The Port Washington City Council on Tuesday unanimously approved a development agreement with a company that plans to spend more than $8 billion to build a data center campus.
Officials discussed the agreement at a public meeting earlier this month and have spent months working to make the development a reality.
Under the city’s agreement with Denver-based Vantage Data Centers, the city will establish a tax incremental district, or TID, in January to support the project. TIDs capture property value growth within a geographic area and use the tax revenue generated by that new property value to repay costs associated with development.
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During Tuesday’s meeting, Chris Smith, the city’s legal counsel for the project, said delaying the TID’s creation until next year will allow the city to access increased property value from the land that Vantage has already purchased.
“The amount that Vantage has paid for all of this land in the project area is about $120 million — $120 million equates to about $650,000 a year just for the city’s portion of property taxes,” Smith said. “We went from that land being assessed extremely low because it was predominantly agricultural land.”
According to the agreement, Vantage will pay the upfront cost of infrastructure improvements supporting the project. The city estimates those costs will total $175 million and include roads, the extension of sewer and water services into the development area, power infrastructure and a new water tower.
The city will use the new property tax revenue generated inside the TID to reimburse Vantage for those costs. According to the city, the TID will be open for up to 20 years or until all costs are reimbursed, whichever happens first.
“I don’t believe that it’s going to take 20 years to pay that off,” Mayor Ted Neitzke told WPR.
Smith called Port Washington’s TID agreement the “opposite” of the controversial local development agreement created for Foxconn in Racine County.
“In Foxconn, it was the government that borrowed all the money for those infrastructure improvements and then relied on the company to generate the revenue to service that debt,” he said. “Here, it’s the opposite. Vantage is fronting all the costs.”
If Vantage doesn’t create enough tax revenue to cover those costs, the company would not be paid back for the full upfront cost of the infrastructure, Smith said.
The city also expects to receive what it estimates as “millions of dollars” from Vantage in “impact fees” for services like police and fire, Smith said.
On Tuesday, the Port Washington City Council also approved annexing nearly 700 acres for the project. So far, 1,315 of the project’s total 1,900 acres have been annexed, Neitzke said. The city’s goal is to annex the entire development area by the end of 2025.
Vantage plans to spend $8 billion to build four data centers on the south portion of that 1,900-acre site. According to the city, two of those buildings will each be about 560,000 square feet and two will each be about 719,000 square feet.
The four data center buildings are expected to need 1.3 gigawatts of electricity, the city says.
For context, that’s more energy than 100 million LED lightbulbs or more than half the energy generated by the Hoover Dam, according to the U.S. Department of Energy.
The data center campus will use a closed-loop cooling system that doesn’t continuously draw freshwater for cooling, according to the city.
In addition to the data center buildings, the company also plans to build a 6,500-square-foot visitor center and a 50,000-square-foot warehouse.
If Vantage does not begin construction on the northern portion of the site by 2038, the city has the right of first refusal to repurchase the land in 2039, according to the development agreement.
“If they decide not to do anything, we are not going to let that land sit vacant with no value,” Neitzke said.
In a statement, Tracye Herrington, vice president of new site development for Vantage Data Centers, said the company appreciates the support it has received from the city for the project.
With the agreement done, Herrington said the company will begin finalizing next steps toward beginning construction.
“We’re excited to take this next step to move our project forward and become part of the Wisconsin community, bringing job creation, economic growth and a sustainable impact,” Herrington said.
While Vantage is developing the site, the company will not be the one using the data centers.
In an email, a spokesperson for Vantage Data Centers said the company has not applied for Wisconsin’s data center sales and use tax exemption. That’s because the exemption only applies to the tenant of a data center, not the data center provider, the spokesperson said.
“Vantage is the owner/operator of the facility, and the internal working components of the physical data center itself is owned and operated by a different party,” Neitzke said. “They basically maintain the facilities, ensure power (and) ensure safety.”
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