After months of contentious debate surrounding the data center that is now under construction in Port Washington, city voters on Tuesday approved a referendum which requires the city to get approval from voters for any future economic development project that uses tax incremental district (TID) financing of more than $10 million.

The approval of the referendum makes Port Washington the only city in Wisconsin with an ordinance of this kind, Port Washington Mayor Ted Neitzke said.

But opponents of the measure said the passing of the referendum is not a win for the city. They argue it will significantly impact future economic development and growth — discouraging developers from choosing the city for major projects. They also expressed concerns about the legality of the ordinance, highlighting an ongoing lawsuit which challenges whether it’s in violation of federal and state laws.

“This is not about the data center. This is not about one project,” said Tracy Johnson, CEO and president of Commercial Association of Realtors Wisconsin (CARW). “This is about future development moving forward.”

The referendum, which passed with 66% voter approval, was introduced by a citizens group named Great Lakes Neighbors United. The group previously presented a petition to the city with more than 1,000 signatures from Port Washington residents — a legal pathway for residents to force a referendum.

Petitions signed by eligible voters that equals 15% of the total number of votes cast in the city of governor in the last general election require the proposal to be placed on the ballot, according to state law.

The petition was born in response to the roughly $15 billion data center under construction in Port Washington by Denver-based Vantage Data Center. The data center, set to be complete in 2028 and located on a 670-acre site, will be used by OpenAI and Oracle.

The city approved a $458 million TID to support the project, adding to the controversy surrounding the development and leading to a lawsuit filed against the city by a group of Ozaukee County residents.

While the city — apart from the data center — has not regularly created TIDs that exceed $10 million Neitzke said, he expressed concern for what the voter approval requirement will mean for the city and its taxpayers in the future.

“I worry that future (Common) Councils would just say, ‘Well, we’re going to bond for these things and then the taxpayers can pay for them right now’ opposed to the developer bearing the cost,” Neitzke said.

While he acknowledged that the unique voter approval requirement for TIFs of $10 million or more in Port Washington puts the city at a competitive disadvantage compared to others for future developments, Neitzke said the “will of the people” prevailed and with respect to the outcome, the city plans to follow the law.

Beyond the economic impact, critics have raised concerns about the legality of the ordinance.

“We believe the state statute does not allow for direct referendum as it relates to TIFs, so we believe this referendum is not allowed under state statute,” Chris Mambu Rasch, executive director of union construction advocacy organization Building Advantage. “We have serious issues with that.”

Mambu Rasch said he worries the voter approval requirement for large TIFs in Port Washington will limit development opportunities there, impacting union contractors and tradespeople.

The Metropolitan Milwaukee Association of Commerce (MMAC), along with several other local organizations, filed a lawsuit in January against the city of Port Washington, arguing that the referendum would devastate economic development in the area. They also filed an injunction to get the ordinance removed from the ballot which was denied by an Ozaukee County Circuit Court judge ahead of Tuesday’s vote.

While the lawsuit is now at a standstill, MMAC president and CEO Dale Kooyenga maintains that the ordinance is unlawful. Kooyenga also noted that it could discourage developers from choosing Port Washington over other areas of Wisconsin due to “community resistance.”

The citizens group emphasized in a statement that they are not opposed to development. They instead highlighted that the push to be included in decisions regarding TIDs exceeding $10 million was about “standing up for transparency and democratic accountability.”

“We are not against development,” said Carri Prom who’s affiliated with the citizens group. “We are for development that the community understands, supports and has chosen together.”

Still, Kooyenga said the legislation could be looked at by developers as a “you’re not welcome” sign.

“If you want be competitive locally, economically – you can’t have policies like this,” he said.