Google sweetens Hermantown data center deal with cash and infrastructure

Google is escalating its efforts to secure approval for a vast data center campus near Duluth, Minnesota, in Hermantown, offering financial incentives and critical infrastructure. According to a draft development agreement reviewed by St. Cloud Live, Google plans to construct water, sewer, and road infrastructure to city specifications, then transfer ownership to Hermantown. The deal includes an initial payment of $150,000 to the city, an estimated $4.5 million in lifetime payments, and an $850,000 upfront payment to Independent School District 700, with projections of $40 million over 28 years. The tax abatement's present value is reportedly around $33.5 million, with clawback provisions tied to job targets. The proposed development, outlined in the City of Hermantown's updated AUAR scoping document, would span approximately 278 acres with up to 1.8 million square feet of facilities, including four 300,000-square-foot server buildings, phased over eight to ten years. The city has initiated a 30-day public comment period on its environmental review, which runs until April 30, 2026. Minnesota Power has entered an electric service agreement with Google, aiming to support 700 megawatts of new clean energy, including 300 MW of wind and 400 MW of battery storage. Google will also contribute $5 million to energy-affordability programs and cover grid connection costs. This agreement awaits review by the Minnesota Public Utilities Commission. Despite support from local business leaders and the Hermantown Area Chamber, the project faces strong opposition. Residents and groups like Stop the Hermantown Data Center express concerns about transparency and the planning process. The Minnesota Center for Environmental Advocacy has filed a lawsuit against Hermantown, alleging inadequate environmental impact assessments, particularly regarding water and wetlands. Opponents highlight the scale of land conversion, potential impacts on water and wildlife, and the use of tax abatements as reasons for more rigorous scrutiny. City Administrator John Mulder acknowledged the financial trade-offs, stating, "the taxes that they're paying are being paid to us, and we're paying them back for the infrastructure they're giving to us." Permitting and construction are contingent upon resolving legal challenges and completing environmental reviews and regulatory approvals.