Menomonie mayor halts $1.6 billion Balloonist datacenter by memo

Menomonie Mayor Randy Knaack halted the proposed $1.6 billion Balloonist LLC AI hyperscale datacenter by memo on September 22, 2025, directing the city administrator to tell the developer the project was not a suitable fit.

The memo followed about 18 months of secret planning that began in February 2024, when city administrator Eric Atkinson and public works director David Schofield signed nondisclosure agreements with Balloonist. The one-page agreement did not mention a datacenter and barred signatories from revealing the technology company or the agreement’s existence. The full Menomonie city council did not learn of the potential datacenter until March 2025, and it approved a pre-development agreement in a closed session that same month.

Balloonist, a Delaware shell company reportedly representing an unnamed tech company, said in September that up to $1.6 billion would be invested in Menomonie. The concept site plan showed up to 15 buildings or equipment yards, though the number of data centers was unstated. Balloonist promised to fund necessary upgrades to Menomonie’s electrical grid and water system and to be water positive by 2030. Consultants projected up to 1,000 temporary construction jobs and between 50 and 75 high-paying permanent jobs.

Residents near the proposed 320-acre site just outside the city of about 17,000 people raised concerns about noise, well water impacts, health and environmental effects. According to estimates, the project will consume 75,000 gallons of water daily. Menomonie was once a major center of the nation’s lumber industry.

Opposition organized through Facebook, coffee shops and supper clubs, and staged protests at the proposed site. The Stop the Menomonie Data Center Facebook group has nearly 11,000 members, more than half the town’s population.

Tim Accola first heard of the Menomonie datacenter from a surprise letter last July. His 1899 schoolhouse-and-church home sits across the road from the site. He testified that excessive datacenter noise and potential harm to his well water supply would force him to sell.

The Menomonie city council majority voted in August 2025 to annex and rezone about 320 acres north of Interstate 94 for industrial use. The August 2025 council meeting included public comment for about two and a half hours. Councilmember Sydney Brennan said she regrets her rezoning vote and was caught between job supporters and constituents strongly opposing the project.

“I felt like their attorneys were more in control of the process than we were,” said Knaack. “I’m not thrilled about the data center coming to our pristine area and farmland.” He phoned Wisconsin lawyers before directing Eric Atkinson to tell Balloonist the project was not a suitable fit.

Knaack lost his re-election this April after 16 years as Menomonie mayor in a campaign defined by the datacenter fight. New Mayor Matthew Crowe declined to meet Balloonist representatives who contacted city staff this summer to avoid undue influence.

The Menomonie city council unanimously passed a zoning ordinance in January reversing the warehousing definition and requiring datacenter developers to apply for a new zone. The January ordinance paused but did not cancel the development. Balloonist LLC still owns the targeted land, and the Menomonie datacenter development remains officially paused.

Menomonie’s experience fits a national pattern of local resistance. Data Center Watch, a project by AI safety firm 10a Labs, reported at least $156 billion in U.S. datacenter projects blocked or delayed in 2025. It also reported 45 projects worth an estimated $68 billion were blocked or delayed between April and June 2026. More than 500 U.S. counties and municipalities seek to ban or restrict datacenters, according to HeatMap analysis.

Seattle lawmakers passed a one-year datacenter ban in June, and New York governor Kathy Hochul imposed the nation’s first statewide moratorium. Texas governor Greg Abbott paused new datacenters despite being a longtime AI industry ally. President Trump said in an August Truth Social post that communities opposing AI datacenters risked ending up backwards and poor.

In Wisconsin, more than $57 billion in proposed datacenter projects exist across the state. Developers have proposed or are building at least five hyperscale projects in Janesville, Kenosha, Beaver Dam, Mount Pleasant and Port Washington. Most Wisconsin data centers are around Milwaukee or Madison, and the state hosts Microsoft, Meta, Vantage, Ark, TierPoint, 1547 CSR, and Expedient. Voters in Port Washington passed a first-of-its-kind referendum that limits future datacenter development.

The technology company behind a separate $1 billion datacenter project in Beaver Dam was later revealed to be Meta, the parent company of Facebook. Beaver Dam families near datacenter construction reported dry wells, and Port Washington residents complained about around-the-clock construction disruption. Wisconsin tax incentives could have let Balloonist seek a sales tax exemption on construction equipment, potentially saving millions while yielding the city perhaps $1 million.

Microsoft’s Wisconsin investment will surpass $7 billion, with Mount Pleasant development potentially exceeding $13 billion. The company opened its first Mount Pleasant data center earlier in 2026 and is building another. Microsoft’s Mount Pleasant facility uses closed-loop liquid cooling across most of the building, and its design aims to reduce water use.

Xcel Energy proposed a rate structure requiring new customers needing at least 100 megawatts to cover costs of serving their new load. Wisconsin regulators must approve the proposed rate structure for large electricity customers. Microsoft said it supplies carbon-free power to the grid to offset electricity drawn from fossil-fuel sources.

Wisconsin Republican state representative Clint Moses introduced a bill to prohibit nondisclosure agreements for datacenter proposals. Menomonie residents created 42 recommendations for future datacenter ordinances covering transparency, community protection, administrative review, infrastructure, fiscal protections and zoning. Wisconsin established a tax exemption on sales and use for datacenters that qualify in 2023.

Barry Burden, a University of Wisconsin-Madison political science professor, said big tech companies target small town boards that act as gatekeepers for project approvals. Menomonie council members work part-time with few staff resources to assess complex infrastructure agreements. Sydney Brennan said small-city officials must fend for themselves judging secretive projects and that big tech companies are taking advantage of that.

“These proposals were coming fast and furious,” says Brittany Keyes, clean air policy manager at Healthy Climate Wisconsin.

Menomonie’s city council has held recent public meetings to seek input while considering new datacenter restrictions expanding the January ordinance. Knaack said he was proud to have paused the datacenter and that Menomonie could be a model for other communities.