The rapid growth of data centers has led to increased activity in state legislatures, with lawmakers debating the merits of offering financial incentives worth tens of millions of dollars to attract these facilities. The issue is complex, with proponents arguing that data centers bring significant economic benefits and create jobs, while critics contend that they pack little long-term punch compared to other industries.
Economic Impact
Data centers require:
- Large tracts of land
- Tax breaks
- Huge volumes of electricity and water to operate
Critics argue that data centers employ relatively few people compared to other industries, suggesting this is a poor return on investment for taxpayers who foot the bill for incentives.
However, advocates counter that:
- Data centers create a significant number of construction jobs.
- They spend enormous sums on goods and local vendors, generating strong tax revenues for local governments.
Legislative Actions
Several states have passed laws or proposed bills aimed at attracting data center development through various means, such as:
- Tax exemptions
- Streamlined permitting processes
Case Studies
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West Virginia: Created ‘microgrid’ districts where companies can procure power directly from their own power plants rather than buying it from utilities.
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New York City: The Hudson Valley region near Albany and Buffalo suburbs near Lake Erie are home to several major data center projects by companies like Google, Microsoft, Meta, Amazon, Apple, IBM, and Dell Technologies.
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North Carolina: The Research Triangle area between Raleigh-Durham International Airport (RDU) and Duke University hosts several major data center projects, including:
- Microsoft: Built a $1 billion campus.
- Google: Spent $3 billion on its campus.
- Meta Platforms: Invested $1 billion in its campus.
- Amazon: Built two campuses.
- Apple: Currently building a campus nearby.
- IBM: Also building a facility nearby.
- Dell Technologies: NTT Data Services LLC is constructing a facility expected to be operational later this month.
Future Developments
- Microsoft plans an additional campus at the RDU airport site adjacent to its existing facility, with construction beginning late last year and an expected opening next summer.
- Permits for construction were approved after a public hearing held on November 30, following a postponement due to the COVID-19 pandemic.
The ongoing developments in data centers highlight the balancing act state legislatures face between attracting investment and ensuring a beneficial return for taxpayers.
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