Datacenter developers want your backyard. FAS says negotiate harder

Local governments will have a clearer roadmap for negotiating infrastructure and community benefit deals with datacenter developers.

Local governments grappling with an influx of datacenter development proposals are being advised by the Federation of American Scientists (FAS) to negotiate more assertively. A new FAS report, "Before Breaking Ground: A Local Government Guide to Better Data Center Policy and Community Benefits," provides officials with a framework for understanding and demanding Community Benefits Agreements (CBAs). These agreements aim to ensure developers benefit local communities through infrastructure improvements, local hiring, and sustainable practices, among other considerations. The report critically examines existing CBAs, finding few are explicitly designed for community benefits and highlights deficiencies in areas like tax break durations, water usage, noise, and decommissioning plans. FAS recommends that governments limit tax exemptions to five years, require specific, measurable noise limits, and mandate the approval of decommissioning plans before construction begins, aiming to balance the economic incentives for datacenters with the long-term needs of host communities.

The FAS report signifies a growing recognition that the rapid expansion of datacenters, fueled by AI, requires a more structured and locally-beneficial approach to development. By providing concrete guidance on issues such as tax incentives, water usage, noise pollution, and decommissioning, the FAS aims to empower local authorities to secure terms that go beyond short-term economic gains. This push for better-negotiated CBAs could set a new standard for how large-scale tech infrastructure projects are integrated into communities, potentially influencing future development across various industries.

This initiative by the FAS will likely affect how future datacenter projects are approved and managed, potentially increasing costs for developers who may need to offer more substantial community benefits. Local officials, armed with this report, are better positioned to demand accountability on environmental and social issues, shifting the balance of power in negotiations. Communities can anticipate more detailed and enforceable agreements that address concerns previously overlooked in the rush to build out AI infrastructure.