Memo to New Governors and Legislators on Effective Data Center Reform

Data centers were on the ballot Election Day — and got routed. That gives incoming governors and state legislators a terrific opportunity in 2027 to enact effective reforms. How? By states amending local economic development processes.

While there are so many problems to resolve about data centers — electricity rates and supply, water consumption, environmental justice, noise and air pollution, and excessive tax breaks — the cornerstone to addressing all of these is more public engagement. And only process reforms can enable that.

But first, a recap of voter outrage. At the local level, 44 of 45 ballot initiatives to restrict data center construction passed by an average vote of 77%. At the state level, calls for data center moratoria were made by many winning candidates, especially in Texas, Georgia, and Ohio. (They are three of the four hottest states for new data center construction; Virginia’s state elections were in 2025, and data center tax breaks forced a long 2026 state-budget standoff there.)

Nationally, 56% of voters told NBC News that AI and data centers were a crucial or major issue in their US Congress votes. And consistent with pre-election polling, 76% told NBC they don’t want a data center in their community.

How can state governments channel all that voter anger into effective, durable reform? By rewriting the rules on local-government zoning and incentive awards to require full advance project disclosure that will empower community organizing.

States legally enable and regulate local-government land use and incentive practices. So states need to require local governments to treat hyperscale data centers — and other large projects, like microchip fabrication plants, e-commerce warehouses, and auto-assembly plants — differently.

Above a set of thresholds — say any project that will occupy more than 100,000 square feet, or use more than 50 megawatts, or cost more than $25 million — should be required to have its details fully disclosed 90 days in advance of any final land use or incentive vote. And there should be at least three public hearings on the project during those 90 days for public comment.

Only robust advance disclosure can ensure community engagement.

Such a requirement would, of course, block the use of Non-Disclosure Agreements (NDAs) 90 days out. So while state bills to prohibit NDAs altogether are laudable, they are insufficient by themselves.

This is necessary because over the past century, the secretive site location consultant industry and their corporate clients have built an anti-democratic economic development system. Using NDAs, project code names, and land-buying proxies, companies get to hide as much as they can for as long as they can to prevent community engagement.

Hundreds of times per year, usually aided by site location consultants, companies secretly play states and localities against each other in a “prisoners’ dilemma” game that intentionally excludes the public. Data centers are just the latest outrage. Before that, it was Amazon warehouses (and other mega-warehouses) and big-box stores disrupting communities.

If every proposed hyperscale data center were fully disclosed for 90 days, affected communities would be empowered to oppose, improve, or support each project. It would not just be NIMBY issues such as proximity to homes, schools, and parks. It would also enable community groups to demand solutions for the structural issues, such as impacts on electricity prices, water tables, and air quality.

It would provide more time to scrutinize the financing behind any project and empower officials to add safeguards to any development agreement in the event a project fails and leaves a “stranded asset.”

Advance disclosure would also enable bargaining for community benefits such as state-certified apprenticeship programs during the construction phase and local hiring for the permanent jobs.

Do not be fooled by scraps off the table. The strategic philanthropy — dressed up as “community benefits” — announced by Meta, Microsoft and even Amazon are obvious efforts to block real solutions.

Finally: eliminate the tax breaks. If there was ever an industry that does not need a tax exemption, it is Big Tech. The 37 states that fail to collect sales and use tax on new data center building materials and/or equipment and/or electricity need to repeal those handouts. Every state also needs to prohibit local governments from giving property tax abatements to data centers.

It’s real money, and costs are soaring: At least four states — Georgia, Texas, Ohio, and Virginia — already lose more than $1 billion per year to their data center sales tax exemptions. Amazon received an $8 billion property tax abatement on one Indiana campus alone.

It’s time for justice, not charity. Require Big Tech to disclose their plans up front so people can have a real say — and to pay their taxes.