North Dakota county OKs AI data center, but can't get a demolition bond
Oliver County, N.D., wrote water, road and public safety conditions into its deal with Applied Digital. It couldn't get a bond to cover tearing the building down someday.
North Dakota county OKs AI data center, but can't get a demolition bond
Key Takeaways
- Oliver County, N.D., commissioners voted 2-1 on July 7 to approve Applied Digital's building permit for an AI data center near Center.
- The county's road use agreement bars wastewater discharge into the aquifer and requires the first cooling water to be trucked in.
- An Applied Digital attorney said the company couldn't get reclamation bonds to cover eventual demolition.
- Applied Digital projects about 200 full-time jobs and around 1,000 temporary construction jobs at the site.
"There's no bank that will demolish a $1 billion facility for an unlimited amount of time."
Janelle Combs, a senior real estate and regulatory attorney for Applied Digital, told commissioners in Oliver County, N.D., that this was why the company couldn't post a bond to tear down its planned AI data center someday, the Center Republican reported. The commission approved the building permit on July 7 anyway. The deal shows what a rural county could and couldn't get in writing when an AI developer wanted to build on farmland. Supervisors in any Valley county would face the same question if a similar project came to them.
What the county got in writing
The permit vote rezoned the land from agricultural to industrial, the paper reported. On July 10, commissioners signed a road use and operations agreement with APLD BIS-01, LLC, an Applied Digital subsidiary, according to Valley News Live. The company will build a private road off Highway 31. Loads over 34,000 pounds have to stay on state highways.
Then came the water terms. No wastewater can go into the aquifer under the site. The water that first fills the cooling system will be trucked in, not drawn from on-site sources.
There's a weed plan due within 60 days. State environmental regulators will set the timeframes for testing the emergency generators. The company also agreed to work with St. Peter Lutheran Church to limit outdoor construction work near the property.
Applied Digital will coordinate with the sheriff, the emergency manager and fire and ambulance departments on funding before property tax money from the project comes in. Combs said that could include the sheriff's request for a fourth deputy.
The company expects about 200 full-time jobs and around 1,000 temporary construction jobs, and it wants the site done within 18 to 24 months. It already runs the Polaris Forge 1 campus in Ellendale. It's also building Polaris Forge 2 near Harwood, a 280-megawatt AI facility leased to Oracle, and in March it closed a $2.15 billion bond offering to pay for that work.
The bond nobody would write
Chairman Rob Schmidt voted no.
He said his only objection was the location, farmland about a mile east of Hannover and five miles north of Center. His biggest worry was the end of the building's life. When it's razed, Schmidt said, taxpayers will be stuck with the bill. Three of his conditions involved reclamation bonds, and Combs said the company had asked banks as far away as Europe.
"These buildings are built to last 100 years," she said. "With inflation over 99 years, for a $1 billion facility, it's not possible."
Combs said the state Legislature might help, but so far there have only been conversations. Commissioner Lee Husfloen, who voted yes, compared the project to the county's power plants, which he said have run well past their expected 35-year life.
Why Valley counties should watch
Nothing in the Oliver County deal touches California directly. But the issues will sound familiar to anyone who has sat through a land-use hearing in the Valley: farm ground rezoned for industry, an aquifer neighbors don't want touched and a small sheriff's office bracing for a big construction crew. Then there's the question of who pays to knock the building down decades from now.
If a developer brings that kind of project to the supervisors in Fresno, Kern or Merced County, the Oliver County file is a ready list of what to ask for. In North Dakota, the company said it couldn't get one of those items, the demolition bond, at all.
Who's still asking questions
Commissioners put a 180-day moratorium on data centers in March, and more than 200 people packed the Betty Hagel Memorial Civic Center in Center for a debate that month, KX News reported. The commission lifted the moratorium 3-0 on April 30.
At the July meeting, Arlo Bakken argued the permit was coming too soon while landowner concerns were still open. Bakken is running for county commissioner in the November general election.
"There have been official complaints filed, concerns about violations and I think those would need to be addressed before a final permit could be approved," he said.
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