Hermantown tables vote on key agreements for contentious Google data center
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Following a packed meeting featuring hours of public testimony Monday night, the Hermantown City Council agreed to take more time to consider a plan to grant Google a property tax break that could reach $80 million, in exchange for building a nearly $2 billion data center complex in the northeastern Minnesota city.
Supporters, many of them representing business and labor groups, wore green T-shirts with the slogan “Yes MN!” They called the project a “generational” investment for Hermantown, and argued that the city near Duluth would see the cost of the subsidy repaid many times over with increased tax revenue and cash payments for the city and local schools.
Opponents, many with the grassroots group Stop the Hermantown Data Center and wearing bright red T-shirts, said the tech giant did not need a tax giveaway, and argued that the proposed site — surrounded by homes and forest and near designated trout streams — is an inappropriate location for a data center with computer warehouses the size of five football fields.
After about three hours of public comment, councilors voted unanimously to table the vote until a later date. Some had legal concerns about whether the city could approve the agreements while an environmental review and two lawsuits are still pending.
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“I think if we take the time and do things intentionally, we will come to a better product,” said Mayor Wayne Boucher. “I don’t think there’s anything hurt by taking a little extra time.”
Responding to criticism from several in the audience, council member Andy Hjelle said councilors are listening to constituent concerns. “We don’t take this lightly. We’re getting all the information we can and trying to make the best educated decision that we can,” he said.
Under the terms of the proposed agreements, Google is expected to spend $650 million on the project’s first phase. The city expects three total phases would be built out over a period of eight to 10 years, with a total investment in the ballpark of $2 billion.
Liz Schwab of Google delivered a presentation to the council during which she described the company’s “ambitious moon shot” — a goal of powering all its data centers with carbon-free energy 24 hours a day, every day.
“I want to underline that this is a huge part of what makes Minnesota so attractive to Google,” she said. “The state should be proud of its ambitious” law that requires utilities to procure all their electricity from carbon-free sources by 2040, she added. “It attracted our potential investment in the state.”
In return for the property tax relief — estimated at about $70 million, but which could be as high as $80 million — Google is offering to pay about $130 million to extend utilities and infrastructure to the project site.
The deal calls for Hermantown schools to receive about $70 million in funding from new property taxes and cash payments from Google over 28 years.
The city would also receive about $12 million in new property tax revenue over a 20-year period, in addition to $4.5 million from Google.
Schwab said the project would create about 100 long-term jobs at full buildout, and up to 2,000 construction jobs.
“Projects like this data center do not always come along that often,” said Jack Carlson, a Hermantown resident and president of the Duluth Building and Construction Trades Council. Carlson said many of the 3,000 union members he represents are forced to travel for work.
“The ability for the Duluth building trades to stay home and eat dinners with their family and attend the events they potentially would miss is an amazing opportunity,” he said.
Other supporters focused on the potential benefits to the area. “I see this as a generational opportunity,” said Hermantown resident Joe Pike, with undeniable benefits to the school system, infrastructure, and the overall economy.
“Let’s not drive that away because of fear of change,” Pike said.
Many opponents stressed that they are not opposed to economic development, or even a data center. But they feel the proposed location, surrounded by several nearby homes, is the wrong place for such a massive development.
“Find a more appropriate location, not a residential wooded area surrounded by families, animals, wildlife and protected rivers and streams,” said Jackie Dolentz, who lives near the proposed location.
“This is not NIMBY. It’s upsetting to hear that money is more important than my family and my neighbors and my home,” Dolentz said.
Others expressed frustration that community members had fewer than two weeks to review the agreements, which the city has worked on with Google for months. Opponents argued Google, with a market capitalization of more than $4.5 trillion, does not need an $80 million tax abatement.
“That’s pocket lint to them,” said Hermantown resident Allison Hafften. “It’s not necessary to attract them here.”
Tax incentives are a common tool cities around the country have used to attract data centers, including in Minnesota. Pine Island, for example, recently agreed to a tax abatement with Google to bring a data center there.
Hermantown officials have argued that if they don’t offer tax incentives, other communities will.
Google and other data center developers already receive a state sales tax exemption on their equipment purchases. Minnesota is one of 38 states that offer data center tax incentives.
The proposed data center in Hermantown is one of about a dozen mega-scale projects proposed around the state. Only one, a Meta data center in Rosemount, is currently under construction.
Several steps still need to be cleared before the Hermantown project could move forward, including environmental review and additional permits. Two lawsuits have also been filed to block it.
