Controversial northern Minnesota data center proposal advances despite opposition

A controversial proposed data center in northeast Minnesota received a key approval Monday evening, when the Hermantown City Council voted for a zoning change that allows the massive development to continue to move forward. 

The 4-0 vote to rezone the property about eight miles west of Duluth came after a marathon meeting that lasted nearly six hours and ended just before midnight. More than 50 residents of Hermantown and nearby communities addressed the council, most pleading with council members to reject the zoning change, or at least table it. 

But after nearly four hours of public testimony, the council unanimously backed the change after fewer than five minutes of discussion. “We’re only approving the zoning change tonight. We’re not voting on the data center, although it affects the data center,” insisted Mayor Wayne Boucher. 

After the vote, people who remained in the audience booed, yelling “Shame!” “You’re selling your constituents out,” another said. 

Nearly 300 people packed the council chambers and an overflow room to watch the proceedings, many wearing red shirts signifying their opposition to the proposed data center. Others stood in the building entryway holding signs, not allowed to enter because the building had reached capacity. 

The proposal has generated intense community interest and backlash since details began to emerge about the proposed data center during the past few weeks. For months, details about the proposal were scarce, as rumors swirled about a massive development project in the rural southwest corner of this bedroom community to Duluth. 

Documents obtained by the Minnesota Center for Environmental Advocacy show that city officials were engaged in discussions with developers for well over a year on the proposal dubbed “Project Loon.” 

In the past month the city has posted information about the project on its website. Officials say a U.S.-based “Fortune 50” company is pursuing the data center, although they aren’t saying which company. The city is working with Mortenson on the development. 

The proposed project would include up to four buildings that would house the data center equipment on the more-than-200-acre site, each up to 50 feet tall and 300,000 square feet — about the size of five football fields per building. 

Officials say it would take 8 to 10 years to build out the $650 million project, which would be the largest development project in the city’s history. As part of the project, the developer would pay between $50 and $100 million to extend sewer and water service to the area where the data center would be located. 

“We will be able to create more housing as a result of this project,” Hermantown economic development director Chad Ronchetti said in an interview with MPR News. “To have the services to facilitate that would be a tremendous win for the community.”

Ronchetti said he’s hopeful the project would begin construction in 2027. 

But at the charged city council meeting, citizens decried what they have called secrecy and a lack of transparency from the city. Two city of Hermantown officials, along with three St. Louis County commissioners, signed nondisclosure agreements, or NDAs, with the developer. 

“Why so secretive about this whole topic?” asked Mark Hummel of Hermantown. “It’s really not a good look. If it’s a legitimate process, why so secretive about it?”

Many urged the council to pause, and to table the vote until the public could learn more about the proposal. 

“Slow all this down. Be honest. Just don’t try to shove it all down our throats,” said Lynn Bradford, who’s lived for more than 40 years about a third of a mile from the proposed data center. 

“We need a David to this Goliath,” said Clarissa Ek of Hermantown. “You did not take an oath to represent the interests of Fortune 50 companies. You took an oath to represent the citizens of Hermantown, who are overwhelmingly and passionately against this.”

On its website, the city says it is best-practice to allow the developer “to hone in the specifics of this project before we talk about it publicly” — to grant companies confidentiality while they do their due diligence on prospective projects. 

Matt Baumgartner, president of the Duluth Area Chamber of Commerce, told the council that nondisclosure agreements are nothing new. 

“They’re a normal, responsible part of the economic development process. They let investors and local governments explore opportunities and run the numbers before anything becomes public,” he said.

Several union officials at the meeting voiced their support for the proposal, which is projected to create hundreds of construction jobs and at least 40 permanent jobs.

“Without projects like this, many of our members are going to move away,” said Jack Carlson, president of the Duluth Building and Construction Trades Council. 

Hermantown City Council member Brian LeBlanc said his main reason for supporting the proposal was to increase the city’s commercial tax base to help bring down residential rates. The city estimates the project could generate close to $1 million in commercial taxes annually. 

The proposed data center in Hermantown is one of at least a dozen massive, so-called “hyperscale” data centers in development around Minnesota. Just one, a Meta facility in Rosemount, is under construction. Several proposals have drawn legal challenges, most recently in Pine Island.

Developers are increasingly looking toward the Upper Midwest to build more data centers as other areas become saturated with projects. They’re also drawn to the climate, which can limit cooling costs. 

The Minnesota Legislature placed new regulations on the industry during its last session, including requiring them to share more information with the state about the amount of water they’ll use. The legislation also limits the ability to pass on the costs of providing electricity to the data centers to other customers. 

But the legislation didn’t go as far as some would have liked. Many opponents want to require data centers to undergo a more-rigorous environmental study. 

In Hermantown, the city completed a less-stringent Alternative Urban Areawide Review. Many residents demanded a more in-depth analysis of their environmental concerns, including water use, noise impacts, impacts on wetlands and the amount of electricity the project would consume, which has not been released by the city. 

“You have held secret discussions, ignored citizen opposition and voted unanimously for the weakest environmental review,” said Rich Hilton of Hermantown. “That's not democracy. That’s predetermined decision making.”

City officials stressed that their vote in support of the zoning change is not the final say in the fate of the data center. The next step is for the city’s planning and zoning commission to consider a special use permit for the project at its Tuesday meeting. The city council would then have to approve the permit.

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