Hyperscale Data Centers dominated conversations in Deuel County at a Legislative Cracked Barrel. One of the area’s lawmakers is bringing a bill to incentivize the tech-giants, but many oppose the legislation.
While the temperature outside of the Clear Lake Community Center in Deuel County felt well below freezing, inside conversations were heated.
"Even the state Constitution says you cannot treat businesses different, I mean that’s the rub here on your bill,” one remarked.
“I was insulted by that comment and I think a lot of Toronto residents were," one said in response to quotes from a South Dakota Searchlight article on data centers.
Many constituents voice their opposition to a proposed hyperscale data center in Toronto, South Dakota, a town of 200. Some of their Legislative representation is leading the charge on the issue and putting forth a bill to bring the multi-billion-dollar companies to South Dakota.
Rep. Kent Roe is the prime sponsor and Sen. Stephanie Sauder is co-sponsor of a bill that creates a sales and use tax exemption on some goods and services related to data center operations. Many have opposed giving sales tax incentives, claiming it goes against a true free market. That included some in the crowd.
Sen. Sauder compared it to how a grocery store attracts customers for business.
"Whether it's our local stores or our bigger stores, why do the stores put on a sale? You got coupons, or buy two get one free, whatever the sale is, it's to get people to come into their store. And when those people come to their store, they're not just going to buy the sale item," Sauder told the crowd of about 50. "They're also going to buy, you know, 'While I'm here, I'm going to buy the full price milk. I'm gonna buy the full price fruit. The state is putting this on to make to attract people to come to our state."
The exemptions last 50 years. Data centers that want to apply would need to do so within the next decade, something Roe calls a “tight window” due to the complexity of the projects.
While the 50-year exemption has raised some eyebrows, Roe said there’s a reason behind it.
“That’s built from industry because they’re building, what they’re considering to be, a 100+ year industry, structures, what-not. They’re looking a long distance into the future, so 50 years gets them about halfway through what they’re projecting their contributory life is going to be,” Roe said. “Also, the bill has it front loaded too. There’s only a 10-year window in which these entities can start to build. After that expires in 2036, then this exemption goes away.”
However, not every legislator in District 4 is behind the bill. Rep. Dylan Jordan told the crowd he will be no vote, citing a history of only one fee increase in his tenure in the state Legislature.
"In South Dakota, we kind of have a low tax rate across the board and our goal is to not have too many exemptions," Jordan said. "I know friends in Minnesota that come and say the air breathes different in
South Dakota, and I want to keep it that way. I think our tax laws for [data centers] are fine the way there are."
Erik Oftedahl, who owns a parcel of land about a mile away from the proposed site, said his “biggest rub” has been the process and feeling neglected by legislators, the county, the Public Utilities Commission on the issue.
"It’s, you know, pushback from feeling not listened to at all levels of government right now. That’s kind of the biggest rub, it doesn’t necessarily feel like just the data center, or just the powerlines, or just the generators," Erik Oftedahl said. "We all feel steamrolled and feel like we have very little say. I wouldn’t say we have no say, but you have to fight for what you want to say.”
Erik’s wife, Michelle, jumped in.
“Nobody’s hearing us about that," Michell Oftedahl said. "They’re ignoring all the unintended consequences of this, and there’s a lot: there’s the first responders being overwhelmed, there’s the price of farmland going up because the investors are coming in.”
Michelle touched on the worry of first responders and Emergency Medical Services volunteers in the county. Many are worried about the influx of people a data center could bring to the area that doesn’t have the infrastructure around it to support.
Sheila Monnier is both a farmer and volunteer for EMS in Deuel County. She says the people who would service the area where the data center is proposed are primarily volunteers.
“It is a real struggle, so it is very concerning to us, you know when they talk about bringing in extra people," Monnier said. "We do rely on the graciousness of employers to go do that.”
Some have looked at ways to leverage the data center opportunity. That includes looking to financially benefit underfunded areas like EMS and first responders. Monnier said money doesn’t help population.
"'Oh, they will donate so much money to you. They will give you money to help support this,' but the bottom line is, yeah, you can give us all the money in the world but that doesn’t fill the boots of the people that operate the trucks, that administer the first aid," Monnier said. "There’s no way you can buy that.”
The project is expected to bring at least 1,000 jobs to the area. The town of Toronto has a population of 200. Erik Oftedahl also volunteers for the fire department, and he said they’re not ready to meet the need should it arise.
“We do pretty well for a town of 200. We’re not staffed, equipped for 10 times that,” Oftedahl said.
However, most contend there are some benefits to the tech giants. Rep. Roe estimates the Applied Digital data center would bring in around $5.5 million in property tax revenue annually to Deuel County to the current-$11 million budget. Proponents also say it gets South Dakota’s economy trending upward. However, Monnier and the Oftedahls say they'd rather pay the extra property tax than have the data center in their area near their land.
Michelle Oftedahl called it confusing because she thought South Dakota's economic focus has always been agriculture and farming, but she believes this could send another signal.
"We have our governor saying that food security is national security, but then we have government pushing to bring in these projects and build concrete lots on perfectly good farmland," Michelle Oftedahl said. "It doesn't make any sense to us. We have so many family farms, we've lost nearly 4,000 South Dakota family farms in the last 10 years. And yet, we're somehow pushing to put more under."
Michelle and Erik said they worry this data center threatens land they've held in the family dating back at least a century.
"I think if you're going to bring any industry into, especially Deuel County where it's predominantly ag, it should either complement or support the industry that already dominates the county," Erik said.
Michelle and Erik Oftedahl and Sheila Monnier started a group in response to discussions around the data center called Residents for Rural and Agricultural Land, or RURAL, hoping to continue the conversation within the area.
When asked by SDPB, Roe said he’s heard a mixed bag from constituents, but…“The general response has been positive. There’s a lot of support out there, and I think we’ll see that become more vocal going forward," Roe said. "Yes, there’s some very, very intense opposition to it same as there is with any bill I’ve experienced. There’s always people that are intensely against something or intensely for something.”
Plenty of those intense voices showed up today to voice their opposition to Roe’s bill, HB 1005. However, he said it’s important he shows up to hear all feedback.
“Well, I think it’s incredibly important that we participate in our democracy and I’m the elected person here representing District 4, and this is the best way to get public input and pushback and everything else,” Roe said.
Roe said the most important part of his bill is it opens the door for data centers but keeps decisions in the local hands and local control. Sauder told the crowd the bill keeping it in local control is what will push her to be a 'yes' vote when it hits the state Senate.
However, Rep. Jordan also pointed to his concerns, quoting former President Ronald Reagan.
"The scariest sentence you can hear is, 'I'm here from the government, or I'm from the government and I'm here to help,'" Jordan said. "So, I just want to remind everyone to never trust the government."
He affirmed his no vote, and said that quote informs a lot of the reasoning behind how he votes in the Legislature.
While the cracker barrel primary revolved around data center and HB 1005, residents also questioned bills designating cell-cultured proteins, commonly called fake meat in the Legislature, as adulterated and a resolution urging the state and its residents to 'Seek the Lord Most High.'
