Pre-development agreement for data center, mayor's "Pause" memorandum

One item of potential interest about the data center was brought up in some on-line discussion yesterday. On March 3, 2025, the City Council held a closed session to discuss a pre-development agreement with Balloonist LLC. The council approved the agreement unanimously, with the exception of Council Person Matt Crowe, who abstained from the vote. 

The text of the agreement was not part of the council packet that was published before the meeting, but was attached to a new revision of the council packet which we did not notice at the time. The text of the agreement is below, and a clean version of the council packet with the properly formatted agreement is attached. 

Also as a matter of completeness in documenting the process, we have obtained a copy of the memorandum from Mayor Knaack that has paused the data center progress. The memorandum is attached below.

PRE-DEVELOPMENT AGREEMENT

This PRE-DEVELOPMENT AGREEMENT (this “Agreement”) is entered into effective as of
the ______day of February, 2025 (“Effective Date”), by and between the City of Menomonie, a Wisconsin
municipal corporation located in Dunn County, Wisconsin (the “City”), and Balloonist, LLC, a Delaware
limited liability company (the “Developer”) for property in Dunn County (the “Property”). The City and
the Developer may be referred to individually as a “Party” and collective as the “Parties”.

RECITALS

WHEREAS, the Developer is contemplating the development of the Property in accordance with
the applicable state, county and municipal laws; and
WHEREAS, the City agrees to timely review the conceptual plans and applications associated
with the potential development of the Property, including the Property’s possible annexation and re-zoning,
without expense to the City’s taxpayers if the project fails to move forward; and
WHEREAS, the Developer has indicated that it would not undertake the project without certain
public improvements and incentives, which the City and the Developer are considering and negotiating.

AGREEMENT

NOW, THEREFORE, in consideration of the following covenants, the Parties agree as follows:

1. Recitals. The terms and provisions of the above recitals are hereby incorporated by reference.

2. Development Applications and Plans; Reimbursement of Costs.

a. The Developer plans to, either directly or indirectly through the existing Property owners,
submit a petition for annexation, an application to rezone the Property, as well as other
petitions and applications for the development of the Property, and continue the negotiation
of potential agreements governing the project with the City (collectively, the “Development
Applications”). The City plans to explore the possible amendments to its Tax Incremental
Financing District # 18 (“TID”) in order to fund public improvements and incentives for
the project.

b. The Developer hereby understands and agrees to reimburse the City for certain, specific
costs incurred by the City relating to the Development Applications and the amendments
to the TID. Attached as Exhibit A is a list of anticipated costs and expenses to be incurred
in connection with the Development Applications and the TID (collectively, the “Costs”).
The Costs for potential reimbursement by the Developer to the City under the terms of this
Agreement shall not exceed $200,000.00 (the “Maximum Amount”). In other words, the
maximum amount of Costs the Developer may have to pay under the terms of this
Agreement shall not exceed the Maximum Amount of $200,000.00. To the extent the City
incurs Costs in excess of the Maximum Amount or expenses outside of the scope of the
Costs (and the Parties to this Agreement do not subsequently negotiate an agreement
requiring the Developer to pay such costs), then the City must pay for such expenses
without reimbursement from the Developer. The Costs shall not include charges for time
spent by City employees working on the Development Applications or amendment of the TID. The Cost shall not include the City attorney’s time negotiation a TID Development
Agreement, but may include other legal expenses related to the Development Applications.

c. In connection with the negotiation and performance of this Agreement, the City represents,
warrants, and covenants that it has complied and will continue to comply with all applicable
anti-corruption laws, rules, and regulations, including by using any funds provided by the
Developer. Said funds shall be used solely for the purposes stated in Exhibit A and not in
any way, directly or indirectly, that would constitute a violation of any applicable anticorruption laws.

3. Deposit. Upon execution of this Agreement, the Developer shall deposit One Hundred Thousand
Dollars ($100,000.00) (“Deposit”) with the City Treasurer to pay for the Costs. If at any time the Deposit
becomes insufficient to pay for the Costs incurred by the City, the City shall provide written demand to the
Developer, in accordance with Section 7, for additional funds which the Developer shall deposit, not more
frequently than monthly, in amounts of approximately Fifty Thousand Dollars $50,000.00 (each an
“Additional Deposit”), but only up to and not exceeding the Maximum Amount. Should the Developer
terminate the Agreement, the City shall remit any portion of the Deposit or Additional Deposit(s) that
remains unexpended after paying any and all outstanding invoices for the Costs.

4. Invoices. The City shall submit invoices related to the Costs on a monthly basis to the Developer
for the reimbursement of eligible Costs from the Deposit. All of the City invoices must include sufficient
detail and supporting documentation to substantiate all fees and expenses charged to the Developer. The
Developer shall have fifteen (15) days from receipt of invoices for the Costs to identify any discrepancies
or non-reimbursable Costs and provide notice to the City of such disputed amounts (“Notice of Disputed
Costs”). The City shall have fifteen (15) days upon receiving such Notice of Disputed Costs to correct any
discrepancy, submit additional information, or remove such disputed Costs from the invoice. Failure to
timely respond to a Notice of Disputed Costs may result in the delay of reimbursement or non-payment of
the Costs identified in the Notice of Disputed Costs. If there is no Notice of Disputed Costs given to the
City by the Developer within fifteen (15) days from receipt of invoices for the Costs, the City may reimburse
itself for the Costs from the Deposit or from an Additional Deposit if applicable.

5. Performance Subject to Required Government Approvals and Government Action. The Developer
acknowledges that the various undertakings of the Developer in relation to the project require approval of
the City’s Plan Commission, the City’s Common Council, and the Joint Review Board. The Developer
understands the City cannot assure that all such approvals will be obtained and the Parties agree this
Agreement does not obligate the City to approve annexation of the Property, rezoning of the Property,
amendments to the TID, a water and sewer agreement, or a TID development agreement.

6. Termination. The Parties agree this Agreement shall either, (i) terminate upon the execution of a
tax increment financing development agreement or (ii) be terminated by the Developer, it its sole and
absolute discretion, upon providing the City notice of such termination (“Termination”). The City shall
provide, within thirty (30) days of Termination, a final invoice for those Costs incurred prior to the
Termination of this Agreement, which may be disputed in accordance with Section 4. Within sixty (60)
days of Termination under this Section 6, the Developer shall reimburse the City’s Costs up to the
Maximum Amount.

7. Notices. All notices and communications given pursuant to this Agreement shall be in writing and
shall be (a) mailed first class, United States mail, postage prepaid, certified with return receipt requested,
and addressed to the Parties as listed below, or (b) by electronic mail with a copy being sent first class,
United States mail, postage prepaid, certified with return receipt requested. If the notice is given by mail or
electronic mail, the notice shall be deemed to have been given on the second Business Day after the notice
is deposited in the United States mail, properly addressed to the Party, with postage prepaid.
to the City:

City of Menomonie
Attn: Eric Atkinson
800 Wilson Avenue
Menomonie, WI 54751
[email protected]

with a copy to:

Weld Riley, S.C.
Attn: Benjamin D. Ludeman
P.O. Box 1030
Eau Claire, WI 54702-1030
[email protected]

to the Developer:
Balloonist, LLC
c/o Quarles & Brady LLP
Attn: Douglas Buck
33 E. Main Street, Suite 900
Madison, WI 53703
[email protected]

8. Entire Agreement. This Agreement constitutes the entire agreement between the Parties and
supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter
contained in this Agreement.

9. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, and all of which together shall constitute one instrument.
10. Governing Law. This Agreement is made and executed under and in all respects is to be governed
and construed by the laws of the State of Wisconsin without regard or application of any choice of law
doctrines or principles.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date set forth above.

CITY:
City of Menomonie, a Wisconsin municipal
corporation

By:
Name:
Title:

Attest:

By:
Name:
Title:

DEVELOPER:
Balloonist, LLC, a Delaware limited liability
company

By:
Name:
Title:

EXHIBIT A

Annexation Application Review
Rezoning Application Review
TID #18 Amendment Preparation or Creation of New TID and Project Plan
Water and Sewer Agreement Preparation/Review
TID Development Agreement Preparation/Review
Site Plan Review
Stormwater Management Plan Review
Traffic Impact Analysis Review
Corporate Boundary Revision