With hundreds of projects before local planners, nondisclosure pacts and tax incentives are spurring suspicion among local residents.
From Georgia to Oregon, New England to New Mexico, data center projects are drawing opposition in local government hearings by residents concerned about the voracious demand for electricity, water consumption, and noise. Critics also argue that data centers don’t produce the jobs other land uses generate.
In Texas, people in small towns question data center development in the broader context of rapid rural industrialization.
In Pennsylvania, ad hoc groups say data centers are tapping into nearby natural gas fields, increasing the frequency of fracking, and straining water supplies.
In Indiana, Minnesota, Kansas, Nebraska, and across the country, residents say the scale and proximity of these high-tech campuses degrade their neighborhoods and devalue properties.
Objections vary, depending on proposal and site, but a common complaint is state and local governments offering data center projects tax incentives that are often shielded from public scrutiny through nondisclosure agreements.
Companies say these pacts shield proprietary corporate intelligence, but the perceived lack of transparency fosters suspicion and anger when residents realize local planners are set to approve a proposal they knew little to nothing about until it appeared to be a done deal.
“Just from our experience, it seems like one of the big concerns is that, yeah, there is no community outreach,” Kamil Cook, Public Citizen’s Texas climate and clean energy associate, told the Epoch Times. “There’s no method by which the community can be informed in a way that actually makes it seem like their voice is valued and that they have a choice in these matters.”
Much of this local opposition appears rooted in the complaint that people “weren’t informed to begin with, were ignored at some point,” said Joe Warnimont, who co-authored a February HostingAdvice.com survey. The survey of 800 people in 16 states found that 93 percent agreed that “cutting-edge AI data centers are vital to the United States,” but only 35 percent want one in their town.
“The main insights are there is clearly a disconnect between what the local residents experience and what is being sold to these communities from developers,” Warnimont told The Epoch Times.
Protect PT executive director Gillian Graber said her western Pennsylvania nonprofit had no idea that planners in Westmoreland County’s Upper Burrell township were considering TECfusions’ bid to build a data center at a former Alcoa site, until reading a local newspaper article.
“We were, like, ‘What is this thing? What’s happening? What does that mean for the community in Upper Burrell?’” she told The Epoch Times.
When residents contacted local planners and officials “early on” to get project details, they wouldn’t discuss specifics, or “they didn’t really seem to know a lot about it,” Graber said.
Protect PT, which stands for Protect Penn-Teller, was founded in Graber’s Harrison City living room a decade ago to challenge fracking and other industrial development some residents say are degrading the area’s environment, she said.
They haven’t won many battles, but they continue to show up.
“Like with everything we work on, it’s always larger corporations and large industries that come into rural communities and think they can just do whatever they want,” Graber said. “We don’t want to see that happen again … but I see history repeating itself again, and again, and again.”
A cursory Facebook search finds dozens of ad hoc local groups with pages where similar claims are aired.
Texans in Granbury say “working-class residents living next to giant, loud, environmentally-destructive data centers are the ones paying the price for Texas’s crypto boom.” Minnesotans call on state legislators to impose more restrictions because “these developments are reshaping our communities.”
The 3,500 members of the Stop Duneland and Valpo/Wheeler Data Centers Facebook group in Indiana express frustration that a planning commission has threatened to waive public hearings on a proposed data center project. The page is rife with comments such as, “We have no voice anymore? Seems like that’s a dictatorship in my opinion.”
Tax Revenue Boon
The Data Center Coalition, which represents 36 “hyperscalers”—corporations including Meta, AWS, and Microsoft—and co-location companies that own data centers leased to operators, such as Equinix, acknowledged data center projects are drawing resistance in some areas, but noted most criticism is standard for any development proposal.
“I think that sometimes gets lost in media coverage,” Jon Hukill, communications director of the Washington-based coalition, told The Epoch Times. “Data centers want to be good neighbors. They communicate with HOAs [home owners associations] and citizens and local and state governments before, during, and after the permitting process.”
“The data center industry is not monolithic. There are a wide variety of companies,” Hukill said.
Data centers are expensive to build and plan to be operating in a community for many years, he said, so developers and operators strictly follow laws, zoning, and land-use regulations.
Data centers are eligible for tax incentives and other inducements, but no more than other proposed developments, he said.
According to a 50-state survey by land-use law firm Husch Blackwell, 36 states have “some kind of legislation authorizing tax incentives for new data center development” with “no standard template for how incentives are structured.”
There are challenges specific to data centers that states are increasingly recognizing, Hukill said.
The “most popular tool” developers seek is “a sales [tax] and use tax exemption,” he said, because the “tremendous amount of servers, the brain stem of the data center, where all the action happens” must be “refreshed every three to five years.”
That’s a “tremendous” recurring investment, Hukill said. “So you have the significant upfront investment of building the shell and the building, and then filling it with servers and chillers and coolers and all the infrastructure, and on top of that, you have to refresh these servers every three-to-five years. Recognizing that—the magnitude of that capital investment—is just so significant.”
These tax abatements are hardly “tax breaks” in the broader sense and benefit the communities they build in, he said, pointing to a February PriceWaterhouseCoopers report that determined the data center industry contributed $727 billion to the nation’s annual gross domestic product in 2023.
Land use attorney Colleen Gillis and her Reston, Virginia-based Curata Partners, represents developers, including data center companies, in northern Virginia’s “Data Center Alley.”
Gillis called data centers “a highly efficient land use” that pays big dividends for cities and counties.
She said data centers generate “a five-to-one ratio” in local and state tax revenue compared with other commercial uses in real estate property taxes, personal property taxes, payments-in-lieu-of-taxes, and fees.
Gillis, a member of the Urban Land Institute’s Data Center Product Council, helped produce a December 2024 Local Guidelines for Data Center Development that spells out how municipalities can benefit from negotiating tax abatements.
Data centers in Virginia are eligible for a sales tax exemption for “refreshing” computer equipment if they commit $150 million in new capital investment—or $70 million for “distressed localities”—and create at least 50 new jobs that pay at least 150 percent of the prevailing annual average wage.
That’s a winning formula, Gillis said. Those that don’t qualify for the abatement pay a hefty price.
Gillis said that “unlike our desk chairs” that depreciate over 10 years, “this computer equipment is usually getting replaced every three-to-five years.”
“That’s why the value, the revenue from approving a data center in any one of these jurisdictions, is so attractive,” she said.
‘More Pluses Than Minuses’
Patrick Boss, Port of Quincy public affairs and business development director, said his town of 8,300 on the Columbia River in central Washington state has benefited tremendously from data center development.
Quincy, on the east side of the Northern Cascades, is an agricultural community amid river-bottom sage and apple-orchard-latticed hills. It was one of the first places to see data center development when Microsoft bought a 75-acre bean field in 2006 as “the internet of everything” boomed.
“As a result of that, it has caused companies to come looking around—not just data centers … manufacturers, food processors, cold storage companies,” Boss said, with data center-anchored “clustering” now spanning three counties along the Columbia.
Quincy’s assessed value in 2006 was about $500 million and is now about $8.5 billion, Boss said, a “15-fold, 17-fold increase in less than 20 years.”
Boss said Washington state offers a sales tax exemption for data centers, but the centers pay property taxes and utility taxes.
“We’ve got a new high school, new hospital, a new indoor youth sports stadium. The property-taxing districts in our area are doing fairly well,” he said.
“I would say, overall, plus versus minus? It’s been far more pluses than minuses.”
‘New Stadium Scam’
GridBrief energy newsletter editor Marc Oestreich, a land-use consultant, maintains that while state offered incentives are scrutinized, often overlooked are tiers of benefits offered at the local level, He argued in a May 6 Reason Magazine article that data centers are “the new stadium scam” with cities and counties giving developers sweetheart deals that don’t deliver benefits for taxpayers.
He cites numerous examples, such as a 40-year tax abatement on equipment through 2068 in exchange for annual payments-in-lieu-of-taxes of a flat $2.5 million, or 30 percent of assessed tax, whichever is greater, in La Porte, Indiana; a “generational tax holiday.”
In Kansas City, Oestreich writes, Evergy is building two new power plants “largely to meet data center demand—costs to be passed on to customers,” and in northern Virginia, Dominion Energy’s “data center grid upgrades are now a line item in statewide electric rate hikes.”
Often flying under the radar are tax increment financing programs in which property taxes and other tax revenues are funneled into a community redevelopment district, rather than into a municipality’s general fund.
Examples include Mount Pleasant, Wisconsin, where Microsoft qualified for a tax increment financing district, originally created for Foxconn, that allows it “to recapture up to 42 percent of its own property taxes—not only avoiding taxes, but being reimbursed with public dollars,” Oestreich writes.
“Today’s stadium boondoggle is a server farm: shinier, techier, but often just as bad for taxpayers,” he said. “Local economic development officials tilt the scales, suspend the rules, and give away the farm.”
In written responses to emailed questions from The Epoch Times, Oestreich said if he was advising a local government on how to handle a data center project, “The first question should be: ‘Would this happen anyway, without the subsidy?’ Most of the time, the answer is ‘Yes.’”
He said there’s “a deep pool of research showing that roughly 75 percent of economic development incentives go to projects that would’ve happened regardless. Why? Because companies—especially at this scale—choose sites based on infrastructure, workforce, access to customers, and suppliers. Not because a county council offered them a gilded shovel.”
Oestreich said “the more honest question is: ‘What will this cost us—in infrastructure strain, lost tax revenue, or foregone opportunity? And are we asking the developer to pay their share?’”
If development codes, land-use regulations, and zoning are outdated, then revise them to ensure “free and fair enterprise, and then get out of the way,” but don’t do so simply to appease a specific applicant, he said.
“Local governments don’t need to build winners—they need to build rules that don’t play favorites. Smart zoning. Predictable permitting. Competitive taxes,” Oestreich said. “If you do those well, it won’t take bribes, negotiations, or complex algebra to bring investment to town.”
Many data center developers are creating, or aggravating, resistance and opposition by insisting on nondisclosure agreements, and many local planners are too pliant in conceding to them, he said.
“Communities don’t know they’ve handed out 30 years of property tax forgiveness until the ink is dry,” Oestreich said. “The best practice is: no special deals, no secret negotiations, and no socialized costs.”
Data center development is a good thing, he said, but some of the deals being struck with local planners are not.
“I’m not against data centers—in fact, I think they’re an inevitable and welcome part of a modern economy,” Oestreich said. “But they need to play by the same few rules the rest of us do. If a data center requires substation upgrades or new transmission lines, then yes, it should contribute to those costs. That’s not punishment. That’s basic economics.”
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