Data centers’ growth is increasing each year, but concerns about energy demand and water consumption have led to organized public pushback on developments. But there are steps governments can take to protect residents, including temporary moratoriums that allow policy to catch up — and community benefit agreements, contracts that guide development practices and ensure the projects deliver on the benefits developers promise.
“It’s absolutely the right direction,” Mike Turner, vice chair of the Loudoun County, Va., Board of Supervisors and Ashburn district supervisor, said of these agreements during a Feb. 17 event from the Center for Technology Innovation (CTI) at the Brookings Institution.
In his county, Turner said data center development kicked off around the turn of the century. Many developers selected the county for its underground fiber network. Since then, there has been an “evolution” in the county, which now has more than 200 data centers.
Four key stakeholder groups respond to and shape the data center marketplace, Turner said, urging more collaboration between them: data centers, utilities, local elected officials and residents.
Community benefit agreements should address several key issues related to data center development, CTI Director Nicol Turner Lee said during the event: jobs, tax revenue and exemptions, and water and energy use. She also recommended public dashboards: “I think we need to see a uniform standard of transparency.”
Data centers often promise job growth, but they typically create few permanent high-paying jobs. Data center developers should be assisting in workforce development, Turner Lee emphasized, and community benefit agreements can require investment in programming.
A paper Turner authored outlines community best practices, like never allowing “by right” data center development, which permit these projects without obtaining specific approvals or meeting certain requirements in some areas. The Loudoun County Board of Supervisors approved a motion in March 2025 eliminating by-right development of data centers.
Other issues community leaders must address, per Turner, are sound, setback, site, power, water and emissions.
COMMUNITY BENEFITS IN CEDAR RAPIDS, IOWA
A select few localities have begun enacting different types of agreements to ensure the places data centers are built benefit from them, as highlighted in an article by Turner Lee, including Lancaster, Pa.; Cedar Rapids; and El Paso, Texas.
In Cedar Rapids, development pacts with developers of two major data center projects — Google and QTS — require investments in what officials have dubbed the Community Betterment Fund. The City Council will make determinations on how these funds are used, but their use may include public improvements to infrastructure, parks, open spaces and public buildings, according to City Manager Jeff Pomeranz.
The companies can provide input as to how these funds will be used, but they will not have veto power over city decisions, Bill Micheel, Cedar Rapids economic and development services director, said.
The city can hold the developers accountable because if they do not hit agreed upon performance metrics, like minimum investment or number of jobs, they would not receive the rebate, Micheel said.
Needs vary by community, but Pomeranz underlined that city leaders are very happy with the Community Betterment Fund.
In Lancaster, an agreement outlines requirements on water restrictions, clean energy usage and strict noise levels. In El Paso, an agreement with Meta offers a property tax abatement over 35 years, but the company must publish a sustainability report each year detailing its electricity and water usage, which have caps established in the contract.
A CHANGING LANDSCAPE
In recent years, the dynamic between developers and community leaders has shifted “significantly,” Micheel explained, as builds have ramped up and the balance has shifted in favor of cities.
“Cities, counties and local governments generally are in a better position to negotiate with data centers,” Micheel said.
For communities considering similar agreements, Micheel recommended paying close attention to location and potential impacts on transportation, including traffic and infrastructure. Agreements can establish requirements for companies to pay partial costs around infrastructure needs. Future data center development agreements in Cedar Rapids, Pomeranz noted, may require increased investment in its infrastructure.
Data center developers want to work with the communities in which they are building to ensure their project’s success, Pomeranz said. In Cedar Rapids, QTS voluntarily donated trees, supporting replanting efforts following a derecho storm.
Data centers are impacting the nation’s gross domestic product as an economic driver, Turner Lee said, and they can support communities with better connectivity, jobs and tax revenue. They can represent an economic development opportunity for communities, but members of the public want more transparency and input.
Local governments including Madison, Wis.; Coweta County, Ga.; Clarke County, Iowa; and St. Charles, Mo., have enacted temporary data center moratoriums, to assess and adjust policy before allowing their expansion. Denver announced its own moratorium last month.
The consolidated city-county’s Chief AI and Information Officer Suma Nallapati said in an email that the moratorium is “a strategic move” to ensure responsible data center growth and to allow officials to “refine” existing guardrails. It remains to be seen how many governments with moratoriums will adopt community benefit agreements for future data center developments.
Last year, President Donald Trump signed an executive order attempting to pre-empt state-level AI regulation, although it indicated that it would not apply to laws related to data center infrastructure. Turner criticized attempts to usurp local officials’ authority on data center decisions.
“That move is afoot at the federal level and at the state level to wrest siting and performance standard control of data centers from the local communities,” Turner said, calling it a “disaster,” as it could impact protections enacted by a community benefit agreement related to infrastructure, grid limitations and more.
