In the spring of 2025, Sydney Brennan was riding high. The 22-year-old was finishing college and was a newly elected councilwoman in Menomonie, a city of about 17,000 in the lush plains of north-western Wisconsin.
Weeks into the new job, she was invited to a meeting with consultants pitching a $1.6bn AI hyperscale datacenter campus that an undisclosed big tech company wanted to build just outside of town. The project’s numbers were eye-opening: a 320-acre site that would use an estimated 75,000 gallons of water per day, making it the most significant development in Menomonie’s nearly 150-year history.
Brennan had her concerns about datacenters and that the company was keeping its identity secret. One of the consultants told her that the developer was Balloonist LLC, a shell company incorporated in Delaware. The identity of the parent corporation bankrolling the project was known to only a handful of people, including two city officials who had signed nondisclosure agreements (NDAs) with Balloonist. Brennan and her fellow councilmembers were in the dark.
As tech giants scour the nation in a relentless pursuit of cheap land and energy to build hyperscale AI data centers, critics say they have relied on secrecy through use of shell companies and NDAs to push through multibillion-dollar mega-projects in cash-strapped cities like Menomonie. In Wisconsin alone, NDAs were reportedly signed in at least four other cities. Officials in one of those cities, Beaver Dam, also signed NDAs with Balloonist LLC. The tech company behind that $1bn datacenter project was later revealed to be Meta, the parent company of Facebook.
Brennan peppered the two Balloonist consultants with questions about water use, noise pollution and the strain of such a massive facility on the city’s electrical grid. The plan for the datacenter would include buffer zones to reduce noise, and Balloonist promised to fund any necessary upgrades to Menomonie’s grid and water system. The company’s goal was to be “water positive”, or eventually replenish more water that it consumed, by 2030.The consultants showed Brennan charts that projected up to 1,000 temporary construction jobs, along with hundreds of contractors and between 50 to 75 high-paying permanent jobs, a potential economic boon for the struggling city that was once a major center of the nation’s lumber industry.
“I mean, you take everything with a grain of salt,” Brennan, who left office in January, told the Guardian. “They’re basically telling you everything you want to hear.”
According to Brennan, the city administrator, Eric Atkinson, accompanied her to the meeting and said that the datacenter was just “one of many ideas” to expand a local tech park that had brought major employers like Walmart to the city in recent years. What Brennan did not know was that the city had already signed a pre-development agreement with Balloonist after the city council approved it in closed session that March, a month before she took office.
The relationship between Balloonist and Menomonie began in February 2024 when two Menomonie city officials, Atkinson and David Schofield, the city’s director of public works, signed NDAs with the developer. The one-page agreement, obtained by the Guardian, makes no mention of a datacenter. It does clearly instruct signatories that they cannot reveal the tech company behind “the project” or even the existence of the agreement itself.
A month after he signed the NDA, Schofield presented the city council with a proposed ordinance which would define the term “warehousing” in the city’s code. The newly added definition included the line, “establishments used primarily for the storage, management, processing, and transmission of digital data”, that effectively paved the way for a datacenter. The city council approved the change at an April 2024 council meeting. It is unclear if any councilmembers knew of Balloonist or of the potential datacenter project at the time of the vote.
That was the first step in a nearly 18-month process where the two sides developed plans for the datacenter campus in secret until the city governmentput outa press release about the proposed project in July 2025, according to interviews, public records and emails obtained by the Guardian. The emails, which cover a period from January to September 2025, show how the city and Balloonist took the necessary actions to make the datacenter a reality.
The emails also reveal, in real time, the fierce community backlash that eventually doomed it.
‘ChatGPT is amazing’
In March 2025, councilmembers were only just learning of the project – more than a year after Atkinson and Schofield signed their NDAs.
They were first told of a potential datacenter in a closed session when they were asked to consider the pre-development agreement with Balloonist. Wisconsin law allows for council meetings to enter closed session – where information discussed is shielded from the public – under a few exemptions, including for the purpose of discussing public business that can remain secret for “competitive or bargaining reasons”.
Two city councilmembers who were present told the Guardian that members were asked for approval of the pre-development agreement, which laid out how Balloonist would reimburse the city up to $200,000 to conduct site, environmental and traffic reviews related to the project. Beyond that, the officials said they were offered few details on the development.
“I don’t remember having any real information on it, other than you know this is a thing that we might look into,” councilmember Cody Gentz told the Guardian. Gentz described the mood in the room as “pretty neutral” with members not outwardly expressing opposition, but instead wanting to know more about a project that appeared like it could provide badly needed tax revenue for the city. The council voted to proceed.
Atkinson soon began scheduling one-on-one meetings between Balloonist consultants and councilmembers, emails show. Balloonist needed a majority of the council to approve the annexation of the land parcels it had targeted for development, which were not within city limits but in a neighboring village, and rezone them for industrial use. One member told Atkinson he felt unprepared to evaluate the project.
In Menomonie, councilmembers are part-time with few staff resources to help sort through the types of complex agreements that a large-scale infrastructure project like a datacenter requires.
In one email, councilmember Chad Schlough admitted to consulting with ChatGPT to prepare for his meeting with the Balloonist consultants.
“I used CHATGPT: Discuss the pros and cons of allowing a datacenter into a small town,” Schlough wrote to Atkinson. “CHATGPT is amazing.”
In an interview, Schlough told the Guardian that, at the time, he had no “frame of reference” for what a datacenter was. He described the meeting with the Balloonist consultants as less an informational session and more a laid-back chat.
“I think they were more looking for the councilmembers to tip their hat on how they would vote for the center,” said Schlough.
Schlough described a process that followed a playbook that tech giants have implemented all over Wisconsin, said Barry Burden, a University of Wisconsin-Madison political science professor who has followed the issue statewide.
“It’s tempting for a big tech company to come into a small town and talk to the five or seven members who might be on the town board and convince them that the project’s a good idea,” said Burden. “In terms of regulations and approvals, it’s just a few volunteer town board members who are the main gatekeepers.”
Atkinson and Schofield did not respond to requests for comment for this article. An attorney for Balloonist LLC also did not respond.
The backlash
Last July, Tim Accola returned home from a work trip to a surprise letter in his mailbox. It was a formal notice for an upcoming city council meeting where a potential datacenter was on the agenda. That was the first time he had ever heard of the project.
Accola’s white steeple home, built in 1899 as a one-room school house and later used as a church, sits just across the road from the proposed datacenter site.
He attended the August city council meeting and found the chamber overflowing with people. Accola was among a number of Menomonie residents who took to the podium during a public comment period that lasted for nearly two and half hours. One by one, angry residents implored lawmakers to stop the project. In a testimony that at times turned emotional, Accola said that he would be forced to sell his home if the project went ahead due to the excessive noise from the datacenter and the facility’s potential impact on his well water supply.
Despite the outcry, Brennan and a majority of her colleagues that night voted in favor of annexation and rezoning the land for industrial use, clearing a major procedural hurdle for the developer. “I didn’t see a way back from that,” Accola told the Guardian.
Following the vote, constituents flooded the email inboxes of city officials. In one email addressed to a city councilmember, a resident who lived near the site decried the lack of transparency around the process. “The city council has a trust problem with the community that needs to be mended,” they wrote.
Datacenter opponents connected on Facebook, in coffee shops and gathered at supper clubs. They staged protests at the site, demanding answers from local officials.
“It was like a black box to get any information,” said Blaine Halverson, one of the organizers behind the Stop the Menomonie Data Center Facebook group, which counts nearly 11,000 members. “And the NDAs with a company nobody had ever heard of really destroyed public confidence.”
Residents knew they likely had little time to try and stop the development. Datacenter projects in other Wisconsin cities were moving ahead despite similar public uproar, Halverson noted. Halverson, who works as a mental health professional, became the group’s designated go-to expert despite having no previous knowledge of datacenters.
He read as much as he could on the topic, listened to podcasts on his long drives between meeting clients and fully immersed himself “in the weeds” on municipal zoning codes. He joined a Signal group chat made up of people from across Wisconsin who were fighting datacenter projects in their towns. They discussed strategy and organized public events. “This just took over my life,” Halverson told the Guardian.
The city’s mayor, Randy Knaack, responded to the groundswell of opposition. He halted the project in a tersely worded memo. The city council also changed course. In January, councilmembers unanimously passed a zoning ordinance for datacenters that reversed the warehousing definition and established a new zone for which any datacenter developer, including Balloonist, would need to apply. The move effectively paused, though it did not cancel the development. Knaack lost his re-election this April after holding the office for 16 years.
In a recent interview with the Guardian, Knaack acknowledged mistakes made in last year’s datacenter saga, which brought his small city into the national spotlight. He noted that while NDAs were common for smaller development proposals in the city, they should never have been signed for a project of this size. Knaack conceded that the city, with a small staff and little expertise around datacenters, was “way in over their head” with Balloonist.
“I felt like their attorneys were more in control of the process than we were,” said Knaack. “I mean, we’re talking about a developer backed by one of the richest companies on earth here.”
Knaack described the initial Balloonist sales pitch as “slick”, but was skeptical of “the fine print” on the deal. Wisconsin’s lucrative tax incentives for datacenter developers meant that Balloonist could apply for a sales tax exemption on any equipment used to build the datacenter, potentially saving the developer millions.
“Maybe you get $1m in tax out of these people, which does help but at what cost to the community?” said Knaack. “I understand why the community was angry. I was angry.”
He described those days last fall leading up to the pause as a frantic rush to stop a project that had gotten ahead of him. He phoned lawyers across the state for guidance and settled on putting out the memo, which directed Atkinson, the city administrator, to inform Balloonist that the datacenter project was “not a suitable fit” for the city. Knaack said he was proud to have stopped the datacenter, for now, and that he was encouraged to see the growing backlash nationally, claiming Menomonie could serve as a model for other small municipalities fighting back.
“All small communities should be aware that when somebody comes in with a sales pitch that seems too good to be true, maybe it is,” he said. “Learn from our mistakes and follow our lead.”
Saying no across the nation
The pushback in Menomonie reflects a growing resistance nationwide to a datacenter boom that polls show has become widely unpopular with vast majorities of Americans.
At least $156bn in projects were blocked or delayed in 2025 across the United States, according to Data Center Watch, a project by the AI safety firm, 10a Labs, that tracks opposition nationwide to datacenters. This year, between April and June, 45 projects worth an estimated $68bn were blocked or delayed.
That opposition to the infrastructure that trains and powers AI models, and growing public distrust of the industry itself, has become one of the defining bipartisan issues ahead of the midterm elections.
President Trump, who has made AI the centerpiece of his second-term economic agenda, lashed out in an August Truth Social post that communities that opposed AI datacenters risked ending up “backwards and poor”.
At the local level, more than 500 counties and municipalities now seek to ban or restrict datacenters, according to an analysis from the climate news site HeatMap. In June, Seattle lawmakers unanimously passed a one-year ban. The New York governor Kathy Hochul followed suit with a statewide moratorium, the nation’s first. In Texas, governor Greg Abbott, who is locked in a tight re-election bid, has put a pause on new datacenters despite being a longtime AI industry ally.
And in Wisconsin, Trump-endorsed GOP gubernatorial candidate Tom Tiffany has bucked the president, labeling his Democratic opponent “Data Center David Crowley” in an ad over his past statements on datacenters.
Crowley narrowly beat frontrunner Francesca Hong in the state’s Democratic primary. Hong, a democratic socialist, had campaigned for a statewide datacenter moratorium, while Crowley, a moderate, said that it should be up to communities to decide. At a 2025 candidate forum, Crowley said Wisconsin had an opportunity “to really become an AI and a data hub not only for the entire country, but for the entire globe”. Tiffany used the quote in his ad.
Crowley has been endorsed by the state’s largest trade unions, which could explain his cautious approach on the issue. Unions, in Wisconsin and nationally, have been among the strongest supporters for datacenter projects, given the thousands of construction jobs that potentially come with them.
“I think with AI datacenters, the tension right now, and the issue for Democrats is with the building trades and the unions that have an opportunity and support it because of the construction jobs,” Hong told the Guardian in a Madison coffee shop this spring. “Being a pro-union party … I can see and understand why people are toeing a line when it comes to the datacenters.”
Hong said that she was asked about the issue at virtually every campaign event she held, especially in rural areas of the state. That tracks with the nationwide data.
Datacenter opposition has risen from a peripheral issue just a couple years ago to one that has upended American politics, said Miquel Vila, lead researcher at 10a Labs.
“It’s going to be a quite difficult issue to navigate for incumbents [in the midterms],“ said Vila. “We’ve seen [Josh] Shapiro in Pennsylvania and Abbott in Texas, who had been leading pro-datacenter administrations, start to pivot to implement stricter regulations.”
In Menomonie, Knaack lost his re-election in April to a city councilmember after a bitter campaign defined by the datacenter. “No Data Center!” signs sprouted across the city, and Knaack often pointed to his success in pausing the project. But he said it was not enough to overcome the public sentiment that he was responsible.
“I could win the fight, but I couldn’t win the battle,” said Knaack.
For Brennan, who now lives in North Carolina, the fallout in Menomonie encapsulated the current national moment: public distrust of institutions paired with a palpable fear of an AI industry seen as “out of control and all-powerful”.
She says she now regrets her vote for the re-zoning. Brennan says she was in a tough spot, forced to balance the pressures from some residents and union leaders who urged her to support the project for its promised jobs and those constituents who stridently opposed it.
The experience, she said, illustrated how elected officials in small cities are “left to fend for themselves” as they assess these projects that have been developed often times in secrecy.
“They’re [big tech companies] very much taking advantage of that,” said Brennan.
Halted – for now
The short drive from historic downtown Menomonie to the proposed site is like that of so many in this corner of Wisconsin. The city grid quickly turns into countryside enveloped by idyllic rolling, wooded hills. On a cold, overcast day in March, snow packed the ground on the site, which sits just across from a local creamery.
In light of last year’s controversy, the Menomonie city council has sought to rebuild trust. It has held several public meetings in recent months, soliciting community input, as it considers new datacenter restrictions to expand on the ordinance passed in January. This summer, the city’s new mayor, Matthew Crowe, issued a press release revealing that Balloonist representatives had reached out to city staff, potentially indicating a willingness to revisit the project. Crowe said he had declined to meet with them “to avoid being unduly influenced”.
After a successful public push to stop the project, its fate is anything but clear. Officially, the development remains paused, but Balloonist still owns the land.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: theguardian.com
