City, business leaders want more data centers in Grand Forks. What does that mean?

May 22ā€”GRAND FORKS ā€” On the western edge of Grand Forks, south of the lonely DeMers Avenue Amtrak station and the city wastewater lab, sit two oblong beige warehouses behind a chain-link fence.

Inside each are rows and rows of computer banks two stories high, conducting trillions of calculations every second, and using massive amounts of electricity to do so.

This is a data center, and some city and business leaders believe bringing more of them to Grand Forks could boost the region's economy and serve as a financial windfall for the city.

Demand for data centers, which do everything from cloud storage to machine learning (think ChatGPT), is exploding across the United States. A 2023 report by McKinsey and Company projected demand for data center services would climb 10% per year into 2030.

Three companies currently operate data centers in Grand Forks, and an informal working group set up by Mayor Brandon Bochenski is exploring the possibility of bringing more to the community.

"We want to be a hub and a continued home to data storage and analytics," said City Administrator Todd Feland. "It really fits our high-tech role."

Grand Forks has a few things going for it as a potential data center hub, according to Minnkota Power Economic Development Administrator Matt Marshall. It's cold (data centers run hot, and need a lot of cooling), electricity is cheap, the city is part of the Midwest's historically reliable electric grid, and local officials like Bochenski are open to doing business.

"Grand Forks, the city and the state have set up a really beneficial economic development environment," said Aaron Hall, who cofounded Grand Forks' first data center operator, Sundog Mining, in 2021.

In exchange, Grand Forks collects commercial property taxes on the facilities and a franchise fee from utility providers for electric usage.

"For large users like that, that (franchise fee) could be a gigantic revenue stream," said Keith Lund, president and CEO of the Grand Forks Region Economic Development Corporation.

In 2020, before data centers began setting up shop in Grand Forks, the city collected around $390,000 in franchise fees from Nodak Electric Cooperative, Feland said.

Last year, it collected $772,000 in franchise fees. (It collected more, around $860,000, in 2022.)

The site on the western edge of town, owned by Texas-based Core Scientific, is currently valued at north of $7 million and will generate north of $100,000 in property tax revenue when a five-year exemption on the site expires in 2027.