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Don’t Reject Data Centers. Negotiate Harder.
Brief
Data centers are reshaping local fiscal landscapes and political choices: Greg Miller (Progress and Poverty, May 6, 2026) uses case studies—Loudoun County, Chandler AZ, Columbus OH and state incentive programs—to argue that data centers will be built and can be net fiscal positives if cities negotiate aggressively. He cites Loudoun’s ~$1.3B FY2027 data‑center revenue (≈45% of county receipts) and declining property tax rates as evidence of upside, while noting centers are high‑revenue but low‑employment land uses. Miller documents growing state giveaway costs (Virginia’s exemption rose from a $1.54M 2008 projection to $1.6B in FY2025; $2.7B forgiven 2015–2024) and examples of excessive local abatements (Google/Magellan: $300M facility, ~$54M 15‑year abatement for ~20 jobs). His prescription: permit and welcome centers for U.S. AI capacity, end broad state subsidies, and use local tools—closed‑loop water, guaranteed grid contributions, PILOTs or CBAs targeted at electricity relief and capital projects—to ensure community benefit.
Why it matters
Loudoun County, VA: data centers are forecast to generate roughly $1.3 billion for the FY2027 budget—about 45% of county tax revenue—and the county’s real property tax rate fell from $1.145 per $100 in 2016 to $0.805 in 2025 (≈30% decline); one parcel recently sold for $6 million per acre.
Key details
- Chandler, AZ rejected a proposed $2.5 billion Active Infrastructure data center that developers said would deliver $10.2 million in annual property tax revenue and supplier commitments including 750 jobs at ≥$75,000, closed‑loop water, on‑site power, and noise monitoring.
- State subsidies are large and rising: at least 37 states offer sales/use tax exemptions for data centers; Virginia’s 2008 exemption projected to cost $1.54M now cost $1.6B in FY2025 (FY2024 = $1.02B) and forgave ~$2.7B from 2015–2024; Columbus/Google received a ~$54M 15‑year abatement for a $300M facility that created ~20 permanent jobs.
- Policy prescription from Greg Miller (Center for Land Economics): build and welcome data centers for U.S. AI competitiveness, stop state‑level subsidies, and use local negotiation leverage—require closed‑loop water, grid supply or mitigation, and stronger PILOTs/Community Benefit Agreements to fund resident electricity relief and capital projects.