Datacenter developers want your backyard. FAS says negotiate harder
Tax breaks, water, noise, decommissioning - report tells local officials what to nail down before signing
Local governments in the United States often struggle to effectively negotiate with developers proposing new datacenters in their communities. To address this issue, the Federation of American Scientists (FAS) has created a guide to help officials ask the right questions and utilize bargaining tools. The AI industry has led to a surge in server farm construction, leaving many local governments negotiating these large facilities for the first time.
The FAS has compiled a report, "Before Breaking Ground: A Local Government Guide to Better Data Center Policy and Community Benefits," which can be accessed on their website.
One crucial recommendation in the guide is that state and local governments should not grant tax exemptions or provide economic incentives to datacenter operators without the provision of negotiating these benefits for a period beyond five years. This is due to the potential increase in property value of the site during this time, which could leave the authority out of pocket.
Additionally, the guide highlights the use of Community Benefits Agreements (CBAs) between authorities and developers to ensure local community groups benefit from large infrastructure projects. CBAs aim to ensure developers act in the interest of the community, such as building or upgrading infrastructure, hiring locally, and adhering to sustainable practices.
The report lists 10 CBAs, with only one explicitly labeled as a CBA and written specifically around community benefits.
The FAS suggests that future agreements include provisions for specific scenarios, such as a sudden surge in energy demand and the facility's water use. They also recommend adding measurable numerical figures for noise levels, including yearly testing near local residences. When specifying remedies, CBAs could include language for special or consequential damages and a clause on alternative dispute resolution, such as mediation.
The guide advises that CBAs should supplement local authority ordinances rather than replace them, as they can reinforce each other. The report also notes that decommissioning regulations remain largely untested, and authorities should approve a decommissioning plan before approving a datacenter's construction.
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