Northeastern Minnesota mystery project identified as data center

HERMANTOWN, MINN. – A massive development proposal that the city is describing only as a “communication services facility” was identified as a data center in a January letter sent to city officials.

A construction firm “intends to build a large data center complex” on 200 acres in the southwest corner of the city, according to a letter from consultant company Braun Intertec, which is working with Hermantown. The letter was obtained by the Minnesota Star Tribune as a result of a public records request.

Mystery has swirled around the project for months as construction and engineering company Mortenson made real estate offers to nearby homeowners and city officials worked to adjust zoning on the land. Meanwhile, some environmentalists say the secrecy surrounding it doesn’t allow for proper review.

There are no large-scale data centers operating in Minnesota, but developers are considering more than a dozen as tech companies bolster their computing power to meet the needs of artificial intelligence products. Facebook’s parent company will be the first, building a project in Rosemount. Environmentalists have raised concerns as the projects multiply, given the extraordinary amount of electricity that data centers need and questions about water usage.

Hermantown Economic Development Director Chad Ronchetti confirmed Monday that Mortenson is the developer exploring a 1.8 million-square-foot light-industrial facility, and he said zoning planned for the land calls for places that house or operate computers, data and transaction processing, along with digital storage.

He said the “best-case scenario” is a 2026 groundbreaking and, once completed, the complex could employ up to 200 people.

The January letter is the first confirmation of what that industrial building could eventually host. Officials are calling the proposed development “Project Loon.”

Hermantown officials have signed a nondisclosure agreement with Mortenson, and so has St. Louis County and the Western Lake Superior Sanitary District, according to public documents.

Meanwhile, the city released a 400-page environmental impact assessment called an Alternative Urban Areawide Review of the project last week. The 400-acre study area is on rural forested land that holds a Minnesota Power substation and some homes.

The review says daily water consumption of the complex would amount to 50,000 gallons, the equivalent of use in about 160 homes. Three miles of water and sewer lines would need to be built to the property, which Ronchetti said would require a private/public partnership and cost between $70 million and $100 million.

It’s still not clear which company would operate a data center in Hermantown. Sometimes, developers work on behalf of a large tech company. At other times, they advance a project while hoping to attract one or more users to buy or rent the site.

Some cities, including Hermantown, have not publicly identified the proposals as data centers in an environmental review. The vague descriptions of the project have frustrated some Hermantown residents.

Other cities, including Monticello, have described such proposals within their boundaries as data centers. In some cases, developers have also been public about their intentions.

Hermantown leaders recently changed the area’s future land use zoning in its comprehensive plan to business and light manufacturing. They have already rezoned Minnesota Power’s land there to that designation to allow communication services, including housing for data storage. Another 200-plus acres in the project area are under consideration for the same zoning.

A variety of city, state and federal permits are required for the Hermantown project to move ahead, along with city approval of the environmental review.

It includes comments from the Minnesota Pollution Control Agency that said the review lacked an adequate level of detail to evaluate environmental impacts. In response, a city official said, a site plan was included in the final version of the environmental review.

The Duluth chapter of the Izaak Walton League and the Minnesota Center for Environmental Advocacy said in a joint letter that the generic description of the proposed complex doesn’t allow proper study of noise and air pollution and potential water loss.

Ronchetti said the public utility extension, job creation and potential workforce development would be “wins” for the city of about 10,200, and the chosen site fits with planning for its future.