Ghost Town or Revival: The Future of Port Washington’s Data Center

The AI data center surge has stoked fears in communities across the United States, not just for their insatiable energy requirements, but also for the dramatic economic impact they have on the communities they occupy.

Port Washington, Wisconsin, a town of roughly 13,000, stands at a crossroads as the issue swiftly hits the mainstream.

The proposed $8 billion “Lighthouse” data center in Port Washington has faced fierce headwinds from residents and activists. While Vantage, the center’s builder, and the project’s supporters cite its economic boons, economic concerns continue to grow among opponents.

Tax Incremental District

Throughout the fall months, anti-data-center activists have narrowed their focus on the Tax Incremental District that was recently established in the data center area.

A TID is an area designated by a locale where a method called tax incremental financing, or TIF for short, is used to attract business. In Port Washington, it will reimburse Vantage for developing the basic infrastructure required to bring the Lighthouse center online. 

State assemblymember Ryan Clancy, who represents parts of eastern Milwaukee, explained a TID in much more digestible terms.

“Say you want a Kwik Trip and you want a bunch of infrastructure, like roads, sewers, and stuff like that,” Clancy said. “Or even if you just want an incentive to build your business, where it wouldn’t maybe economically make sense to. You can go to a community and be like ‘Hey, I want to take the taxes that I would normally be giving to your community and then just put it towards whatever we want to use to make this Kwik Trip.’”

Because communities establish TIDs to attract new development, the new source of tax income ideally matches the original investment. At their meeting on November 4, the city’s Common Council voted unanimously for a TID in the data center area.

“When we divert property tax revenue into a TID, that money doesn’t go to our schools, our roads, our fire and police departments, or our parks,” resident Scott Lone said shortly before the vote. “That’s not economic development. That’s corporate welfare dressed up as progress.”

“I don’t agree with our tax money funding three companies that have a valuation of over $1 trillion,” he added.

Mayor Ted Neitzke IV said the data center was actually the remedy for their school district’s declining performance.

Lone said that he and other organizers are already gathering signatures to bring the TID to a referendum vote. He said that 80 percent of the people they canvass end up signing on. A volunteer named Matt was canvassing at the Common Council meeting with a clipboard in hand. He said that the figure was closer to 90 percent.

“I would consider that a slam dunk,” Lone said.

Jobs

The opposition to the data center in Port Washington has not been unanimous, however. A few residents expressed neutrality or even full support for the project. Many of these supporters cite from the litany of benefits Vantage claims the project will bring to Port Washington.

But one of the highlights has been the potential for job opportunities. Vantage claims that the project will create roughly 1,000 jobs. They add that 700 of those will be from Oracle and OpenAI, the center’s rentier companies. What’s been a larger point of conversation, though, is the 4,000 construction jobs the project will also create.

In Port Washington, the mayor and the Common Council see the data center as more than an economic boon. It is a vital opportunity. In their view, waning financial resources for key public resources like the local school district necessitate a more reliable tax base.

“At a time when many Midwestern towns are facing dwindling economic opportunities, we were struck by how the city of Port Washington leaders wanted to be a part of building the future,” said Kaitlin Monaghan, a representative from Vantage.

In an interview with Media Milwaukee, Mayor Neitzke said much of the same. He added that the city’s public resources are in dire need of a more sustainable tax base.

In the same vein, union workers poised to work on the project were also among the project’s most vocal supporters.

“This is going to create a lot of opportunities for kids coming out of high school,” said Jake Olson, a business representative from the International Association of Sheet Metal, Air, Rail and Transportation Workers Local 18.

“We do a lot of HVAC, as well as exterior architectural panels,” said Matt Van Der Puy, another representative from Local 18. “It’s going to put a lot of our members to work.”

Of course, any building requires maintenance too. Van Der Puy seemed similarly hopeful about the work Local 18 could do at the data center in the future.

Chris Olig, a representative of LIUNA Local 113, a construction union, said he believes the people of Port Washington oppose the data center itself, not his union’s desire to build it.

“We are a jobs club,” Olig said. “Above and beyond everything else. Our issue is not necessarily left or right. Our issue is if somebody wants something built, we want it to be built union. We want to do it with our union laborers and with our union brothers and sisters.”

Meanwhile, a teacher from nearby Saukville shared cautious support for the Lighthouse center.

“This is a great advantage for our students,” he said. “Now, I have pushed back to Vantage, saying that their numbers need to come to fruition, because I want our students working with local contractors, local HVAC companies, local electricians, plumbers, excavators, et cetera.”

“What do we get in return?” Lone said. “Maybe a few permanent jobs, a building that comes with servers, not people. A facility that consumes huge amounts of electricity and water, but gives very little back to the community that it resides in.”

With Oracle and OpenAI as its clients, Vantage is not the first large company to invest from out of state. Regardless of whether or not the Lighthouse center in Port Washington ends up meeting its goals, the promises it is making are not too unfamiliar to some communities elsewhere in the state and country.

In Wisconsin, the infamously cancelled Foxconn manufacturing complex in Kenosha County promised over 13,000 jobs post-construction. Those 13,000 jobs never materialized, leaving a sour taste in many people’s mouths.

On a broader scale, too, skepticism plagues AI’s uses in the future.

“They’re investing billions and billions of dollars because they don’t want to pay the wages,” said Andy Manske, a 26-year-old candidate for Wisconsin governor. “Average minimum wage here – you’re making about $700 every two weeks, so $1,400 a month for minimum wage. Talking AI, they’ll do your job for $300.”

Energy Rates

Vantage pledged to pick up the bill for power infrastructure. The Milwaukee Journal Sentinel reported that by 2030, the Lighthouse center will consume a daunting 3.5 gigawatts.

To put that in perspective, the Point Beach nuclear power plant near Two Rivers produces around one gigawatt.

The reason for such an enormous need for power is simple: it’s a lot of computers. Professor Ryo Amano, an expert in energy and industrial engineering at UW-Milwaukee, explained that it also means a lot of transistors – tiny switches that are the basic building block of every computer.

“When you open [a transistor], you need to set the current on and off and on and off. Every time it goes on and goes off, it creates a huge resistance inside,” Amano said. “It is like friction. Friction causes heat.”

Heat, Amano explained, means Vantage will need plenty of cooling as well. He guessed the cooling apparatuses alone would comprise roughly half of a data center’s power consumption.

“This project will be entirely funded by Vantage, and not taxpayers,” a spokesperson from We Energies said about the power generation to meet the data center’s demands. “They are on the hook to reimburse the costs of those resources.”

“I think it’s important for local citizens, especially to recognize, and then our regional friends to recognize, that Vantage is on the hook for the 1.2 billion dollars in build out no matter what,” Mayor Netizke said.

We Energies added that they plan to expand natural gas and renewable energy capacities to meet the increased energy demand.

Despite We Energies’ pledge to keep Vantage on the hook, resident concerns have hardly subsided. Many worry that the dramatic spike in power consumption will lead to them paying increased rates.

Samantha Doucas is a member of the Party for Socialism and Liberation, which has been an active voice against. She shared her skepticism.

“With what has been reported time and time again,” Doucas said, “data centers across the country raise energy prices for the people around them.”

Lone said he wasn’t buying it either.