approval from Google leadership to move forward and spend money on a project — we go public as soon as we can," she said. "And especially now in today's environment with the public concern over this, we understand that that's really important to earn trust and start to build that rapport with local elected officials and community members.”
Hundreds of pages of comments were submitted to Hermantown for its revised AUAR, many of which urged a more intensive environmental review, like an Environmental Impact Statement — which is completed by the state.
The state Public Utilities Commission is currently accepting comments on the electric services agreement between Minnesota Power and Google through July 21.
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