City OKs data center deal despite protests

More than 40 people packed Port Washington City Hall Tuesday, urging aldermen not to approve measures to advance a proposed data center campus on the city’s far north side, with several people saying the issue should not be decided by the Common Council but put to referendum.

“It’s just appalling what you all have done. It should have been a referendum,” Susan Waldhuetter of the Town of Port said.

City resident Shane Schmutzler concurred, saying the issue is too important for the seven-member Common Council to decide.

“I don’t understand why we don’t have a binding referendum,” he said. “I think this is way too big to be decided by the council. I do not see long-term or short-term value for the investment. I think more needs to be done on this whole subject. At this point, I think this is premature.”

But aldermen on Tuesday unanimously approved a developer’s agreement with Vantage Data Centers, a Denver-based company, that will govern many aspects of the data center — a major step in the approval process.

They also annexed and rezoned 753.36 acres from the Town of Port Washington into the city for the data center campus and agreed to discontinue a portion of Highland Drive, which currently bisects the almost 1,900 acres Vantage is buying.

Vantage, which has committed to spending at least $8 billion on the project,  plans to build four data center buildings on the southern 672 acres, with work beginning later this year. It has not made plans for the northern portion of the site.

Mayor Ted Neitzke lauded the council’s decisions, saying the data center will benefit the community now and into the future.

“I think this is a really good thing for our future,” he said, noting the developer’s agreement ensures city residents will not pay any of the costs associated with the project. 

“With this agreement in place, we can move forward on a generational opportunity to improve our infrastructure, relieve the tax burden on our residents and boost our local businesses. And it does so while protecting residents from absorbing any costs related to this project.”

But those who spoke during a roughly 40-minute comment period disagreed.

“You’ve got a whole room full of people against this,” one Port resident said, adding that more than 1,100 people signed an online petition against the data center as well. “You’re telling over 1,100 people we don’t matter.”

“You have a lot of people who have very legitimate concerns,” another Port resident said. “If you were going to take the residents who elect you seriously, the only way to do it is to say no.”

Chris Kestell of Waldo said there are too many unknowns with data centers for people to feel comfortable with the proposal.

“We don’t know the disadvantages yet. They haven’t been around long enough,” he said.

“People don’t want to live by one,” Kay McCormick of the City of Port said of data centers. “What’s going to happen to our town, our community? We have to do our research.”

A proposed tax incremental financing district to pay for $175 million in public improvements needed to accommodate the campus was also questioned.

“Why the municipal socialism?” asked city resident Rob Roy. “Why can’t Vantage simply pay?”

“We have what they want. Why do we have to give them any kind of carrot?” McCormick asked. “We shouldn’t have to give them any sort of incentive for what they want.”

One woman asserted that the $175 million in infrastructure costs would take hundreds of years for the city to repay. However, officials noted that Vantage, not the city, is paying that money upfront for public infrastructure work, including the extension of sewer and water that will benefit other property owners as well as the data center, and it will be repaid through the increased taxes on its property over a maximum 20 years. Vantage will also pay all costs related to the data center campus incurred by the city.  

If the increased tax revenue doesn’t cover the full $175 million, Vantage is still responsible for it, they said.

Attorney Chris Smith of von Briesen and Roper, the city’s counsel for the data center project, said officials were insistent that residents reap some financial benefits from the data center immediately. To do that, he said, the TIF district won’t be created until 2026, a delay that will add $120 million to the city’s tax base, bring in an estimated $650,000 in new tax revenue and result in a $170 tax decrease for the owner of a $350,000 home.

As the project is developed, he said, any additional tax revenue from the Vantage land will go to pay off the $175 million in infrastructure improvements.

Other people questioned the tax benefits of the project, with one woman noting that the $170 decrease in property taxes projected for the owner of a $350,000 home is the equivalent of 46.5 cents a day “which will buy me a coffee, a Snickers bar,” except, she said, she lives in the Town of Port and will see no return.

Several people said the project will increase the cost of water in the city and power throughout the region.

Vantage has said the data centers will use 1.3 gigawatts of power and as much as 1.2 million gallons of water a day, although the average water use will be about 35,000 gallons a day. The water will come from the City of Port’s utility, which officials said has enough capacity to accommodate this use, and not taken directly from Lake Michigan.

“The increase in our (electric) bills is not going to be offset by this $170,” Jeanne Azoff of the City of Port said.

We Energies, which has committed to providing the power needed for the data center, has proposed a special rate for large electrical users such as data centers to ensure other ratepayers aren’t charged for those costs. That proposal is under review by the Public Service Commission of Wisconsin. 

Vantage officials have also said the company is covering the full cost of acquiring the power needed for the data center.

Still other people raised concerns about the impact of data center water use on Lake Michigan.

City resident Yvonne Klotz said the questions show that things are moving too quickly.

“I believe we need to slow down a little bit and dig a little deeper, all of us together,” she said. “I understand the concerns. But it’s almost like things are moving a little too fast. I’m asking for a little more time.”