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Construction of a $3 billion data center on a 320-acre site in southeastern North Dakota has sparked an annexation dispute between the small city where it is being built and its much larger neighbor, Fargo.
Polaris Forge 2, a 280-megawatt artificial intelligence computing factory, is being developed in Harwood by Dallas-based Applied Digital, which also operates data centers near Ellendale and Jamestown, ND. The project team includes Minnesota-based McGough Construction; Builders of the century; MBN Engineering; and Midwest Inspection Services, all with offices in Fargo.
Initial plans call for two buildings, each about 900,000 square feet, with room for expansion. Applied Digital has been contracted to purchase more than 900 acres for the campus and has secured electric power from Cass County Electric Cooperative, a member-owned nonprofit organization.
The company says it’s expanding into North Dakota because the state offers abundant energy, available land and a business-friendly climate.
“Demand for AI capability continues to accelerate, and North Dakota remains one of the most strategic locations in the country to meet this need,” CEO Wes Cummins said in a press release.
The first phase of the project is expected to become operational in the second half of 2026, with the second phase planned for 2027. The campus is expected to create around 200 jobs.
Harwood, a town of about 900 people 10 miles north of Fargo, sees the project as a buffer against rapid growth on Fargo’s north side. Fargo, which has a population of 136,000, launched an annexation bid in August for about 800 acres that include the data center site.
“Fargo made, under our noses, [seek to] annex that property,” said Harwood Mayor Blake Hankey. “This building is in our ET Zone, what we call our extraterritorial zone. This is owned by Harwood. Fargo is trying to annex our property and steal this project…and so we’re fighting Fargo right now. And why? Because they want our tax revenue.”
Harwood City Auditor Chayla Hanson said the city in November rejected an annexation agreement submitted by Fargo because state law says a city cannot annex land under another city’s extraterritorial zoning or subdivision authority without written consent or an order from an administrative law judge.
“We follow North Dakota’s century code. We don’t need an agreement,” he said.
While the project was being considered, opponents raised concerns about water use, energy costs and noise. Hankey said most of the opposition comes from Fargo residents or people outside of Harwood.
He said the data center will use a closed-loop cooling system that keeps the water completely contained. In the system, water flows through sealed pipes to absorb heat from the servers before passing through a heat exchanger or alternative cooling tower. The chilled water then returns to the servers to repeat the cycle.
Hankey also dismissed concerns about rising energy costs.
“The CEO of Cass County Electric has said rates will not go up. And Applied Digital has agreed to extend the [power] necessary infrastructure at its price,” he said.
Regarding noise, Hankey said the buildings will be concrete with all noise-generating equipment inside and the site is about a mile from the city.
As for the annexation bid, “This is a big city taking on a small town,” Hanson said, adding that Harwood is not dependent on Fargo for services the data center might require.
Applied Digital announced in October that it signed a lease with an unnamed US-based investment-grade hyperscaler for the campus. The company said the lease represents about $5 billion in contracted revenue over an estimated 15-year term and covers 200 megawatts of critical IT load for AI and high-performance computing infrastructure.
Fargo officials did not respond to a request for comment on the annexation effort.
