A controversial northern Minnesota data center proposal advances despite opposition

A controversial proposed data center in northeastern Minnesota got a major nod Monday evening, when the Hermantown City Council voted in favor of a zoning change that would allow the massive development to continue moving 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 surrounding communities addressed the council, most imploring council members to reject the zoning change, or at least put it forward.

But after nearly four hours of public testimony, the council unanimously supported the change after less than five minutes of discussion. “We are approving the zoning change tonight only. We are not voting on the data center, even though it affects the data center,” Mayor Wayne Boucher insisted.

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

Nearly 300 people packed the council chambers and a packed room to watch the proceedings, many wearing red T-shirts to signify their opposition to the proposed data center. Others stood at the entrance to the building, holding signs forbidden from entering because the building had reached its capacity.

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

Documents obtained by the Minnesota Environmental Advocacy Center show that city officials were involved in discussions with developers for more than a year about the proposal called “Project Loon.”

Last month, the city released information about the project On its website. Officials say a US-based Fortune 50 company is seeking to establish the data center, although they did not mention the name of the company. The city is working with Mortenson on the development.

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

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

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

Ronchetti said he hopes the project will begin construction in 2027.

But at the charged City Council meeting, citizens decried what they described as secrecy and lack of transparency on the part of the city. Two Hermantown city officials, along with three St. Louis County commissioners, signed nondisclosure agreements, or NDAs, with the developer.

“Why the secrecy about this whole thing?” asked Mark Hamel of Hermantown. “It’s really not a good look. If it’s a legitimate operation, why the secrecy around it?”

Many urged the council to pause and schedule a vote so the public can learn more about the proposal.

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

“We need a David for this Goliath,” said Clarissa Eck 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 overwhelmingly and passionately oppose this.”

On its website, the city says it’s a best practice to let the developer “vet the details of this project before we talk about it publicly” — to give companies confidentiality while they do due diligence on potential projects.

Matt Baumgartner, president of the Duluth Area Chamber of Commerce, told the council that non-disclosure agreements are not new.

“It is a normal and responsible part of the economic development process,” he said. “It allows investors and local governments to explore opportunities and crunch numbers before anything becomes public.”

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

“Without projects like this, many of our members will leave,” said Jack Carlson, president of the Duluth Building and Construction Trades Council.

Hermantown City Councilman Brian LeBlanc said the main reason to support the proposal is to increase the city’s commercial tax base to help lower housing rates. The city estimates the project could generate nearly $1 million in business taxes annually.

The proposed data center in Hermantown is one of at least a dozen massive so-called “hyperscale” data centers under development across Minnesota. Only one facility, the Meta facility in Rosemount, is under construction. Many of the proposals have raised legal challenges, The last one is on Pine Island.

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

Established by the Minnesota Legislature New regulations on industry during his last session, including asking them to share more information with the state about how much water they will use. The legislation also limits the ability to pass on the costs of providing electricity to data centers to other customers.

But the legislation did not 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 metropolitan area-wide alternative review. Many residents requested a more in-depth analysis of their environmental concerns, including water use, noise impacts, impacts on wetlands and how much electricity the project would consume, which the city has not released.

“You held secret discussions, ignored citizen opposition and voted unanimously for the weaker environmental review,” said Rich Helton of Hermantown. “This is not democracy. This is predetermined decision making.”

City officials stressed that their vote in favor of the zoning change is not the final say on 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 meeting Tuesday. The City Council will then have to approve the permit.