Datacenter developers want your backyard. FAS says negotiate harder
Tax breaks, water, noise, decommissioning - report tells local officials what to nail down before signing
Datacenter developers are eyeing residential areas in the United States, prompting the Federation of American Scientists (FAS) to assist local governments in negotiating with these companies. A report from FAS, titled "Before Breaking Ground: A Local Government Guide to Better Data Center Policy and Community Benefits," provides guidance on how to negotiate better terms for datacenter projects.
The surge in server farms construction has left many local governments inexperienced in negotiating with developers for such large facilities.
FAS suggests that local governments should not grant tax exemptions or economic incentives to datacenter developers without negotiating their removal after the initial five-year period. This is due to the potential for significant increases in property values during the period, leaving local authorities financially burdened. Some states lose over $1 billion annually in tax breaks and rebates as incentives to developers.
Community Benefits Agreements (CBAs) have been used in various situations to ensure developers benefit local communities. They aim to require developers to undertake actions like constructing or upgrading infrastructure, hiring locally, and adhering to sustainable practices. The report outlines ten CBAs, but only one - between Lancaster, Pennsylvania and the developers of two AI campuses - is explicitly classified as a CBA with a focus on community benefits.
The FAS recommends that future agreements should specify measures for dealing with sudden increases in energy demand as well as whether the facility will generate its own power or draw from the grid. Additionally, agreements should include reporting on water usage and procedures for securing extra water if needed beyond the average day's demand.
One activist has already filed a lawsuit against Amazon Web Services for allegedly making false and misleading statements about water use at its Virginia facilities. Authorities looking to limit noise should include specific, quantifiable figures in their CBAs, along with yearly testing near local residences, regardless of whether complaints are filed.
In addition, CBAs could include language for special or consequential damages and alternative dispute resolution methods, such as mediation, instead of relying on litigation for issue resolution.
The FAS also advises that CBAs should complement local authority ordinances rather than replace them. Both need to reinforce each other as a CBA can't rectify zoning gaps, while zoning ordinances can't capture specific project commitments like a CBA can. Lastly, decommissioning regulations for datacenters are largely unproven, with the FAS unaware of any case where a datacenter was formally decommissioned. The organization recommends that authorities approve a decommissioning plan before granting approval for a datacenter.
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