When a data center comes to town

Data centers are not new. Northern Virginia, now the largest data-center market in the world, grew from an internet exchange point in the 1990s (JLARC). Microsoft has run a campus in Quincy, Washington, since 2007 (EPA). Two decades of operating records show what hosting one looks like.

In Quincy, a farming town of about 9,000, town leaders credit the data-center tax base with making a new high school, hospital, library, and police and fire stations affordable (KOMO News), and Microsoft paid for a $31 million plant that recycles its cooling water, saving an estimated 138 million gallons a year. Loudoun County, Virginia, has lowered its real property tax rate from $1.145 per $100 of assessed value in 2016 to $0.805 in 2026 (Loudoun County). In Indiana, the utility I&M has proposed cutting a typical home's bill by about $100 a year, citing revenue from large customers including data centers (T&D World). In DeKalb, Illinois, tax revenue from Meta's data center helped a new elementary school open sooner (Northern Public Radio), and in Henrico County, Virginia, officials reported 85 completed home-purchase deals through a fund built on data-center taxes.

Closer to home, Kansas regulators approved rules in 2025 that require Evergy's largest new customers to commit for at least 12 years and pay for most of the power they reserve, in a settlement joined by the state's residential ratepayer advocate (Utility Dive).

The internet has an address. The video call with your family, the files your business keeps in the cloud, the AI tool helping you make something new: somewhere, computers are doing that work in a building. Building and operating that facility puts the digital economy in contact with local trades, utilities and public budgets.

A data center can bring skilled work, a new tax base and a large customer helping pay for shared infrastructure. Understanding how those contributions work gives communities a way to shape new investment. The seven topics below explain the connections, then point toward the evidence and the local decisions behind them.

Electricity bills: sharing the cost of the grid

Homes, businesses and data centers use a system of wires, substations and other equipment that has to be paid for. A large new customer contributes revenue to that system. When its payments help cover shared costs, there can be less for everyone else to pay.

Research on U.S. electricity rates from 2015–2024 estimates that data-center growth modestly reduced average retail rates. The connection runs through the utility's accounts: what it costs to supply electricity, what customers pay, and how those costs are allocated.

Serving a new customer may also involve new infrastructure. Long-term commitments, minimum payments and exit provisions give a utility something firmer than a forecast to plan around. Virginia's regulator has approved a large-load rate class with 14-year contracts for qualifying new customers, effective January 1, 2027.

For example, a minimum payment can cover capacity reserved in a substation, alongside charges for the electricity actually used. The rate agreement determines how those payments contribute to the utility's costs.

Taxes: a new source of public revenue

A data center's land, buildings and computer equipment can expand the local tax base. That gives local governments and school districts a potential source of revenue alongside the taxes paid by residents and other businesses.

The amount that reaches each public body depends on tax rates, valuations and the project agreement. An equipment sales-tax exemption and a property-tax abatement affect different categories. A payment in lieu of taxes is another arrangement: the company makes an agreed payment rather than paying the otherwise-applicable tax. Tax comparisons and reporting on Ohio's agreements explain how those arrangements work.

Equipment valuations can change as servers age or are replaced. A year-by-year revenue estimate shows what the community could receive during an abatement and after it ends. Put those payments alongside spending on roads, utilities and services, and residents can see how the investment fits into the public budget over time.

Water: how cooling choices shape demand

Servers produce heat, and engineers have several ways to remove it. Some cooling systems evaporate water. Others recirculate it or use dry cooling. The design, size and computing workload shape the facility's demand.

Virginia's legislative research agency examined actual utility records and found wide variation between data-center buildings. Most used about as much water as a large office building—about 6.7 million gallons a year—or less. For comparison, the state's largest industrial water user used about 36.5 billion gallons that year, and all of Virginia's data centers together used about 2.1 billion, under 0.5% of the state's water withdrawals. A facility's cooling plan helps explain where it falls within that range.

The source of the water is part of the design. Using reclaimed wastewater makes a different demand on the drinking-water system. Average annual use and the busiest summer day also tell you different things about the capacity needed.

Two measurements help make the plan understandable. Water withdrawn is the amount taken from a supply. Water consumed is the part that does not return to the immediate water system, often because it evaporates. Knowing which quantity an estimate measures lets residents compare the facility's demand with the water supply that serves it.

Jobs: skilled work and paths into the trades

Building a data center takes people who can pour concrete, install electrical equipment, fit pipes and commission cooling systems. Running it requires technicians, engineers, maintenance workers and other staff.

Virginia's report describes operator examples of roughly 1,500 workers on site at the height of construction, compared with about 50 full-time workers—including contractors—for a typical 250,000-square-foot operating building. Construction and operations provide different kinds of work on different schedules.

A campus built in phases can provide a sequence of construction projects. Ongoing operations involve maintaining the electrical and cooling systems as equipment wears out or is upgraded.

Training can connect that investment to local careers. The same report describes a Northern Virginia electrical-workers union expanding its apprenticeship courses alongside data-center demand. Hiring and training arrangements give a community a way to connect the work being created with the people who want to do it.

Local benefits: turning revenue into public priorities

The school and housing examples at the beginning reflect choices about how to use new revenue. A larger tax base gives public officials more to work with; the adopted budget determines where that money goes.

A negotiated benefit agreement can specify additional payments for particular purposes, with a schedule and conditions that residents can follow. Keeping those commitments separate from ordinary tax revenue makes it easier to see what the developer has agreed to provide and what local officials have chosen to fund.

Communities can start with their own priorities: a school project, housing assistance, training or another public service. That makes the discussion more concrete than an investment total. Residents can follow the connection from a tax payment or agreement to a funded program and its delivery.

Noise and siting: fitting a facility into its surroundings

The arrangement of buildings and cooling equipment, the distance to homes and the surrounding terrain affect what nearby residents hear and see. Construction, continuous operating sound and generator testing are separate parts of the design and schedule.

Virginia's report recommends sound modeling before construction. It lets designers and local officials evaluate equipment and possible sound-reduction measures while the plan can still change. The report also explains why continuous low-frequency sound deserves attention in noise rules.

The equipment layout, an acoustic study covering full campus build-out and nighttime operation, and clear operating conditions give residents a more specific picture of how the facility would fit into its surroundings. They also give local officials a basis for considering the design before buildings and equipment are in place.

Land use: finding a place for new investment

A campus includes more than its buildings. There may be substations, access roads, paved areas, buffers and land reserved for later phases. Serving it can also require infrastructure beyond the property line.

A map brings those pieces together with existing homes, streams and other places people value. The community's long-term plan provides context for comparing plausible uses of the actual parcel. Virginia's research found that operating data centers covered land equal to about 1.4% of the farmland the state lost from 2017 to 2022, while accounting for 20–30% of land development in two fast-growing counties.

The site's zoning identifies the uses already allowed and whether a proposal needs a rezoning or special approval. That helps explain which decisions remain open to local officials and public input. Site plans and maps give the community a way to discuss where new investment fits and what it wants to preserve.

Putting the evidence to work locally

For a local proposal, start with the project name, its location and the decision currently before officials. The planning department's application, site plan, staff report and hearing schedule show what is being proposed. Incentive and benefit agreements, together with the public financial analysis, explain the commitments behind it.

Your commissioners can explain which decisions belong to them and which belong to a utility, state regulator or another agency. That helps you take an electricity question to the right docket or a water question to the people responsible for the supply.

Choose the questions that help you understand the proposal:

• How will the company's electricity payments contribute to shared infrastructure and any new capacity it needs?
• What tax revenue and agreed payments are expected over time, and where will they go?
• How do the cooling design and water source determine demand, including seasonal peaks and drought conditions?
• What work is expected during construction and operations, and how can local residents train and qualify for it?
• Which public priorities will the investment support, and what are the payment and delivery milestones?
• How does the full campus design fit its surroundings, including sound at nearby homes and nighttime operation?
• How does the site and its supporting infrastructure fit the community's long-term land-use plan?

The public record should help residents see which commitments are enforceable and who is responsible for measuring and reporting the results. It is also a place to discuss what opportunities the community wants the investment to support.

The evidence section is the next step. It brings together the research and examples behind these seven topics, with source links you can follow for yourself. Each topic covers one issue, from electricity bills to school budgets to a proposed site, with the sources behind it.

Explore the evidence on all seven topics.