← GovLove - A Podcast About Local Government
GovLove - A Podcast About Local Government
#727 A Data Center in Every Community with Christopher Jordan, National League of Cities
00:59:34
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- [00:00]
A
Foreign. Coming to you from Durham, North Carolina, this is Gov Love, a podcast about local government brought to you by Engaging Local government Leaders. I'm Tony Thompson, Director of Strategy for the Northcon Department of Health and Human Services and your GovLove host for this episode. GovLove is produced by EOGL engaging local government leaders. You can support GovLove by becoming an EOGL member. EOGL is a national volunteer run, membership based nonprofit organization with a mission to engage the brightest minds in local government. Check us out and learn more about our $50 annual membership@eogl.org and now on with our show. Today's guest is Christopher Jordan. Christopher is program Manager of AI and Innovation at the National League of Cities where he leads research on emerging technologies and public sector innovation. He works with cities across the country to help them use new tools and approaches to create resident focused solutions to local challenges. Welcome Christopher. Thanks for joining me.
- [01:15]
B
Thanks, Tony. Good to be here.
- [01:17]
A
Yeah, awesome. I'm really excited to have this conversation with you talking about the emergence of AI and data centers and how communities are kind of approaching AI data centers at their doorstep and the decisions that they have to make and whether they're gonna allow a data center in their community and the implications of that. But first, with every guest, we do a lightning round so our listeners can get to know you a little bit better. So I have four lightning round questions for you if you're ready for them.
- [01:47]
B
Yeah, that sounds great.
- [01:49]
A
Okay, awesome. Great. Okay, so first lightning round question. What is currently inspiring you in your professional work?
- [01:56]
B
Sure. So, yeah, like you said, I work for the National League of Cities. I just really like working with city leaders, mayors, city council members, staff. I've worked in a few areas of government and working with city leaders is just always awesome.
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A
Yeah, that's great. Okay, second question. What's a book, podcast, or show you think every public servant should check out at least once?
- [02:21]
B
Yeah, I really like the show Veep. I think that in these trying times, it's good to sort of stare down at the abyss of it all of broken politics and get some comedy, get some laughs. And I just love Julia Louis Dreyfus. It's just so funny.
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A
Yeah, that's one show I haven't checked out yet and it's on my list. I think I've had too many West Wing rewatches. I need something different.
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B
So, yeah, West Wing is the classic, right?
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A
That's a classic.
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B
It's mandatory, prerequisite if you're getting a public servant.
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A
Absolutely. Okay, great. I'LL check out Veep Number three. What fictional world would you most like to live in if you could?
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B
Yeah, I'm a huge Lord of the Rings fan. I'm sure you get this answer a lot. The Shire would be a great place to live. Why not?
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A
Yeah. Yeah. Are you a fan of all the movies or just kind of like that core Lord of the Rings, like, trilogy?
- [03:17]
B
Yeah. Not to be too much of a purist, I love the original trilogy so much. I try to read the books once a year, basically. Actually, like, it's. When I say I'm a nerd, it's like, I really invest a lot of time in this. Maybe too much.
- [03:32]
A
That's awesome. Are you excited for the new movie that they're working on? The hunt for Gollum?
- [03:41]
B
I'm very excited about that. Yeah. I think this will be Ian McKellen's last go as Gandalf. So just some lovable characters. And, like, any. Any more content they can put out there? Yeah, like, I'll watch it even if it's not my favorite. Like, I'll. I'll gladly consume any content they put out. All right.
- [03:59]
A
And kind of last sub. Lightning round question. Do you have a stance about the Eagles?
- [04:07]
B
So we could really get into this, Tony, about the, you know, X. What is that? Ex.
- [04:15]
A
Deuce.
- [04:15]
B
Machina. The hand. Odd, right? So, like. No, I mean, I think that. I think they had to go on foot. This was, you know, this was that kind of operation. You know, the Eagles were. Eagles have their own prerogatives, you know. You know, they're kind of above the trifles of Middle Earth, so I think that they. They stayed out of it, you know.
- [04:36]
A
Okay. Okay. Oh, this. Okay. Really? Last Lord of the rings 1. Who would you identify most as yourself in the Fellowship? Like, who would you be on the Fellowship?
- [04:48]
B
That's so great. You know, it's funny that my brother and I call each other Boromir and Faramir, but Faramir and he's Boromir, and Faramir is not in the Fellowship, so I would have to go with Mary because of Mary. You know, the Mary and Pippin duo is fun. I think me and my brother also have that dynamic. So. Yeah, just kind of there. Not as a strategic mind, but just as a good hang, you know, I like that. I like that personality Higher of the Fellowship.
- [05:15]
A
I love that. Boromir Farmer, I was going to ask, like, man, I hope you have a good relationship with your father. You know. Okay, last lightning round question. What's the best professional advice that you've ever received.
- [05:31]
B
Yeah, I ignored a lot of good advice, professional advice over the years. One thing that my dad always used to tell me was a quote he had heard. I think he misattributed it because I think it's like a general patent quote. But he had heard it from his boss at one point of lead, follow or get out of the way. So I really like that mentality in terms of my work now and think about it more in terms of where there's problems that come up, where can I be the solution, where can I find a solution, or where can I just remove myself as a barrier to finding a better solution someone else might have. So that's stuck with me over the years.
- [06:14]
A
Chris, thank you again so much for being on the podcast. Thank you for answering those lightning round questions. Before we get into the crux of our conversation, can you tell our listeners a little bit about your professional journey, how you got to where you are today and what you're currently doing in your work?
- [06:32]
B
Sure. So yeah, I'll start where I currently am, which is at the National League of Cities. I manage the AI and Innovation program there. So we help city leaders navigate emerging technologies, mostly AI these days, but now data centers, which we'll talk about today. But before that had a lot of really great opportunities in or sort of beside government. So I worked for a local congressman back in the Chicago area for a little while I worked for the Consulate of Japan in Chicago on their economic development team. That was a really great job. And people always ask me, did you go to Japan? I did not. I spent most of that role traveling around the Midwestern states from the Dakotas, Indiana, Wisconsin, visiting Japanese, mostly manufacturing facilities. But it was a great role and learned a lot. I did a graduate program at the University of Notre Dame in Global affairs and focused on local government and sub national governments in particular in terms of how they can take more responsibility coordinating around transnational issues that don't fall neatly into federal, state, national governments. So based on that interest in local governments, found my way at National League of Cities and yeah, it's just been a really great time. I focus, like I said, mostly on innovation, but we also have a lot of emerging work now on international engagement and civility and polarization as well, because those are issues that are coming up for local leaders and they really, really want to find the best solutions, innovations, public engagement, sort of mechanisms to best help their communities and lead better conversations.
- [08:21]
A
Chris, that's awesome and thank you for sharing your professional kind of journey how you got here and why, you know, what you've done is so relevant to the conversation we're about to have. I invited you on because you wrote an article for NLC that I read recently about how local governments are handling the decision about allowing kind of hyperscale AI data centers into their community. But before we get into that, can you tell our listeners a little bit about what is a hyperscale AI data center and why this is becoming a conversation point for so many of our municipalities across the country?
- [09:04]
B
Yeah, absolutely. So data centers are the physical infrastructure that underpins all of our cloud services, artificial intelligence, digital services, data storage, and everything. And when we're talking about a hyperscale data center, we're mostly talking about the facilities that power modern artificial intelligence. So whether that's AI training, training a large language model, or running the inference, you know, for example, turning your prompts that are written in plain language into code and video or images or other text. So I think it's important to distinguish first the hyperscale from what you might call a traditional data center, the hyperscale data centers. Definitionally, you know, we think of a facility that has about 100 megawatts or more of power draw, but it can often be much, much more. And to answer your second question about why we're talking about them today and why exactly this has become an issue with communities, is the scale is increasing significantly in terms of how big these data centers are, are the power draw, the resource intensity, and also the acceleration around the country, this urgency to build out this infrastructure. And it has really been compared to a modern day space race in many ways. There are people in D.C. here where I am that talk a lot about national security and the importance of hosting US data on US soil, but there's also just the economic development angle. You know, for these large tech companies, it's really strong. This is investment that's necessary. But then also for communities, some are deciding that it's investment worth making just based on hosting that site, getting some extra tax revenue out of it. So those are a few of the considerations.
- [11:05]
A
Yeah. Would you, would you say that it's fair that these AI companies who are trying to build out these centers are. Are they trying to keep up with demand or are they forecasting future demand and trying to kind of get ahead of it?
- [11:23]
B
Yeah, I'll put on my like, lawyer hat and say it depends. Like, right. It's a little bit.
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A
And.
- [11:30]
B
And disclaimer. I'm not a lawyer. I took one class. Anyway, I. So on one hand, you do have more and more data being created. Like, that's a real thing. That. Because we're creating more and more data every day. I saw recently that the average U.S. household has 21 connected devices. Those are all collecting data. They're storing data, they're using data, they're streaming, you know, and all the entertainment and streaming services we use and everything like it. So we are building some of the demand ourselves, as long as we rely on services like this, like this platform in which you and I are talking on and listeners will tune into. Right. Like, that's demanding more data storage capacity. And the other thing too is more and more people are coming online, you know, around the world, and we're still at a point in the US where we're not all connected to broadband and Internet. That's still being built out, too. And that's also part of the, I think, of the data center conversation in terms of broadband and fiber deployment is now those are sort of being spoken about in the same breath of maybe the data center development comes with all that other development now. And that's a conversation happening at the federal level through, like, the, the bead program. But I think that for the tech companies, a lot of it is trying to just build the biggest, best model and to keep up and to win the market right now. Because, you know, we all, when we talk about search engines, we all say Google. And when we talk about large language models, we've been talking about ChatGPT in kind of the same way. But there's still sort of this, like, contest, I think, in terms of which model is going to come out on top. And we obviously saw a lot of spending on super bowl commercials to this point this year of, you know, who's going to have the best model for what purpose, who's going to win the huge market for nonprofits, for cities, for businesses. Because, you know, there's. There's still so much, so many organizations that haven't adopted these tools at scale yet. And, you know, all that to say it's a little bit of both. Yeah, but the, but the scale of this is, is really unprecedented. And, you know, we've had data centers forever. Like, since the 90s, we've had data centers. Now all of a sudden, we are all becoming experts very fast about what they are and what they need. Just because this is a huge infrastructure challenge.
- [14:03]
A
Yeah, absolutely. Okay, let's talk about the pros and cons. Why are these data centers attractive to some communities, and why are they controversial?
- [14:14]
B
They're attractive particularly for localities because they can help grow a local tax base. You know, if you talk to folks near where I am in D.C. in Loudoun County, Virginia, you know, Northern Virginia is often called data center alley. It's the hotspot of data centers in the world. Loudoun county officials will tell you that they've been able to keep property taxes down for their residents by 25% because of the investments of data centers. And not all their data centers are hyperscale, but some are. And they host something like 200 data centers in the county. So it is in many ways a really exceptional example in terms of how that, how the tax burden can decrease in a community. They're also attractive because of job creation. They do create some jobs. Not many permanent jobs. It's mostly construction. And with hyperscale facilities, you'll see something like one permanent job for every five to 10,000 square feet, just depending on the purpose in what that data center is designed for. And as we already talked about, the pro is that to some degree they're necessary because we're all demanding some of these services more and more. But yeah, while it's necessary, the controversy, of course, is the acceleration of the build out. Thinking about the return on investment and then thinking about the resource intensity and the siting of the data centers. And that has caused a lot of controversy as well. Yeah. Happy to dig more into all those pieces.
- [15:46]
A
Absolutely. Yeah, absolutely. I want to do that later. You said something that I think is interesting that I don't know if many people may be aware about, but you mentioned one person for every 10,000, 5,000, 10,000 square feet. I mean, once these data centers are built out, there are not a lot of permanent jobs that are created. Like obviously you said the construction, you know, that's a lot of, you know, there's an influx of people coming in, but once the data center is done, they don't require a lot of human maintenance to them. Is that. Is that correct?
- [16:23]
B
Yeah, absolutely. Yeah. You need very few people to run a data center. You know, some of it's security personnel. You do need some IT folks to staff it, but it's mostly construction jobs. You need electricians to come in to build these things, to build these servers and to install everything.
- [16:40]
A
Yeah, yeah. All right, so I want to dig into the article a little bit that you wrote with your co author, Kate Stoll. I don't want to forget her. In your article, you kind of documented the wide range of responses that local governments and their communities are having to these data centers. First, can you give us a range of the responses that you've seen and documented from these locations when they've had to have a decision about data centers coming to their communities.
- [17:11]
B
Sure, yeah. So we've seen significant amount of pushback and protest, particularly in the last year. And a lot of this is based on increasing utility prices that we've seen across the country. In my area, in my neighborhood, you've seen some areas with bills that have increased over 200% in this part of the country on the grid. And you're also seeing protests related to water use. And those protests are mostly coming in drought vulnerable areas like the southwest of the country. And that's significant because that's a hotspot in the area of the country where we're seeing the most growth in data centers and the most growth in terms of power demand and projected power demand in the future. I think I read recently that in the past several years 2/3 of data centers have come online in the southwest. So those markets are like Phoenix, Salt Lake City and Reno are the three biggest right now. So yeah, the resident response to all of this has really been one of major concern because these are just gigantic facilities that are just popping up and it seems like, you know, the regulation just isn't catching up in terms of making sure that these are cited responsibly or thought about. Because a data center developer can come in having no idea if another data center developer is coming in next door, not having a conversation with the utility or the public utility commission or the folks who work in the water planning department or in some cases they don't even necessarily want public engagement or community engagement. So you're seeing more non disclosure agreements come up and that's drawing more concerns from residents because you know, they, they want to know, they want to know who exactly is coming in their backyard. And yeah, I think, I think that in some communities the protests have, you've definitely seen it lead to pauses in developments. So if you look at Indianapolis and Tucson last year, those are two communities where the protests led to the developments actually backing out of those communities to say, actually we're not going to go through with this. I know in the Tucson example there was a non disclosure agreement that ended up getting leaked and when people found out about it, there was just a large amount of community action.
- [19:44]
A
You mentioned electricity bills going up and water bills going up. Are these hyperscale AI data centers or I would say AI data centers. Do they require more energy and water than a typical data center that we've seen that you said we've been seeing since the 1990s.
- [20:03]
B
Yeah, yeah, yes. At scale too. So, I mean, these data centers are built to run 247 and they're built with peak load in mind. So everything's built around peak use because everything needs to stay operational around the clock. So I just. In terms of how much energy demand though. So I think, you know, a couple years ago, data centers accounted for like 4% of electricity demand in the country. And in the next decade you're going to see that rise maybe to something like 8 or 10% is the last number I saw. But yeah, the energy use is because these computers are just running so hot around the clock and then the water use comes in to cool all the equipment down. But then there's a whole air water nexus too, that you can consider when talking about the water issues. Because I know folks around Northern Virginia aren't as concerned about water as the folks are in the Southwest. Right. But there is a larger picture to consider when you think about AI used on site for cooling and the different technologies and efficiencies there versus the AI or the, sorry, the water used for on site electricity generation. And then the third piece is the water that goes into the manufacturing of semiconductors. So if you look at that whole nexus, the water demand is huge. When you're looking on site water consumption, it does just very completely in terms of the environment, the technology. So like closed loop cooling technologies use a lot less water and they're becoming more common, but still it's just much more efficient from an industry standpoint to use the evaporative cooling or like a hybrid system in which all that municipal water is going to the data center. It's, it's clean, potable water and so much of it's being consumed. So, you know, a lot of facilities, the water comes in and the water gets returned. At a data center, if it's evaporative cooling, like 80% of that water is being consumed and then isn't reclaimed by the system.
- [22:12]
A
It's going. It's literally evaporating into the sky.
- [22:16]
B
Exactly, exactly.
- [22:17]
A
Yeah. Wow. Okay, so we kind of detail like what these data centers are, you know, why there's some controversy around them in terms of kind of the energy usage, the power. Power usage. I do think it's interesting that you kind of talked about the, the pushback of like where loud Loudoun county can say, you know, we've kept your tax bill, your tax liability down by 25% if these data centers weren't here. But as a Resident, you're seeing your water bill and your electricity bill go up. And so while Loudoun county can say that as a, as a resident, like, I don't, I'm not seeing the, the, the other side of it where, you know, my tax bill is not going up, but I am seeing my, my bills go up and people are very sensitive to their water bill and electricity bill. So I just think that's a, that's an interesting dynamic that could be happening, you know, with these communities that have said yes to data centers.
- [23:16]
B
Yeah, absolutely. It does make it, it does force you to look at the bigger picture. Right. So again, we talked about the advantages and why it's an attractive investment. The tax picture. Right. A lot of those effects aren't felt immediately, though. Some of the complex tax incentives and structures at the state level that affect local communities and affect what they can collect and how it affects their revenue, what they can spend that revenue on. But yeah, I think, you know, it's, and I should say it is difficult to draw a direct line between data centers and increased electricity prices. If you talk to folks on the utility side, at least again here in this area, they would say some of these prices would have increased anyway, that, you know, we have aging infrastructure and we need to improve the grid. And for too long we've been trying to keep electricity prices as low as possible. And so now they need to go up. But again, it's hard to draw a straight line either way. Um, so, and, and this is something in general where this is why you need public engagement, this is why you need to have these conversations, is to get better information out there. Because, you know, we need to. If it's not the data centers that are causing the electricity increases, what is. Right. We need to look at other things. And there's the feeling now from a resident standpoint that we're subsidizing big tech. And that myself as a taxpayer, if my, or you know, as a utility rate payer, if my rates are going up, am I subsidizing all this stuff that I might not even be using?
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A
Right.
- [24:51]
B
And that is, that is the inherent tension.
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A
Okay, So I want to get into this a little bit more. So what are data centers offering local governments in terms of, hey, we're going to come in and give you X, Y and Z? And then also on the other side of the coin, what are local governments offering these data centers to come in to their communities in terms of, you know, any kind of tax incentives? That's you.
- [25:14]
B
Yeah, yeah. So what I've seen is that data centers take advantage of the taxes, the tax incentives at the state level. On a local level, they might add a little bit more carrots on top of that. And then in terms of like the sticks, that's where you would have a community benefits agreement or something in place where some concessions are made. And I think there's concessions made in any kind of large land use development like this where the city or county is involved. But what we're seeing on the community benefits agreement side of things are community saying these construction jobs have to be local, so there's some benefit there. If they're permanent jobs, those should be also sourced locally. And then, you know, you need to come in and maybe it's something like a scholarships or job training or some sort of community investment. Some communities have used the revenues to create, you know, programs around housing affordability in neighboring communities. So some, some communities have gotten pretty creative in terms of how to get more sustainable benefit out of this because as we mentioned, some of the tax incentives and structures make it so that those benefits aren't felt for five or maybe 10 years down the road anyway. So anything you can secure today. And then the last thing I'll mention that I think is a really, it's really important is many communities I've spoken with have this mentality that growth pays for growth and we bring the data center in and if we package everything wisely enough, they are going to help pay for all the infrastructure improvements and upgrades that we need. Whether it's from water infrastructure or the grid that affects us locally. Fiber improvements, even road improvements. Like that mentality of growth pays for growth is super strong and compelling and attractive for a local official because you have a data center that might be off in a special use area or an industrial park. Basically, you know, if you depending on the siting and zoning rules in your community and so then that far off, you know, that infrastructure is going to pay for everything else in my community that is going to lead to some economic improvements for my residents.
- [27:33]
A
Yeah, I think that's a really interesting point that I don't think I've asked you yet about. But you know, this conversation around land use, you know, data centers are coming in and they're looking for any viable land that they can find anywhere. And then these communities have to then ask themselves, okay, well, if we're not going to do, you know, if we're not going to build a data center on this land, what are we going to do with it? Right? And the communities are saying who might Be opposed is like, well, I don't want a data center, period. And I might want this land to just be open space because that's important for preservation. Or why don't we do X, Y and Z around this? So, you know, where is this tension that you've seen with. Okay, well, someone wants to make a decision about this land and how local governments are trying to kind of navigate that, that opportunity cost, if you will, around that?
- [28:37]
B
Yeah. You mean like specific, when you're talking about like specific parcels of land, what's the best, like.
- [28:43]
A
Yeah.
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B
Economic purpose for this?
- [28:44]
A
Yeah, yeah. If I'm not going to put a data center in here that's going to give me, you know, benefits now that I can, you know, parlay into other benefits for growth, you know, what is, what, what is the economic benefit of either leaving it empty or, you know, being forced to think about what, what else you want to do with that land, you know, right now?
- [29:04]
B
Yeah, yeah, that, that's, that's a great point. And I think something that a lot of residents have asked when they come to their, these public engagement opportunities when they happen about data centers is that, hey, why are we using this land for this when it could be used for community center or some other improvements or anything else really? Just when you're looking again at that sort of land use per job created, I think if that's your metric, it's hard to justify the data center on that land if you're looking at how can we maximize the amount of jobs created. If you're a local planner thinking you have different priorities for economic development related to tax revenue, property tax revenue, data centers are a good bang for your buck in that case. But it's interesting, I mean, we're seeing at the federal level the EPA issuing guidelines based on the executive order last year, and these guidelines are now meant to help local leaders build out data centers on Superfund sites and brownfields. So these are parcels of land that are hard to redevelop anyway and especially for anything that's going to be like a community center or something that the public can enjoy like a park or anything. So there's a lot of nuance there and a lot of trade offs and thinking about that in particular. But that's something I know that the federal government now is sort of prioritizing is let's use the undesired land for the, the data center. Right. Let's be as creative as we can. But in terms of when you do see a data center come in right next to A neighborhood. I mean we have seen that happen. And these. One thing we haven't talked about yet is the public health impacts of a data center in terms of the air quality and pollution that can come from on site generation and then the noise pollution as well. So yeah, I mean you've seen these built next to some more like vulnerable communities. Like you've seen these built next to like, like senior citizen, like centers and neighborhoods. Right. And I know that we were going to talk about equity later in this conversation and but yeah, yeah, it's definitely a piece of it.
- [31:20]
A
I'm glad you brought that up because, you know, we talked about the water and we talked about electricity and something I forgot to mention is that. And maybe you can kind of help me get a better understanding around this. But when you're building this data center, they need to connect to power. And so something that's also happening is power plants are being built like kind of solely to power these data centers and like gas power plants, which means you're putting a gas power plant somewhere in your community that didn't exist before almost solely for the purpose of this data center. So are you seeing that also coming with these conversation decision points too, that there's just a lot more of these power plants that are being built that maybe community members also just don't want to see in their community?
- [32:07]
B
Yeah, I'll say that there are certain examples that we've seen where this is an issue. I haven't seen it across the board in terms of where that power is being generated. Coming up as part of this, I think that there's one argument to be made that more power generation could lead eventually to some decreased utility prices, electricity prices. But of course, I think more to the point of your question is what is the source of that power and how that could be a problem and when the power for that data center is happening on site and what we call behind the meter generation. So some of these facilities, I mean these are such big powerful players that you know, you have Microsoft talking about small modular nuclear reactors for power generation on site. I mean, let's not forget just that that's a, that's crazy to think about. Like that's how big this industry is and how powerful these players are. But there is the example of the, the XAI data center colossus in Memphis. And I know there, I mean they, there's just a huge rush to get online as quickly as possible, so much so that they didn't want to wait for any electricity hookup to the grid there locally. So they create the power on site through, you know, gas powered turbines. And what that means is there's, there are more pollutants, a higher concentration of air pollutants in the air that affect nearby neighborhoods. So I was just reading recently a Time article where they, they're talking about this and they, they found the nitrogen dioxide levels increased over 70% in a nearby neighborhood called Boxtown in Memphis. And this is a predominantly black community. And then you're having residents, you know, reporting that it's aggravated their respiratory diseases, they're having asthma attacks for the first time in years. So when they're, when they, when we're talking about on site power generation and in more power generation in general, these are huge problems.
- [34:13]
A
Yeah, and I think that's so interesting that you brought that up because I think another consequence that I wanted to explore with you is that the demand from these companies to get this data centers on the ground seems so high that they're kind of taking it, I don't want to say taking advantage of, but they're building these data centers in legal areas where there might not be any regulations around. Like, hey, if you're going to put a power plant here, it needs to look like X, Y and Z. And so now in that example that you just brought up, well, oh, well, I can just buy maybe an outdated or something that's dirtier than community might want to bring in here, but there's no regulation around it and I need to get this data center on the ground online so quickly. That's just the most expedient thing for me to do. And do you see local governments trying to put in zoning laws or zoning regulations before they maybe even have to have this conversation around data centers? Like, hey, we're open to data centers, but we want to put some guidelines in place for what that looks like for us.
- [35:30]
B
Yeah, yeah, absolutely. Yeah, you're totally right. Like, time to market in this industry is everything. And as we were talking about up top, because it is this sort of space race of developers trying to get the market share, trying to develop tools that are better, faster at making whatever they do. Right. That's the main goal is let's get to market as quickly as we can. For local governments, that can be a point of leverage. Right, right. That can be a point where they can look at a process and say, we know you want to get the time to market quickly. If we have clear policy, ordinance in place in which you need to follow that in terms of a economic development perspective, again, that's I think where both parties can come out more advantageously. Of course. Yeah. So you know, like National League of Cities, we're looking at all sorts of policies that are coming up. Zoning updates and even comprehensive ordinances specific to data centers or specific to large water users. Ideally these are put in place before negotiations even happen. A lot of them have been reactive and that's where we see some instances of moratoria coming up where the city pauses all developments for like a six month period so they can put the right policies in place. Place.
- [36:52]
A
Yeah. I love this conversation because you're already like touching on things that I want to get to and I want to get dive deeper into something that you already alluded to. But the, the equity piece of this. You know, I've been trying to do my own research around like these data centers and like the communities that they're trying to get into and it's hard to keep up. Like there's just so many, so many governments who are trying to have this conversation or negotiate with these data centers. But I feel like I've noticed a pattern where some more affluent, well resourced communities are able to mount responses to keep these data centers out of their communities compared to other communities. Have you noticed this in your research and in your analysis? That might be suggestive that these centers are potentially trying to target communities where political power might not be as robust, they might not push back as much as they can take advantage of.
- [38:00]
B
Right, right. I'll answer that question first with my NLC hat on. To say as a researcher I haven't notice this pattern in terms of where the centers are being built, that it seems more in terms of the considerations in a market of fiber connectivity or you know, where there's amenable local policy and tax structures that give them a nice payout. From a personal perspective, I would say if you look at where the protest has been successful, like your point about like political voice and resistance, those seem to be more affluent communities that are keeping the data center at bay. So what does that tell you about the inverse? Right. And about the example we talked about in Boxtown in Memphis that is literally getting all the negative externality and the public health impact from that XAI data center. So I think, you know, and I'm curious to hear your thoughts on this as well. If this is, you know, this is something that we could see in other land use and developments and industry developments. Like historically this has been the case for lots of industries. It wouldn't surprise me if this is also true of data centers, then that this is what happens when a new industry comes in and we're all on the ground trying to respond locally and it's all fragmented. And then nationally just takes longer to get the bigger sense of the picture of what's happening and how well coordinated that is and how much is just sort of a pattern.
- [39:33]
A
Yeah, I, my personal perspective is that I think there's such a strong history of racialized zoning and planning that still exists. When you think about where you're more likely to see trash incinerators or more likely to see African American communities are communities of color put next to factories and things of that nature and the quality of land that people are allowed to live on next to industrial uses and practices. I think there's a clear through line that is happening in these data centers as well. To your point, I do think there's. It's a mix. Right. I think there's such a demand these data center companies are trying to find wherever they can put a data center, they can put a data center. And the factors that you mentioned as well about connectivity to broadband and some other factors like that. But I do think the outcomes and success rates of where these data centers are going to be able to get built, that kind of racialized planning is going to be a factor. And I think I mentioned to you, or it's in the rundown recently there was a county in South Carolina, and I'm from South Carolina, so I kind of try to pay attention to these things that they passed the data center deal in the middle of the snowstorm, which South Carolina doesn't typically get snowstorms, but the middle of a snowstorm, they like passed through a data center deal that they had an NDA agreement with that essentially nobody knew about. And I looked at the, I looked at the county meeting, the county commissioner meeting. It's empty because getting there is hard. And like two people, two or three people commented on it because they just found out and it was more all they could do is say like, hey, we just found out about this. I have questions. I'm not sure this is the right decision to do. But at that point they'd already struck the deal with the data center and so now they're going to build it. And yeah, I just think it's very interesting that these kind of things are happening. And this county of South Carolina is predominantly African American. So I just think it's interesting about that piece. But also, you know, do you think these kind of NDA agreements and deals are going to be more common Practice so data centers can try and get ahead or circumvent central public outcry to them.
- [42:35]
B
Yeah, there's part of me that would say, yeah, like, of course, I mean, the, the PR on data centers right now is so, is so bad. And again, this is my personal opinion, like the PR on data centers is terrible. And like that's why you have commercials showing up about data centers and about how good they are for rural communities or, you know, all this, all this kind of thing. So NDAs are common in industry, of course, that's to protect trade secrets and information and market, market valuations and all this kinds of thing. But we've already seen them common with data centers. I think it's fair to say and assume, like we said, that they'll still be common practice. But in terms of what local governments can do to counter the NDA or to include the public, I think limiting the scope of an NDA to try to respect whatever IP or trade secret that is necessary to protect, protect in that NDA. And this is an area far outside of my expertise in terms of what is in the NDA exactly, I think is a little bit of a mystery. But you know, anything you can do to limit that and be transparent about siting about resource intensity, about all the different health and environmental impacts of that, of that development, putting an expiration date on an NDA also, you know, if you can do that, if you can leverage that, that's great. And then what some localities can do is that they can require that the data center is rather than a by right development, it's a special use. It requires a special use permit or an industrial permit of some kind where there is some sort of engagement through the city council. And I guess if the public is involved, that might be more at discretion of the city. But that's another way to get some sunlight on things is just to make sure that those zoning policies are updated. Because data centers in the 90s are different than today. And so you might in your city code or county code have a data center still as a buy right development. And that might need to be updated to make sure that the, you know, a development of that size has to go through some kind of checks and some kind of accountability process and review process.
- [45:04]
A
Yeah, another kind of economic development angle to these data centers that I see is kind of akin to football stadiums or, you know, sports stadiums. You know, there was this movement, you know, in the 90s, I guess, where these stadiums kind of went into the cities and they said, hey, you know, we're going to build a stadium in the city. There's going to be so much economic benefit to this. And it's not just going to be a stadium for sports. You know, everyone's going to benefit. They built all these stadiums, they gave them massive tax breaks. They didn't really see the economic benefits of it and said, oh, we made a mistake. And now you're seeing this movement where these stadiums, they're moving back out to the county, you know, because people in the cities are saying, no, it's going to cost too much money. And they think they can just go somewhere. It's like the Chicago Bears, they're not even going to be in Illinois. It doesn't seem like. So we're not going to be in Chicago anymore. And I think that's an interesting parallel that I'm thinking about is do you think these data centers are ultimately going to be enough benefit for communities like 10, 15, 20 years down the road where you're going to look back and say, hey, I'm glad I made that cost benefit trade off? Or do you think there are going to be some examples where communities might have legitimate regrets about, you know, saying, yes, these data centers now?
- [46:36]
B
Yeah, yeah, of course. I think that. I think that, you know, when you think about 10 years from now, this whole industry could change. Everything could change, everything could become so much more efficient that you don't need 100 acres, 50, 100 acres for a hyperscale data center anymore. It could be a lot less land use. The chips will become more efficient, the AI will become more efficient. And that could very well mean that we have a huge hangover of facilities that we don't need anymore. And what do you do with all that infrastructure that could potentially be a stranded asset for your community? So that's, that's one angle to consider for, for a local leader and a community that, that's really eager today is to look in 10 years from now, of course, like, with that increase in efficiency, you could see, like, you know, that there's like the paradox of everything becomes cheaper, demand gets even higher, right? Who. Who knows? But in terms of, and I like the stadium example as like a parent parallel to this, right? Because you're talking about these huge tax incentives and structures. The assumption being we're going to wreak the reward later. Like the Chicago Bears, they could never leave us, right?
- [47:55]
A
Until they never happen.
- [47:56]
B
Until they do. Like even the Bears, like, who knew? Like, loyalty, unfortunately doesn't go both ways. And I am a Bears fan, I know this well.
- [48:05]
A
Oh, I didn't know this. Now
- [48:10]
B
I'm from, from Wheaton, Illinois originally. It's like 30 miles straight west of Chicago. Lived in Chicago for several years and love the Bears, but. Yeah. So it's a good parallel. Right. That these data centers, like it is infrastructure today that they might not need and they could move, they could move wherever they want to next to get the next payout. So that's, that's the thing to always consider is as well. And then. Yeah. How do you like sustain a benefit from any kind of development, you know, like what kind of scholarship, training, what kind of real community impact are you going to basically extract or obtain from, from these developments? So that's the, that's the catch of it all. And you know, we ought not be enticed by a big tech, you know, name coming into our community, especially when it's a data center rather than something that's a bit more concrete of its impacts in terms of the knowledge and everything that gets cemented locally.
- [49:09]
A
Because it's not like you can do a mixed use development with these. Right. It's like it. Data center is a data center. Is a data center.
- [49:15]
B
Yeah. Although maybe our friends in Europe are finding ways to think about mixed use. I know they are making a lot of headway in terms of greener campuses for data centers. And there's a technology with, you know, basically heat transfer.
- [49:31]
A
Yeah. They're building like the district heating under the ground, like heating up wind.
- [49:36]
B
Yeah, yeah, yeah. And the other thing I'll say again, this is because this is such a, I keep saying, nuanced area. When you talk to the industry folks, they'll say, well, like data centers actually, you know, procured half of the green sustainable energy in the US Market last year. And you're thinking like, will that drive more green energy or sustainable energy? Or is that because they're just so energy hungry that they need whatever they can get their hands on? So again, it's like, it's, it's so the picture is complex. Yeah.
- [50:10]
A
Okay, last couple questions for you, Chris. And again, thank you for the conversation. What advice would you give local leaders who are listening to this episode, listening to this podcast, and they have to confront making a decision now or in the future about allowing a data center in their community.
- [50:31]
B
Yeah, yeah. So every community is going to do what they feel like is best for them and their priorities. And some communities might be literally better positioned to host a data center. Right. So, but as we know, the public needs to be involved, so engage all those stakeholders like this is something we learn in, you know, policy school or in degrees in your first classes, but only gets more true over time and practice that you need to bring stakeholders across utilities, across water, planning, economic development, and then figure out what your public engagement plan is. And then also, as we talked about, making sure that those policies are in place already before the data center comes in with a proposal in your neighborhood or community so that they know exactly what the procedure and hoops that they have to jump through are. Getting all that done now is, you know, being proactive rather than just waiting for the data center to come. And then because there are so many communities experiencing this, I think my advice would be just to talk to the communities that have been through this process to see what do they learn, you know, what, what are the implications? Like, I've heard from a lot of city leaders that have had really good experiences in terms of a municipal finance perspective, others who have just been bogged in sort of the, the large scale community protest of it all. So yeah, I mean, at nlc, I'll just give ourselves a plug that we're tracking all the policies so we have a decent database of how cities are responding. And I think there's just a lot to learn just by looking at what other peer cities are doing right now across the country.
- [52:11]
A
Thank you for that advice. I think that's really helpful. Maybe think of one more question. So there's the intersection of these data centers and the kind of bifurcation of government services that they're interacting with. So you have your water utility, right, that can be a government. You have your energy utility that can either be public or private. And then you have your various local governments that fall within the jurisdiction and the intersection of those two things. And I can see it's a really easy place for a data center to come in. And there be no coordination or conversation between those three entities. And do you think this kind of, this data center. I'm trying to think of the right word. I'm trying not to be biased about it. This data center question should or will demand more of a coordinated conversation.
- [53:21]
B
Right.
- [53:22]
A
So where I live, right, I live in the Triangle area of North Carolina, you have Duke Energy, which is private, and they're kind of like an allowed monopoly that's allowed to exist. Yeah. You have like 20 local governments and you have your various water, you know, agencies. So like Owassa is one of them in this area. So those, those kind of three entities don't have to talk to each other. But do you think these entities should have some kind of coordinated conversation because it's just really easy for a data center to come in and you not really think about the implications of those three factors ever having to do with each other that do have implications for all three of those areas.
- [54:04]
B
Yeah, yeah, yeah, absolutely. I mean, coordination is great, but hard in practice, of course, obviously. And to your point, I think, like sometimes these really sticky questions or problems are what create coordination. Whether or not that lasts institutionally, it might just depend. It's an ad hoc basis thing. Right. I'll give a shout out. Like Prince George's County, Maryland, did a task force where they brought a whole bunch of folks together. And close to where I'm from, Aurora, Illinois, they did a moratorium, but they're part of a group of regional cities. It's the Metropolitan Mayor's caucus. So that group came together and they've brought in, you know, the utility folks from Comet and they've brought in, you know, U of I from Urbana Champaign, like water experts. And they've brought in all these folks across the state. State to basically bring the best policy, bring the best evidence forward and bring their experiences to the table. So, yeah, I think these are always unique sort of natural experiments that happen in the wild. Right. But we can all learn from them.
- [55:12]
A
Yeah. Thank you for giving those specific shout outs. I think that'll be helpful for people to look at those examples as they're making these, these decisions for their own local communities. Chris, give our listeners some sense of what you're currently working on, what you will be working on for the rest of the year that they can follow you through NLC and your work.
- [55:32]
B
Absolutely. So we put out a number of resources last year on data centers. Those focused mostly on water and energy and a little bit on siting and zoning. So our next resource is a key questions document. It's basically a checklist of. Here are the questions that you want to consider when talking directly to a developer or people in your community that you're coordinating with. So your last question before was very apt. And then we're also going to create a new fact sheet looking at jobs, looking at economic return specifically. Other than data centers. The world of AI keeps evolving. I struggle to keep pace, but that is my role. So we're bringing together local leaders from around the country throughout the year. We have a little group called the AI and Emerging Technologies Forum, where basically we bring together those local leaders with some of our strategic partners from the private side basically to talk about gaps of research and how NLC can come in and fill some of those research gaps and resources. So those are the main priorities for the year. And the last piece, I'll say again, is we're looking more and more at political polarization as an organization and ways in which we can help communities have better public conversations and meetings. So it's a huge pain point. It's, I think in general an exciting time to be in local government, though, because innovation's happening. Local governments always innovate. They get a bad rap. And I know you come from the innovation world, so I know you like preaching to the choir a little bit when I say this that, you know, innovation is not just AI and tech. It's all these things, processes, and all the little things that happen that often go unnoticed. And so we're always trying to do a better job of telling the stories of local governments to say they're doing a lot of really great stuff and we don't have exact measurements for everything, but we're trying to get those stories out there.
- [57:34]
A
Yeah.
- [57:34]
B
As best we can. Awesome.
- [57:35]
A
I love that. We'll definitely be on the lookout for that and maybe we can link to some of that stuff in the podcast episode. Chris, thank you so much for the conversation. I've really loved it and I hope our listeners loved it too. The last question I have for you is if you could be gov love DJ for a day. So the music that you want tied to this episode that your co host saying what would you want your exit song song for your episode to be?
- [58:02]
B
Wow.
- [58:02]
A
Any song, any song. Are you going to go Lord of the Rings?
- [58:05]
B
No, of course that's too peaceful for this conversation. Like, or maybe you could make put people in a good mood. I'm going to go on behalf in honor of my stepdad, Steely Dan. Dirty Work by Steely Dan.
- [58:21]
A
Great. I love it. Thank you for that. Okay, so, so that ends our govlove episode for today. Thank you Chris for coming on and talking with me. GovLove is brought to you by EOGL and the best way to support GovLove is to become an EOGL member. You can reach us online at eogl.org govlove or @govlovepodcast on LinkedIn, Instagram and X. Subscribe to GovLove on your favorite podcast app. New episodes drop every Friday. If you are already subscribed to GovLove, go tell a friend or a colleague about this podcast or share on social media. Help us spread the word that govlove is the go to place for local government stories. Thanks for listening. This has been Gov Love a podcast about local government.
- [59:16]
B
Oh yeah. I don't want to do your dirty work no more I'm a fool to do your dirty work oh yeah.