Obedio Municipal Intelligence · Data Center Watch
While much of the country spent the spring of 2026 writing moratoria to keep data centers out, the city of Hermantown, Minnesota — population roughly 10,000, just west of Duluth — has spent it trying to pull one in. The project even has a local codename: Project Loon.
It surfaces in the most ordinary of places. In Hermantown’s June 15 bills register, alongside sewer-construction line items, sits an $11,115 escrow payment to Northland Consulting Engineers — coded “Project Loon.” On the city’s public-comment cards, residents register to speak on “Project Loon” and “Data Center Construction.” The mundane paperwork is the tell: this isn’t a rumor or a rezoning study. It’s a live, multi-billion-dollar development moving through a small city’s committee structure one resolution at a time.
The deal
The public name behind Project Loon is Harmony Group, LLC — described in Hermantown’s own May 4 staff report, in plain language, as “a Google owned subsidiary.” Economic Development Director Chad Ronchetti’s memo to the Mayor and Council lays out the shape of it: a data-center technology campus in Section 31 of the city, built in up to four phases across up to four buildings, with Phase I carrying a minimum capital-investment commitment of $650 million — and each subsequent phase expected to bring a comparable sum. Stacked up, this is a potential multi-billion-dollar build dropping into a city most of the country has never heard of.
What stands out isn’t the headline number; it’s how seriously Hermantown is treating its side of the table. For a deal this size the city retained three law firms: Overom Law as city attorney, Fryberger as local abatement and bond counsel, and — tellingly — DLA Piper out of Chicago, brought in specifically for its data-center contracting and land-use practice. A city of 10,000 hired a global firm because it intends to win this and hold it together.
A city of 10,000 hired a global law firm because it intends to win this — and hold it together.
The instrument is a paired Development Agreement and Tax Abatement Agreement, which came to a public hearing on May 4 as Resolution 2026-45. The groundwork was laid weeks earlier: at a March 26 Economic Development Authority work session, Ronchetti walked the board through “Tax Abatement 101 for EDAs” — a quietly revealing agenda item, a small-city staff preparing its decision-makers for a transaction far outside their usual scale.
Crucially, the agreement is fenced with off-ramps. It commits the city’s infrastructure and regulatory support but does not by itself grant the Special Use Permit, the Commercial Industrial Development Permit, the plat, or the environmental review. Each requires separate action, and the abatement is contingent on all of them clearing. If construction doesn’t begin within five years, either party can walk. The fiscal case was presented by Todd Hagen of Ehlers, the municipal advisory firm — the standard signal that a small city is leaning on outside expertise to model what it’s actually getting.
The fight
None of this is happening quietly. Hermantown’s June 15 meeting turned into a public-comment marathon: more than forty residents spoke, the great majority — roughly 35 — in opposition, with about eight in support. That’s a remarkable turnout for a city this size.
The supporters — fewer in number, and several from neighboring Duluth — argued that the data-center industry has changed, that modern facilities underpin everyday digital life, and that the investment is “the way of the future.”
The opposition was overwhelmingly local, organized, and specific. Across the spring’s hearings, residents raised the project’s draw on a limited aquifer — warning that a hyperscale facility on city water could leapfrog the limits meant to give residential users first call on the supply. They cited the threat to what one speaker called one of the best trout streams in the region, the noise of an air-cooling system, well-water pollution, and the broader anxieties around AI-scale facilities. One resident put the accountability problem bluntly: a company the size of Google would be very hard for a small town to hold responsible if something went wrong. Their comments tracked a paper trail of land-use ordinances, special-use permits, and a draft AUAR — Minnesota’s Alternative Urban Areawide Review — all leading back to the same campus.
That tension — real environmental stakes versus a transformative tax base — is exactly what’s producing one-year moratoria in towns elsewhere. Elsewhere in Minnesota, the Pequot Lakes Planning Commission discussed Hermantown by name as the cautionary example of “billion-dollar data center projects,” with members noting a mid-sized facility can draw electricity equivalent to 25,000 homes while employing only about 20 people once operating, and floating a one-year moratorium to buy time. Hermantown’s choice has been the opposite: to have the fight on the way to yes.
Why it matters
Project Loon is a clean illustration of a divide that’s hardening across the country in 2026. The dominant story is refusal — the share of municipal data-center items ending in a moratorium or prohibition has risen sharply through the spring. But a much smaller, much quieter set of jurisdictions is doing the opposite: competing for these projects with abatements, TIF districts, enterprise zones, and PILOTs. Hermantown is the sharpest example of that second posture — a small city that brought in DLA Piper, ran “Tax Abatement 101” for its EDA, and put a paired development-and-abatement agreement to a public hearing, all to land a $650 million first phase.
The map everyone already has shows where data centers are being turned away. The valuable, scarcer map shows where they’re being courted — and what those communities are willing to pay and risk to win them. Hermantown just drew itself onto it, in a $650 million line.
Reporting drawn from the City of Hermantown’s own meeting records, March–June 2026: the May 4 City Council staff report and Resolution 2026-45 public hearing, the March 26 Economic Development Authority work session, and the June 15 council packet and public-comment record. One figure remains outstanding from these documents — the abatement’s percentage, term length, and projected tax-revenue impact, which were presented in Ehlers’ fiscal-impact analysis and would round out the financial picture. This is reporting on public proceedings, not legal, tax, or investment advice.