New Orleans It’s been interesting and kind of exciting to see data centers become an issue in the midterm elections in many states and communities, as well as something of a movement in the way the needle has moved to finally seek some accountability from our tech and billionaire overlords. The feeding frenzy of competition around artificial intelligence and demand for energy resources has even finally aroused concern by utility companies themselves, who have been the greedy beneficiaries of this race so far in many parts of the United States.
The problem remains how to beat them. The strategy of moratoriums makes sense, but in too many cases seems to be trying to lock the barn after the cows are out. The best results may be not for the centers in development, but corralling the ones to come or simply on the planning board. I recently read two reports from the battlefields that are worth sharing for what they reveal.
The first, and in many ways, most important, was in a long piece in Scientific American that focused on Elon Musk’s highly controversial mega-project in Memphis, Tennessee, and around Southaven, Mississippi. This project has gotten a lot of attention for all of the wrong reasons, including Musk’s unpermitted building of gas turbines to access energy resources more quickly for this huge development, as well as the suit filed by the NAACP based on environmental racism and damages from this activity. The report contains a good look at all of the dangers and the frustrations of local people and organizations trying, largely unsuccessfully, to rein in the project. At the same time, this grassroots effort has led to an important and potentially pathbreaking community agreement won from the Memphis City Council,
After enormous public pushback against SpaceXAI, Memphis created a community-benefits ordinance. Under it, 25 percent of property-tax revenue from the company’s facilities, up to $100 million, will go toward public-benefit projects in zip codes within a five-mile radius of two of its sites, with 1 percent set aside for environmental work. The ordinance cut against the way Memphis usually courts industry: companies typically negotiated deals that can reduce their property taxes by as much as 75% for a set term, but xAI…asked for no such break.
By my lights, that’s huge, and could be precedent setting everywhere, even when the cows are out of the barn. Hopefully, as well, this could be the floor for future agreements, not the ceiling, but, if it can be won in Memphis, why not elsewhere?
Which brings us to George Packer’s report in The Atlantic on the fight to stop another huge development around Clinton, Iowa. The proposal here was from a company, owned by private equity giant, Blackstone, for an unknown client on track to erect ten buildings, each a half-million square feet, on 1100 acres of farmland. This is another, too common, great, but losing fight, at least in terms of stopping the project or winning a moratorium. Packer sees the takeaway, despite the brutal divisions in the community, as a revival of classic American grassroots democracy. For our part, there are some small wins in that…
QTS has requested no tax incentives and will pay 100% of the utility improvements required for the center to operate. A spokesman for Alliant Energy, the region’s regulated electric utility, promised residents that costs related to the data center’s extreme demand would not fall on existing customers.
At the same time, Packer also reports that…
Clinton’s mayor…told me that the project could bring $20 million in annual property taxes to a city with a $24 million budget. Sokolovich, of Grow Clinton [the project’s local booster] told me it would be closer to $30 million.
Maybe it would be bittersweet and small consolidation, but to me the property tax numbers just scream for a Memphis-model community benefits agreement to mitigate the damages and dangers coming from this monstrosity. To me, and I bet to many in and around Clinton, that would give some bite and benefit to democratic practice, even if unable to block headlong and heedless capitalism expansion.