City, town ink land deal for data centers

The QTS Phoenix 2 campus in Arizona provides an example of modern data center design, but at 85 acres, the campus will likely be significantly smaller than the one planned for Port Washington, where roughly 2,000 acres of town land are reportedly under contract to be purchased for the data center complex. And while QTS advertises a 280 megawatt capacity, the Port campus would have a capacity of more than a gigawatt.
Port Washington city officials on Tuesday took steps to pave the way for a sprawling data center complex, reaching an accord with town officials that will allow the city to annex approximately 2,000 acres for the massive campus that would cost billions of dollars to develop and require a gigawatt or more of power to run, even as residents continue to object to the project.
The agreement, which was inked by both the Common Council and Town Board Tuesday, provides a variety of benefits for the town, including the extension of sewer and water services throughout Knellsville at no cost to the township and five years of increased tax revenues, in return for amending the border agreement as it pertains to the affected property and allowing the land to be annexed as of Feb. 1.
The terms were hammered out by town officials in a closed session Tuesday afternoon and presented to the city in a closed session Tuesday night, with both panels approving the agreement in open sessions before standing-room-only crowds.
Town Supr. Greg Welton abstained from the vote since he owns land in Knellsville and may benefit from the terms of the agreement.
Residents warned officials to take their time approving the massive data center, which they say will irrevocably change the character of the community.
“Consider the human impact on people who are not your citizens but are citizens of the town,” Kim Tydrick, 4465 Weilers Way in the Town of Port, told the Common Council, noting town residents are “living the lifestyle we chose in that area. You’re ripping that away from us.
“I don’t want this in my backyard and I don’t think any of you would want this in your backyard. I think it takes such hubris to make a decision like this without listening to the people impacted.
“This legacy you’re creating I don’t think is going to be what you think it’s going to be.”
Tydrick said the data center will diminish property values and bring noise and light pollution to what is now a quiet rural area.
Noting that officials said noise from the center would be no louder than the freeway, she said, “but it’s now two highways essentially, which makes it twice as loud.”
The border agreement between the city and town prevents much of the land that would be used for the data center from being annexed until 2026, but city officials asked the town to end the agreement early so Cloverleaf Infrastructure, which develops plans and secures permits for data center projects and sells the project to a technology company to build and operate the center, can find an end user.
“Cloverleaf can’t make a deal with one of those end users without assurances the annexation can occur sooner than 2026,” Chris Smith, the city’s attorney for the data center, said.
Town Chairman Mike Didier told residents at the afternoon Town Board meeting that the city had assured officials they were willing to wait until the end of the year to annex the land if necessary, so getting the best deal for the township was the board’s goal.
Many of the specifics residents sought, such as berms and setbacks to minimize the impact and keep the buildings away from their homes, were things the city wasn’t willing to negotiate, Didier said.
“That was off the table because they don’t have a project (plan) yet,” he said, adding city officials said they will create rules to govern these issues.
But, he said, many of the items included in the agreement were based on residents’ comments over the last several weeks.
According to the agreement:
Annexations for the data center can only be sought by the land owners, not the city. The property expected to be annexed stretches from the City of Port’s north border to Dixie Road and is west of I-43 and east of the Ozaukee Interurban Trail, the city can only approve annexations sought by landowners and will not initiate annexations itself.
The city will pay the town $150,000 annually for five years instead of the roughly $20,000 required by state law to be paid by the city to make up for lost property tax revenue.
Land annexed will be used only for data centers and related uses for at least five years after the annexation, although existing uses will be grandfathered in for that time.
The city will reimburse the town as much as $50,000 for the cost of negotiating and implementing the agreement.
When sewer and water services are extended to the site, they will also be extended to all of Knellsville at no cost to the town.
Knellsville will never be annexed to the city unless the Town Board agrees.
Other than the proposed data center site, the terms of the border agreement, which was set to expire on Dec. 31, 2025, will continue for three more years.
The town’s fire contract with the city will be extended for three years at its current rate of $176,660 — a price Didier said was expected to increase significantly.
The city’s costs will be borne by the end user, Smith told the crowd.
If a developer’s agreement is not reached by Dec. 31, any property that has been annexed for the data center will be returned to the town.
“If a company will not agree to those things, we can walk away,” he said, saying the agreement is “contingent on Cloverleaf finding an end user, coming to terms on a developer’s agreement and the project as described moving forward. If any of those things don’t happen, everything becomes moot.”
He reiterated the agreement is one of the first steps to be taken for the project moves, adding, “there are still a great number of steps to go before this becomes reality.”
One of those steps, creating a zoning district for data centers that would incorporate guidelines and standards for the proposed complex, is a priority, Mayor Ted Neitzke told the Plan Commission last week. He asked that a proposed zoning ordinance for these facilities be presented to the commission for consideration in February, adding, “We should do that sooner rather than later. We should put Port in a proactive position on this.”
But many of those in the crowd spoke against the project moving ahead.
Tydrick’s son Caleb said that while he understood the excitement that a microchip manufacturing facility initially proposed for the land brought, data centers “are a dime a dozen. They pop up in Nowhere USA all the time. I don’t believe Port Washington, Wis., is Nowhere USA.”
He questioned the type and value of the jobs created, saying, “I don’t believe this would create the type of permanent jobs that this type of land commands. I don’t consider that a good return on investment.”
Amanda Mueller, 4488 Lilac La., Town of Port, told aldermen she has decided to sell her house but was told that she needs to disclose the fact a data center would be nearby.
“This is not what I signed up for. I’m out of here,” she said. “It hasn’t even happened and I have already been affected by it.”
Ben Donajkowski, 4799 Hwy. LL, Town of Port, reminded officials that whatever agreements they reach need to extend beyond Cloverleaf to the end user.
“Cloverleaf can promise the moon,” he said. “They can’t guarantee what Meta, IBM or whoever will do once it’s there.”
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