Hermantown Google data center plan advances with tax-abatement proposal

Google’s proposed Hermantown data center moved from concept to hard numbers on April 23, when draft development and tax-abatement documents showed how much the company is asking the city to put on the table. Under the plan, Harmony Group LLC, the project entity, would be eligible for abatements tied to new property taxes on a data-center campus of up to 1.2 million square feet in Hermantown’s southwest corner. The city says the project has now reached the stage where a traditional public application can be considered, and the first phase is not expected to reach a certificate of occupancy until 2029.

The tax-abatement notice puts a ceiling on what Hermantown would give up. It limits total abatements to no more than $80 million across all three phases, with each abatement lasting 20 years. Taxes on the current property value and the first $100,000 in taxes on the new improvements would still be paid, but the city could abate up to 85% of the remaining property taxes, or 70% of the city’s statutory tax-abatement cap, whichever is less. In plain terms, the city would continue collecting some tax revenue, but a large share of the new tax base would be diverted back to the project for two decades.

Hermantown is pitching that tradeoff as a long-term gain for the local tax base. The city’s project page calls this the largest proposed project in Hermantown history and says residents are already asking about noise, traffic, taxes and environmental effects, along with the prospect of hundreds of jobs. In the city’s broader review scenarios, officials have pointed to more than 1,500 jobs, nearly $110 million in annual labor income, about $5 million in annual county and local tax revenue, and more than $600 million in annual economic output. The city also says the appeal is that a larger commercial tax base could help pay for infrastructure without directly raising residential taxes.

The draft development agreement shows the other side of the deal: a major infrastructure buildout before the project can open. The agreement runs through approvals, utilities, easements, stormwater, water, sewer and road improvements, and says the company cannot get occupancy ahead of city-engineer certification for sewer main, water main and public roadway work. That makes the project a regional infrastructure issue as well as a zoning matter, with the county, the sanitary district and Hermantown’s largest neighbor all part of the discussion. The City Council is set to hear public comment on the abatement request at 6:30 p.m. May 4 at the Government Services Building on Maple Grove Road.