Data centers

Aldie, VA - January 20: On what was recently farmland, Amazon data centers have been built as close as 50 feet from Loudoun Meadows houses on January 20, 2023, in Aldie, VA. As the data center industry expands its footprint in Northern Virginia, often building massive commercial structures near residential neighborhoods, communities push back with their concerns.(Photo by Jahi Chikwendiu/The Washington Post) 

From sports facilities to data centers, not all projects add to local economic activity in the way that they are touted by proponents.  Data centers don't have a lot of jobs after construction, and the facility in and of itself doesn't generate business development of other types.

Not an issue for me but they pose big issues in terms of electricity needs ("Power costs soar in PJM region as data center demand spikes," Reuters), and water.  WRT electricity, in part rates increase on all users to produce energy for data centers which is unfair.  

Also, it requires upgrade to the transmission system, which is overburdened as well.  

Because of the demand posed by data centers, adding renewable sources isn't enough.  They need to use fossil fuel generated electricity too, The water demands too are incredible, although to some extent the water can be recycled.  Here are some resources.

-- "Amazon data centers are not an investment in us," Philadelphia Inquirer

The truth is, Big Tech’s AI-fueled data center frenzy is hurtling us further and faster into environmental catastrophe. A single data center can use as much energy as an entire city. Tech corporations are demanding so much extra energy and water as they compete for AI dominance that entire coal plants scheduled for closure are being kept open.

-- "The AI Data-Center Boom Is a Job-Creation Bust," Wall Street Journal

“Data centers have rightly earned a dismal reputation of creating the lowest number of jobs per square foot in their facilities” said John Johnson, chief executive of data-center operator Patmos Hosting.

... The reality is data centers can employ more than 1,000 people in the several months or years it takes to build them, but rarely need more than one or two hundred once they open, according to Synergy chief analyst John Dinsdale. Stargate would have to be much larger than currently planned to create hundreds of thousands of construction jobs, let alone permanent ones.

-- "Tax Breaks For Data Centers Bring Few Jobs," Forbes 

Data Centers As Infrastructure Projects. As governments look to stimulate economic development, it is crucial to see the industries they are supporting for what they are—rather than what they’d like them to be. Data centers, while essential to the modern economy, do not serve as permanent and ongoing job creation engines anymore than the construction of a highway or a bridge does.

Data center construction more closely resembles infrastructure projects that provide a backbone for economic activity, rather than being viewed as economic activity itself. It is for this reason that private industry seeks to offload the cost of data center construction onto taxpayers—it is increasingly becoming merely the cost of doing business rather than a profit center or competitive advantage.

As such, it is more appropriate for public subsidies to focus on construction and development of these facilities and the infrastructure required to make use of them—rather than their ongoing operation and ownership. Investing in the construction and laying out of telecommunications infrastructure can be justified in the broader context of development in underserved areas.

Subsidizing ownership of data centers, through property and sales tax breaks for example, is less defensible. The tech companies that dominate the market for these centers are among the most valuable companies in the world, with market caps that regularly dwarf the gross domestic product of the states they are asking to foot the bill. These corporations have ample resources to manage their own operational costs without public support.

For example, building data centers as a project adjacent to enhancing digital connectivity, which in turn can attract other businesses and support economic growth, makes good policy sense. Similarly, ensuring data centers make use of renewable energy sources by subsidizing their provisioning returns broader social benefits.

Subsidizing ownership of data centers, through property and sales tax breaks for example, is less defensible. The tech companies that dominate the market for these centers are among the most valuable companies in the world, with market caps that regularly dwarf the gross domestic product of the states they are asking to foot the bill. These corporations have ample resources to manage their own operational costs without public support.

State governments should therefore reconsider their approach to supporting data centers, focusing on subsidies for the construction phase and overall improvement of internet infrastructure. Simultaneously, states must ensure that these investments are tied to clear public benefits such as job creation in the construction industry, environmental sustainability, and enhanced connectivity for under-connected communities.

-- "How a Washington Tax Break for Data Centers Snowballed Into One of the State’s Biggest Corporate Giveaways," ProPublica

-- "Beating back data centers," American Prospect

Virginia state lawmakers aiming to establish a regulatory framework have run into obstacles. The industry has established the Data Center Coalition, their own PAC, comprised of heavy hitters like Amazon, CloudHQ, Visa, and others. The coalition has been at work in the Virginia General Assembly, spending $70,500 in campaign contributions so far this year.

Several bills that would have established a set of regulations failed last session, including one proposed by Del. Josh Thomas that would have required applicants to perform site assessments that detail noise, water, agriculture, parks, registered historic sites, and forest impacts. Virigina Gov. Glenn Youngkin (R), a vocal proponent of the centers, vetoed the bill, citing infringements on local control and red tape.

... OpenAI’s GPT-4 uses as much as three 16.9-ounce bottles of water to produce a 100-word email.

-- Good Jobs First has a number of reports and articles on the subject, including "Community Benefit Agreements with Data Centers Can Help Mitigate Harms," which takes the position I do on sports facilities--if you can't beat them, get the best possible deal for the community.

-- "Data centers need to bring their own power supply, watchdog says," Bloomberg via Crain's Chicago Business