Data center complex to seek city tax break

Among the concessions that the owner of the massive data center complex planned for Port will seek is a property tax break from the City of Port Washington, an official with the company working to develop the campus said Tuesday.

Aaron Bilyeu, chief development officer for Cloverleaf Infrastructure, said Tuesday it’s standard operating procedure for data center operators to negotiate their tax payments because the value of these facilities is so large that paying the same rate as other taxpayers would result in a disproportionate and “astronomical” payment.

“The moneys involved are so disproportionate to any other type of construction,” he said. “Otherwise you’re asking someone to pay more than their fair share. There will be a rate negotiated specific to data centers, and the amount will be significant.

“This isn’t uncommon. Every data center has that. It’s how the whole industry works.”

Bilyeu said the amount will be part of a developer’s agreement to be negotiated with the city, which will also be asked to create a tax incremental district to finance the extension of utilities to the site.

The negotiated amount, he added, will be “a significant contribution” that the city can use to increase services or cut taxes.

“Every community that’s got a data center has an incredibly nice high school and athletic fields and everything that goes along with that,” he added.

Cloverleaf Infrastructure, the Houston, Texas-based company, works to assemble the land and permits for data centers and then sells the project to a tech company to build and operate.

The Port campus would be built on as many as 2,000 acres in the Town of Port Washington that will be annexed to the city for development.

The campus would consist of multiple buildings, require a 40-acre substation and use enough electricity to power as many as 750,000 houses.

Bilyeu said that Cloverleaf is talking to as many as 15 companies about the Port project, and when the project was introduced to the Common Council last month he told aldermen that the company is only in talks with domestic firms.

When asked if those include the $500 billion Stargate Project announced by President Donald Trump at his inauguration, Bilyeu declined to comment.

“I cannot confirm or deny that we have specifically talked to anyone” about the Stargate Project, he said, adding that the project was the “type of entity” that is seeking sites like the one in Port.

That’s due to both the size of the project and the speed at which it could be built, he said, noting the Port project is planned to have a gigawatt of power with construction starting by the end of 2025.

Stargate is a joint venture backed by companies that include SoftBank, OpenAI and Oracle that have committed $100 billion immediately and $500 billion over four years to build artificial intelligence infrastructure in the U.S.

Wisconsin is among 16 states considered for the data centers Stargate is expected to build.

Among the criteria said to be used to select the Stargate sites are the availability of land, energy and the workforce as well as public incentives.

Bilyeu said that one reason Wisconsin is attractive is that it has a sales and use tax exemption for data centers, something created when Microsoft announced its plans for a data center in Pleasant Prairie.

“The reason you’ve seen an uptick (in data centers) is because of that,” he said. “That’s the No. 1 incentive being sought.”

Without it, he said, tech companies won’t build in a state.

Tax incremental financing to help with the cost of infrastructure is also important to many of these companies, Bilyeu said. In Port’s case, that’s likely to pay for the cost of extending sewer and water services to the site.

The property under contract for the Port data center complex extends from the city’s northern boundary north to Dixie Road and between the Ozaukee Interurban Trail and I-43.

The amount of land under contract is about 2,000 acres, but Bilyeu said the biggest attraction is the amount of power that would be available.

“When we talk about large sites, we’re talking about electrical capacity, not the amount of acreage,” he said. “It’s the unit of currency people in the industry use.”

He said the total acreage may not be used for the data center complex, noting some companies like to build single-story structures while others construct multi-story facilities that don’t take as much land.

“Some of it (the property) may stay fields,” he said. “They (the end user) may not choose to use it all.”

Bilyeu said Cloverleaf continues to work through administrative processes with the City of Port, which is in the process of creating a zoning code to govern data centers.

Mayor Ted Neitzke has asked that a draft of the zoning code be brought to the Plan Commission for consideration this month.

Bilyeu said Cloverleaf’s real estate arm, Red Granite LLC, won’t purchase the property until after the annexation and zoning approvals are completed, a process he said could take three to four months.