President Biden's Racine County visit to highlight huge expansion of Microsoft data center

President Joe Biden's visit to Racine County on Wednesday will highlight a massive increase in the scale of Microsoft's data center development in Mount Pleasant.

Microsoft has begun construction of its first data center building in the village's Wisconsin Innovation Park and has pledged a minimum value of $1 billion on the first phase of the development.

That investment is "just the tip of the iceberg" for Microsoft's involvement in Racine County, a source said Friday.

Wednesday's announcement is expected to be an expansion that's multiple times larger and create far more jobs than what has to date been made public about Microsoft's data center plan.

No details about the focus or location of Biden's visit have been made public. But it will give Biden an opportunity to contrast the rapidly expanding Microsoft project with the failed Foxconn project at the same site that was touted by former President Donald Trump — Biden's Republican opponent in November — as the "eighth wonder of the world."

Key Microsoft executive Brad Smith lays groundwork

Biden is coming a week after Microsoft President Brad Smith spent several days in southeast Wisconsin meeting behind closed doors with business leaders, educators and other local officials.

Microsoft inked its first deal to develop a data center in Mount Pleasant in 2022, when it paid $50 million for 315 acres at 90th Street and County KR. Construction of the first data center building is underway and a second is planned on that site. One of the buildings will include an attached two-story office building, according to conceptual drawings submitted to the village.

Last month, the company received the village board's approval to begin grading the southern portion of a parcel to the west in preparation for additional construction. Microsoft acquired that land in December as part of a massive 1,030-acre purchase of industrial park land that had formerly been under option to Foxconn Technology Group.

More: How Microsoft's purchase of 1,000 acres in Mount Pleasant could lead to a decade of construction

At the time, AJ Steinbrecher, Microsoft's director of North America land acquisition for cloud infrastructure, told the village board the company's plan in Mount Pleasant was "to invest billions in the development of our cloud infrastructure."

Village officials were unavailable for comment Friday regarding any additional changes to Microsoft's plans.

A global push to meet AI demand

The Mount Pleasant data center project is part of a global push by Microsoft and its tech-industry competitors to build out a global network of data centers to meet the growing demand for cloud computing and AI technology and services. Microsoft alone operates more than 300 data centers around the globe.

The industrial park was developed as part of a multibillion package of incentives to lure Foxconn, the Taiwanese tech company, to Wisconsin. As the deal was negotiated, Foxconn said it intended to build a high-tech LCD screen manufacturing plant in the park that would create 13,000 jobs. That plan did not materialize; the company now employs about 1,000 people who make computer data servers and power converters for rooftop solar installations.

Foxconn's agreement to give up its options to allow the sale of the land north and east of its campus amounted to its first public acknowledgment that its Wisconsin plans had been dramatically scaled back.

Data centers typically employ only a couple hundred people, but village officials have focused on the economic impact of Microsoft's multibillion investment in terms of tax revenue and raising the profile of the region as a technology hub.

As part of the December land sale and developer agreement, Microsoft boosted the guaranteed minimum taxable value of its future buildings to $1.4 billion, the amount needed to generate enough tax revenue to pay off the debt the village accrued as it developed the business park.

Foxconn has a similar obligation and this year for the first time owed special payments equal to the $1.4 billion value even though the value of its property is only about $500 million.

Combined, those valuations would allow the village to retire the tax incremental financing district before its scheduled end in 2047.

Microsoft last fall also signed a partnership with Gateway Technical College to jointly develop a Microsoft Datacenter Academy, a training and certification program for cloud computing and information technology careers. The agreement follows several other Microsoft-funded workforce and education initiatives including the Techspark, STEM program it started in northeast Wisconsin in 2017 and a $1.25 million gift in 2019 to UW-Milwaukee's Connected Systems Institute, which brings engineering and business students together to explore new uses for smart technology in manufacturing industries.

Microsoft CEO Satya Nadella, a UWM alumnus, and his wife, Anu Nadella, gave $2 million to UWM to establish the Fund for Diversity in Tech Education, which supports pre-college tech-education programming for K-12 students, scholarships, and mentoring and tutoring for UWM students.

This article originally appeared on Milwaukee Journal Sentinel: Microsoft, Biden to announce huge expansion of Racine County project