Port Washington Data Center Would Include $175 Million In Public Infrastructure Costs

Around $175 million in tax incremental financing could support Port Washington’s future data center campus.

The Port Washington Common Council will likely vote on the proposed development between the city and Vantage Data Centers later this month. If approved, Vantage would pay for an estimated $175 million in infrastructure improvements for the project — including water and sewer main extensions and road improvements — through newly created tax incremental district, or TID.

TIDs work by capturing growth in property value within the district. They funnel property tax generated by newly created value to repay TID costs rather than having that new revenue go to taxing bodies like school districts.

The revenue for the TID for the Vantage Data Centers would repay the company for the upfront cost of infrastructure improvements. The TID would remain open for up to 20 years, or until Vantage is reimbursed for all its costs — whichever comes first.

According to the city, those infrastructure improvements will include expanded capacity for water and wastewater treatment facilities, upgraded water mains and sewer lines, power infrastructure and a new water tower.

Chris Smith, the city’s counsel for the project, said the TID creates a “shield” to protect city taxpayers from those costs.

“Vantage is paying it, and once Vantage starts to build, and they get their assessment, and then they get their tax bill from those funds, they can start to get paid back,” Smith said during a city meeting on Wednesday. “The faster they build, the more value they may create, the faster they get paid back.”

The city of Port Washington has been working to annex 1,900 acres in the surrounding Town of Port Washington for a data center campus on farmland north of the city. Vantage has been purchasing the land through private transactions, according to Port Washington Mayor Ted Neitzke IV.

During the city meeting, Neitzke said the city considered paying for the infrastructure costs by itself, or asking Vantage to pay for all of the costs.

“Expecting any company to pay up to $175 million in public infrastructure costs without getting reimbursed, it’s just not going to happen,” Smith said during the meeting.

Neitzke, who called the project a “once-in-a-generation economic opportunity” in a statement, said he believes a TID is the best option.

“We’re a community of 13,000 people,” Neitzke said in an interview with WPR. “We don’t have that borrowing capacity, and we also did not want to take on the risk and put it on the taxpayer. So the best option was to create a tax incremental district.”

Smith said the TID protects the city from risk.

“The city is not the one holding the bag here if the project does not create the value that we hope it will,” Smith said. “Vantage is the one holding the bag because they won’t get paid back because they’re fronting all the money to pay for everything.”

Smith said the infrastructure improvements also open up other land for future development in the area.

“Extending the water and sewer out to the project site opens up all kinds of other areas for development, which otherwise would come at a cost to that developer or to the city,” Smith said.

Vantage Data Centers announced in June that it would build and operate the campus. The company operates 36 data center campuses across 5 continents, according to their website.

Specific details for the project have not been announced, but Tracye Herrington, vice president for new site development for Vantage Data Centers, said it will bring a “positive economic impact to the area.”

“In addition, the development will follow Vantage’s sustainable design with careful planning and consideration given to the environment and its surroundings,” Herrington wrote in a statement.

In May, the Port Washington Common Council voted to annex about one-third of the land for the campus. The council also amended the city’s 2035 comprehensive plan to classify all 1,900 acres as “business park and industrial.” That set the land up for future annexation and re-zoning.

The development agreement and annexing more land from the town for the campus could be voted on during an Aug. 19 meeting.

No residents spoke out against the proposed development agreement during a public hearing Wednesday, but in past city meetings, some residents said they’re worried about light and noise pollution from the campus.

Elsewhere, the growing data center industry has created concern about energy and water use. According to the U.S. Department of Energy, data centers use 10 to 50 times the energy per floor space of a typical commercial office building.

In Port Washington, local officials are focused on the potential revenue the development could eventually generate for the community. Neitzke previously told WPR one data center could add between $1.3 and $1.8 billion in property value to the city.

The data center is one of many either in the proposal stage or under development in the state. Microsoft is building a data center campus in Mount Pleasant. Others are planned in Kenosha County, Beaver Dam, Dane County and Caledonia.

Port Washington data center could include $175M in tax incremental financing was originally published by Wisconsin Public Radio.