As data centers proliferate, conflict with local communities follows

[December 05, 2024]  By DAN MERICA and JESSE BEDAYN

ALEXANDRIA, Va. (AP) — Richard Andre Newman thought he would live the rest of his life in his quiet, leafy neighborhood in suburban Virginia. He was born and raised in Bren Mar Park, where children ride their bikes and neighbors wave hello.

But now, as he’s approaching 60, he’s considering selling his Fairfax County home and moving away. That’s because he’s getting a new neighbor: Plaza 500, a 466,000-square-foot data center and an adjacent electrical substation to be built a few hundred feet from townhomes, playgrounds and a community center.

Newman feels helpless to stop it.

“I planned on staying here until I died,” he said, “until this came up.”

The sprawling, windowless warehouses that hold rows of high-speed servers powering almost everything the world does on phones and computers are increasingly becoming fixtures of the American landscape, popping up in towns, cities and suburbs across the United States.

Demand for data centers ballooned in recent years due to the rapid growth of cloud computing and artificial intelligence, and local governments are competing for lucrative deals with big tech companies. But as data centers begin to move into more densely populated areas, abutting homes and schools, parks and recreation centers, some residents are pushing back against the world’s most powerful corporations over concerns about the economic, social and environmental health of their communities.

Tyler Ray, a vocal critic of data centers and leader in the fight against the Virginia project, said the incentives offered are not enough to counteract the consequences of building a facility so close to homes.

“All that we are asking for is, as the county is trying to bring in this data center income, that they are doing it in a way that doesn’t run residents away from their homes,” he said.

Dotting the hills in Northern Virginia

In Northern Virginia, more than 300 data centers dot the rolling hills of the area’s westernmost counties. Cyclists who ride the popular Washington & Old Dominion trail are at times flanked by data centers, and the thousands of commuters who head into the nation’s capital each day can see them in the distance from the Metro.

Plaza 500, one of the latest proposals in the area, is encroaching on neighborhoods like never before, said Newman, who heads a homeowners association in the community.

The pitch from Starwood Capital Group, the private investment firm founded by billionaire Barry Sternlicht, to Fairfax County officials promised a significant property tax boost and, in addition to permanent positions in the data center itself, hundreds of temporary construction and electrical jobs to build the facility.

Tyler Ray and his husband moved to the Bren Pointe community in 2022, hoping to balance proximity to Washington with a desire for green space.

But shortly after the couple moved in, Starwood Capital began scoping out a commercial property near their new home as a possible location for the Plaza 500 project.

When Ray and his neighbors learned of the proposal, they held protests, attended regular county meetings and drew media attention to their concerns to try and stop the development. But their efforts were largely unsuccessful: the Fairfax County Board of Supervisors in September said all newly proposed data centers must adhere to stricter zoning rules, but the Plaza 500 project would be grandfathered in under the old rules.

Ray worries that more data centers in the area could compromise the already stressed power grid: Over 25% of all power produced in Virginia in 2023 went to data centers, a figure that could rise as high as 46% by 2030 if data center growth continues at its current pace. Some estimates also show a mid-sized data center commands the same water usage every day as 1,000 households, prompting concerns over the cost of water. Ray also frets over air quality, as the massive diesel generators that help power the data centers’ hardware send plumes of toxic pollutants into the atmosphere.

A spokesman for the firm declined to respond to questions for this story.

“I don’t know how a general resident, even someone who has been engaging intently on an issue,” Ray said, “has any chance to go up against the data center industry.”

Local leaders say data centers provide a financial boon

For local governments, attracting data centers to their municipalities means a financial boon: Virginia Gov. Glenn Youngkin said in 2024 that Virginia’s existing data centers brought in $1 billion in tax revenue, more than the $750 million in tax breaks given to the tech companies that own them in 2023.

Amazon Web Services data center is seen at night on Thursday, Aug. 22, 2024, in Boardman, Ore. (AP Photo/Jenny Kane)

For average-sized facilities, data centers offer a small number of direct jobs — often fewer than 100 positions. Google announced recently that its two data centers in Loudoun County, which has about 440,000 residents, created only around 150 direct jobs. But data center advocates argue that the number of indirect jobs like construction, technology support and electrical work make the projects worthwhile. In that same announcement, Google said their investment spurred 2,730 indirect jobs.

Kathy Smith, the vice chair of the Fairfax County Board of Supervisors, voted in favor of the Plaza 500 proposal because, in her estimation, data center growth is inevitable in the region, and Fairfax County should reap the benefits.

“I have a responsibility to step back from what we do and look at the big picture,” Smith said. “Data centers are not going away.”

Amazon data centers welcomed by some in Oregon county

On the other side of the country, in Morrow County, Oregon, Amazon Web Services has built at least five data centers surrounding the 4,200-person town of Boardman, nestled among vast stretches of farmland flecked with mint patches and wind turbines, next to the Columbia river.

Last year, AWS, which is owned by Amazon, paid roughly $34 million in property taxes and fees stipulated in the agreements after receiving a $66 million tax break. The company also paid out $10 million total in two, one-time payments to a community development fund and spent another $1.7 million in charitable donations in the community in 2023.

That money has been instrumental in updating infrastructure and bolstering services for the roughly 12,000-person county, going toward a new ladder fire engine, a school resource officer, police body cameras, and $5,000 grants for homebuyers among other things.

Still, some residents are skeptical of the scale of tax break deals. Suspicions started years ago, when three formerly elected officials allegedly helped approve data center deals while owning a stake in a company that contracted with AWS to provide fiber optic cables for the data centers. In June, they each paid $2,000 to settle an ethics complaint against them.

Those officials are no longer in office. But some remain wary of the relationships between the company and local officials, and raised eyebrows at one of the latest data center deals which gives AWS an estimated $1 billion in tax breaks spread over the 15 years to build five new data centers.

Former county commissioner Jim Doherty described a meeting with AWS officials soon after he was elected to office at an upscale restaurant in Boardman, where large windows opened onto the Columbia River.

The AWS representatives asked what Doherty wanted to accomplish as a commissioner. “They said, ‘Tell us what your dreams are. Tell us what you need. Tell us what we can do for you,’” Doherty recalled. Other former officials have described similar interactions. Doherty said AWS didn’t ask for anything in return, but the exchange left him uneasy.

“We engage with stakeholders in every community where we operate around the world, and part of that outreach is to better understand a community’s goals,” said Kevin Miller, AWS' Vice President of global data centers. “This helps AWS be a catalyst for communities to achieve those goals, and reflects our ongoing commitment to being good neighbors.”

Doherty and another former county commissioner Melissa Lindsay said they pushed unsuccessfully in 2022 for AWS to pay more in taxes in new data center negotiations. They also lobbied to hire outside counsel to negotiate on their behalf, feeling outgunned by the phalanx of AWS-suited lawyers.

“We didn’t want to blow it up. We didn’t want to run them off," said Lindsay. “But there were better deals to be made.”

Boardman Mayor Paul Keefer and Police Chief Rick Stokoe say their direct line to AWS allows them to get the most out of the company.

“This road right here? Wouldn’t happen if it wasn’t for AWS,” said Keefer, riding in the passenger seat of Stokoe’s cruiser, pointing out the window at construction workers shifting dirt and laying pavement. Both Keefer and Stokoe have been in positions to vote on whether to authorize tax breaks for AWS.

“These companies would not be here if they weren’t getting some kind of incentive,” Stokoe said. “There wouldn’t be any money to talk about.”

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