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, N.D. The project team includes McGough Construction, headquartered in Minnesota, Century Builders; MBN Engineering and Midwest Inspection Services — all with offices in Fargo.
Initial plans call for two buildings, each about 900,000 sq ft, with room for expansion. Applied Digital has contracted to purchase more than 900 acres for the campus and secured power from Cass County Electric Cooperative, a member-owned nonprofit.
The company says it is expanding in North Dakota because the state offers abundant energy, available land and a pro-business climate.
“The demand for AI capacity continues to accelerate, and North Dakota continues to be one of the most strategic locations in the country to meet that need,” CEO Wes Cummins said in a news release.
The project’s first phase is expected to come online in the second half of 2026, with the second phase scheduled for 2027. The campus is expected to create about 200 jobs.
Harwood, a city of about 900 residents located 10 miles north of Fargo, views the project as a buffer against rapid growth on Fargo’s north side. Fargo, which has a population of 136,000, initiated an annexation bid in August for about 800 acres that include the data center site.
“Fargo did, under our noses, [seek to] annex this property,” Harwood Mayor Blake Hankey said. “This building is in our ET Zone — what we call our extra-territorial zone. That is Harwood’s property. Fargo is trying to annex our property and steal this project … and so we are 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 administrative law judge’s order.
“We follow North Dakota Century Code. We don’t need an agreement,” she said.
As the project was being considered, opponents raised concerns about water use, power costs and noise. Hankey said most of the opposition has come from Fargo residents or people outside Harwood.
He said the data center will use a closed-loop cooling system that keeps water fully contained. In the system, water circulates through sealed pipes to absorb heat from servers before passing through a heat exchanger or alternative cooling tower. The cooled water then returns to the servers to repeat the cycle.
Hankey also dismissed concerns about rising power costs.
“The CEO of Cass County Electric has come out and said the rates are not going to go up. And Applied Digital has agreed to expand the [power] infrastructure as needed at their cost,” he said.
On noise, Hankey said the buildings will be concrete with all noise-generating equipment inside, and the site is about a mile from town.
Regarding the annexation bid, “This is a big city taking on a little city,” Hanson said, adding that Harwood is not dependent on Fargo for any services the data center might require.
Applied Digital announced in October that it has entered a lease agreement with an unnamed U.S.-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 about the annexation effort.
