Brainerd officials agree to draft new power and development contract for BlockMetrics, set hard deadlines and deposits

City staff and members of the Brainerd Public Utilities Commission and Economic Development Authority agreed on May 8 to draft a new power agreement and a revised purchase-and-development agreement for BlockMetrics’ proposed data center at 1911 TC Drive, and to return to the groups with firm deadlines, a required upfront deposit and potential penalties if the company does not meet milestones.

The consensus followed a multi-hour exchange in a joint meeting of the Brainerd City Council, the Public Utilities Commission (BPU) and the Economic Development Authority (EDA) about a project that has not executed previously circulated agreements and missed a commencement deadline described in the EDA contract.

City staffer James Kramick said staff "does recommend continuing to work with BlockMetrics through a power agreement extension and revised purchase and development agreement with the EDA," while adding conditions to allow earlier termination if no progress is made. Kramick reviewed construction progress in submitted plans and identified a remaining issue: the roof over the air-cooling units that, if removed, would trigger a conditional-use-permit review under the city—s recent data-center ordinance.

The meeting recorded repeated frustration from elected members and commissioners that BlockMetrics and the property owner VCV had not executed previously offered agreements. Council members and commissioners said the EDA—s April 1 commencement deadline in the purchase-and-development agreement had passed and no signed power contract exists with BlockMetrics. Officials described an "opportunity cost" of roughly $55,000 per month tied to power capacity that could otherwise be sold to other customers.

Participants discussed specific contract elements staff proposed to include: an agreed-upon execution date for the power and PDA documents (staff suggested Sept. 1 as a possible target), a construction-commencement measure (the EDA contract treats issuance of a building permit as commencement; staff suggested adding a completed foundation inspection and tentatively noted Nov. 1 as a possible deadline), and a primary-building construction milestone (installation of exterior roofing, siding, windows and doors). Staff also proposed consequences for missed construction deadlines, ranging up to termination under the EDA contract's 30-day cure provisions.

Officials said they also want financial protections. Commissioners and council members who spoke at the meeting proposed an upfront, nonrefundable deposit of about $275,000 at contract signing, a surety bond or similar guarantee, and monthly liquidated-damages or opportunity-cost assessments if BlockMetrics fails to meet agreed milestones. BPU staff noted existing contractual protections for payments once a customer begins drawing power but said the commission had not received a signed contract from BlockMetrics.

Technical and schedule constraints were discussed: BPU staff said transformer lead-time quotes ranged in the record from about 10 weeks to as long as 24 weeks (six months), and that Brainerd currently has about 25 megawatts of capacity that staff would feel comfortable leasing without further upstream grid upgrades. Speakers also noted that some infrastructure for the site—an electrical line—was already installed and paid for by VCV, which could complicate alternative uses of the property if the PDA were eliminated.

Legal staff and commissioners said a substantially revised design (for example, removing the roof over outdoor cooling equipment) would likely trigger a conditional-use-permit (CUP) process that would involve the planning commission and city council and could add roughly a 90-day review period for design revisions, sound studies and hearings. Planning staff said the noise calculations they had run assumed no structure around the air-cooled equipment and that the design as submitted met MPCA-related sound criteria under that analysis.

No formal motion or vote was taken at the meeting on the BlockMetrics agreements. Instead, elected officials and commissioners signaled consensus for staff and legal counsel to prepare a contract that includes hard deadlines, an escrow or deposit at signing, specified penalties for missed milestones and clear triggers for when the EDA would revisit the property disposition. Staff said legal counsel could prepare draft contract language quickly and could aim to have a draft for the commission by the end of the next week.

The meeting closed without a final decision; officials said the next steps are for staff and legal counsel to draft specific contract terms and for the BPU, EDA and council to reconvene with that language. The city emphasized that if BlockMetrics does not sign a clear, time-bound contract, staff will explore other parties interested in purchasing power or developing the site.