How a $15B data center campus ended up in Port

Having one of the country’s largest, most expensive data center campuses built in Port Washington was unthinkable not that long ago.

Now it’s a reality, one that’s attributable to two national initiatives — the $280 billion CHIPS and Science Act and the $500 billion Stargate program — and an abundance of farmland that once stretched for miles north of the city. 

Efforts by state and local officials to site a chip factory in Port fell by the wayside, but it set the stage for the campus Vantage Data Centers is creating for Oracle and OpenAI by placing almost 2,000 acres of what had been primarily farmland under contract for development.

The data center, which is part of the Stargate program, a $500 billion investment in AI infrastructure in the United States, has divided the community and led to an ongoing effort to recall Port Mayor Ted Neitzke.

The data center has also dominated city government for the past year, with the majority of meetings devoted at least in part to the data center campus. In recent months, these meetings have attracted sometimes raucous crowds of data center supporters and detractors from throughout the state and, in one case, led to three protesters being arrested for disorderly conduct.

The data center got its start last year when  the Milwaukee 7 Regional Partnership, Wisconsin Economic Development Corp. and Metropolitan Milwaukee Association of Commerce began looking at areas of the state to see where there was enough land to build a microchip factory. Port was one of those places.

These groups were spurred by the CHIPS and Science Act, which was intended to revive U.S. manufacturing of semiconductors and reduce the country’s reliance on foreign-made computer chips. 

  Prompted by this, Jeff Hoffman of the Milwaukee commercial real estate company Cushman & Wakefield/Boerke began negotiating sales agreements with Town of Port residents, offering them $42,000 per acre plus additional money for improvements on properties — an offer many found too good to pass up.

City officials signed nondisclosure agreements (NDAs) to learn more about the proposal — a move that angered residents — but the effort came to naught by fall when a representative of M7 called and said, “Bad news, Port was not chosen,” Neitzke said.

“I was OK with that,” he said, noting officials were wary after hearing about the negative impacts, including a significant amount of pollution, the need for Clean Air credits, large amounts of water required, the need to make changes to I-43, the size of the needed workforce and how it would affect the city.

But, Neitzke said, he asked the next question — “Then what. You have all this land under contract. What do we have to do to be ready for the next project?”

“We anticipated multiple knocks on the door,” he said. “It could have been for anything you imagine.”

It didn’t take long before M7 called back, Neitzke said, asking, “What do you know about data centers?”

“Modern data centers are exactly the opposite of manufacturing,” he said, noting they do not require Clean Air credits, minimize pollution and bring “an incredible high per square foot value” to the city.

“That was pretty attractive,” Neitzke said, especially in a community where homeowners pay the bulk of the property tax burden and state levy limits make it difficult to keep up with inflation.

Modern data centers, he added, are conscious of their impact on the environment and work to minimize it.

In fall, the city assembled a team to help it prepare for a data center proposal that included experts in law, planning, engineering and financing, he said, noting city staff did not have the expertise to handle it.

“We did not want to put taxpayers at risk of paying the cost of a project like this,” he said. “Our philosophy was how do we shift those costs and have zero risk fall on the city.”

Data center siting “is highly competitive,” Neitzke said. “But we knew we had something very special and we treated it as such.”

M7 brought Cloverleaf Infrastructure, which develops plans and secures permits for data center projects, to the city in late fall, and in January Cloverleaf and the city announced plans for a sprawling data center complex that would cost billions of dollars to develop, require a gigawatt or more of power to run on the property, which would be annexed to the city.

Neitzke said the city learned from the NDA debacle and was upfront with Cloverleaf that officials would not sign another such document and wanted everything to be public. The company agreed.

By the end of January, the city and Town of Port reached an agreement on annexation of the property, an agreement that included a renewed border agreement, an agreement to extend water into Knellsville, money for the community and a fire and ambulance agreement.

Numerous people came to city meetings about the data center to express concerns about the project, Neitzke said, and the city took their concerns to help mold a zoning code and other agreements that took these matters into account.

They included concerns about light pollution, noise pollution, restoration of wetlands and habitat, retention ponds and requirements for berms and significant plantings to screen the site.

“These were ideas that came from the people of the city,” Neitzke said. “We were negotiating from a position of power — if you don’t do this, we’re not annexing the land.”

Over time, the scope of the project increased, Neitzke said, with the energy requirement alone increasing from one gigawatt to 3.5 gigawatts, potentially making it one of the largest data centers in the world. 

That’s not the data center approved by the city, he said.

“That is not the world’s largest data center,” he said.

The investment in the campus also increased to $15 billion.

Neitzke said from winter through August, the city focused on doing its due diligence — everything from visiting other data centers to researching the center’s impact and financing — and taking steps to protect the city from any negative aspects of the project.

In June, Vantage was identified as the developer of the project, and recently Oracle and OpenAI were identified as the end users and the campus was identified as part of the Stargate program.

That, said Neitzke, was reassuring.

“That shifted it,” he said. “It’s about the race for global dominance and national security. It’s not making videos of Santa Claus with his shirt off dancing with your mother.”

The city held public hearings and annexed land, but this fall, as American Transmission Co. held meetings about where to locate power lines to bring the needed electricity to the site, opposition to the project exploded with a crowd of people accusing the city of approving the project behind closed doors and not listening to their concerns. 

“We were caught off guard,” Neitzke said. “It just kept accelerating. People started paying attention at different points.

“I believe in my heart we were very upfront with the community. I don’t know how we could have done it any differently, except for direct mailings.”

While many people said the matter should have been put to referendum, Neitzke said that’s not the way decisions are made in government.

“You can’t strategically do what’s best for your community if at every step you have to take a vote,” he said, noting major projects and developments in the city would never have happened then.”

The data center, Neitzke said, has received all the necessary approvals from the city and state, with only the Public Service Commission decision on the power line route yet to come.

Now, he said, the city is moving ahead with creating the infrastructure and processes to hold Vantage accountable and ensure they do what they’ve promised.