Proposed AI data center sparks debate near Fargo

A planned AI data center caused a big stir in the small city of Harwood, N.D.

The $3 billion project could bring about 250 jobs to the region and even boost the local government with tax revenue, according to Applied Digital, the AI infrastructure company behind the proposal. 

But local residents expressed concern over the project to Harwood’s city council Tuesday night during a public comment period. The City Council unanimously voted to approve the facility’s building permit. 

Some residents of the area,  such as Duncan McAlister from West Fargo, said the facility’s energy needs could strain the electrical grid, raising utility bills. 

“These [databases] are going to use a lot of power,” McAlister said. “They’re going to drain our grid. They’re going to require new infrastructure, and all of that is going to raise prices, possibly permanently.”

Applied Digital leadership attended the meeting and addressed some of the concerns residents had. They said the company would pay for electrical grid improvements to sustain the facility. 

The company also said it would use a closed-loop cooling system that would reduce water usage. 

Dozens of local residents attended both a planning and zoning meeting as well as a City Council meeting to express publicly comment in the Harwood Community Center on Tuesday.

Tadeo Ruiz Sandoval | MPR News

Moorhead resident Lee Gambara was not persuaded by the company’s arguments.  

“They talked in there, ‘Oh, we’re going to have this separate water use area,’” Gambara said. “They’re still going to have to basically steal water.”

Some residents are more optimistic about the facility’s impact on the region. Nathan Schleicher has lived in Harwood for over a year. 

“There is potentially growth and additional amenities that might come to Harwood as a result of the creation of the facility,” Schleicher said. “It’s an exciting prospect.”

The City of Fargo has also expressed interest in Applied Digital’s AI data center. It’s voted to annex the land where the facility would be built. Harwood voted against the annexation as it encroaches on their land. Fargo will need a judicial order to move forward.

Nevertheless, Fargo’s presence has put pressure on Harwood's leadership. If they voted against the data center, Fargo could take the project instead.

“If they get their way, it’s [possible] that it’s going to be built in the exact same location with no tax benefit for the city of Harwood,” Mayor Blake Hankey said. “So we deal with all the headaches and none of the benefit.”

Both Mayor Hankey of Harwood and Mayor Tim Mahoney of Fargo have signed a non-disclosure agreement with Applied Digital over the project. The company said the practice is standard and is meant to keep the mayors from divulging industry secrets should a deal fall through. 

But many in the local community said this makes the process feel less transparent. 

“They’re public servants,” McAlister from West Fargo said. “So to have anything that’s not available to the public that is so crucial towards such a massive thing is unacceptable.” 

The City Council will reconvene in October to finalize their vote. Although the mayor could call a special session on the matter before then. Applied Digital said they hope to break ground before winter delays the construction process.