Community Impact

Key Takeaways

• Data centers create fewer jobs than comparable industrial investments—typically 50-200 permanent positions per gigawatt facility
• Electricity rate increases affect all ratepayers in the region as grid infrastructure costs are socialized
• Water consumption competes with agriculture in arid regions—1-2 million gallons per megawatt per year
• Visual, noise, and traffic impacts during construction are significant, with disruption lasting 2-3 years
• Long-term considerations include equipment obsolescence cycles (5-7 years) and uncertain community benefits if facilities close

What Happens to Communities

On a December evening in 2024, residents of Saline Township, Michigan gathered at their local elementary school. They came to hear about a proposal that would transform 250 acres of corn and soybean fields into something called a "data center." The developers promised jobs, tax revenue, and economic transformation. Within three weeks, the township board approved the project.

The Saline Township experience is not unique. Across America, from rural Virginia to West Texas, from suburban Phoenix to farmland outside Kansas City, communities are grappling with similar proposals. These are not traditional factories or warehouses. A single gigawatt data center facility can draw as much power as a quarter-million homes while employing fewer than 200 people.

The gap between what communities expect and what they receive is where this story lives. Understanding the actual impacts—both positive and negative—requires looking beyond the glossy presentations and million-dollar promises to the physical, economic, and social realities of hosting AI infrastructure.

Jobs: The Complex Reality

"Jobs" dominate the conversation when data centers come to town. Developers tout hundreds or thousands of employment opportunities. State officials celebrate major job announcements. But the numbers require careful parsing.

Construction Phase: Temporary Surge

Building a gigawatt-scale data center requires enormous labor. At peak construction, a major facility might employ 1,500-2,500 workers: electricians, steelworkers, concrete crews, HVAC specialists, and general laborers. These are real jobs with good wages—often $50,000-$100,000 annually for skilled trades.

But construction jobs are temporary by definition. The typical 2-3 year construction timeline means that even the longest-tenured workers face job transitions when the facility opens. And many construction workers are brought in from other regions or states, following the project pipeline rather than settling permanently in the local community.

Operations Phase: The Permanent Reality

When the ribbon is cut and the facility opens, the permanent workforce is dramatically smaller. A 1 GW data center—a $5-10 billion investment drawing enough power for 1 million homes—typically employs 50-200 people in operations roles.

Why so few? Data centers are capital-intensive, not labor-intensive. The building is essentially a large, climate-controlled warehouse for computer equipment. Once operating, the facility largely runs itself, monitored by sophisticated software. The permanent staff includes:

• Facilities engineers who maintain cooling and electrical systems
• Network operations technicians who monitor connectivity
• Security personnel to control access
• Administrative staff for HR, accounting, and management

These are skilled positions with competitive salaries ($60,000-$150,000), but the total headcount remains small. Compare this to a similarly-sized manufacturing facility, which might employ 1,000-3,000 workers permanently.

Job Quality and Local Hiring

The jobs that do exist tend to be good ones—stable employment with benefits, often with major technology companies. But local hiring isn't guaranteed. Many specialized positions require technical training that rural communities may not provide. Companies often transfer experienced personnel from other facilities or recruit from urban areas.

Some states have attempted to mandate local hiring percentages or require workforce development programs as conditions of incentive packages. Success varies. The fundamental challenge is that the skill requirements for data center operations don't align perfectly with traditional rural labor markets.

Tax Revenue

Tax revenue represents the primary economic benefit most communities receive from data center development. A multi-billion dollar facility should generate significant property tax receipts—in theory. In practice, the picture is more complicated.

PILOT Agreements

Most data centers negotiate Payment in Lieu of Taxes (PILOT) agreements with local governments. Rather than paying standard property taxes based on assessed value, the developer makes fixed annual payments negotiated in advance.

These agreements typically provide 75-89% reductions from what full property taxes would be. For example, a facility that might owe $30 million annually in standard property taxes might instead pay $3-7 million under a PILOT agreement spanning 10-30 years.

Why do communities agree to such steep discounts? The alternatives are often "some revenue or no revenue." Developers can locate facilities in competing jurisdictions, and the negotiation leverage tilts heavily toward companies making billion-dollar investments. Local officials face intense pressure to "land the deal" and often lack the resources to evaluate complex financial proposals independently.

School Funding

In many states, property taxes represent the primary funding source for public schools. PILOT agreements reduce the tax base available for education. While data centers don't directly stress school capacity (few employees = few children in local schools), the foregone revenue can create funding challenges.

Some PILOT agreements earmark portions of payments specifically for schools. Others direct all revenue to general municipal funds. The allocation matters enormously for communities where school districts face chronic underfunding.

Long-Term Revenue Stability

Fixed PILOT payments provide revenue certainty for municipalities—a predictable annual check regardless of market fluctuations. But they also mean communities don't benefit from facility expansions or equipment upgrades that increase property value. And if a facility closes or downsizes after the PILOT term expires, communities face sudden revenue losses.

The equipment inside data centers—the servers, networking gear, and cooling systems—depreciates rapidly on 5-7 year cycles. This creates assessment challenges. How should tax assessors value a building filled with obsolescent hardware? Different jurisdictions answer this question differently, creating wide variations in actual tax receipts.

Electricity Rates

Data centers don't just consume electricity—they reshape regional power economics. And those effects ripple out to every ratepayer in their service territory.

How Large Loads Affect Rates

Utilities must build infrastructure to serve peak demand. When a 1 GW data center connects to the grid, the utility must upgrade or build:

• High-voltage transmission lines
• Substations with massive transformer capacity
• Backup and redundancy systems
• Generation resources to meet the new load

These infrastructure costs—often $500 million to $2 billion for a gigawatt-scale connection—must be recovered from ratepayers. In regulated markets, utilities file rate cases with state Public Utility Commissions requesting rate increases to cover the investments.

Sometimes data center developers fund some infrastructure directly. But frequently, the costs are "socialized"—spread across all customers in the utility's service territory. Your electricity bill increases to subsidize the infrastructure enabling someone else's facility.

Regional Rate Impacts

The magnitude of rate impacts depends on the utility's existing customer base and load profile. A 1 GW data center represents:

• 10% of peak load in a small rural utility (significant impact)
• 2-3% of peak load in a regional utility (moderate impact)
• Less than 1% in a major metropolitan utility (minimal impact)

Northern Virginia illustrates the extreme case. With 6+ GW of data center load, Dominion Energy has undertaken massive transmission expansions. These costs have contributed to above-average residential rate increases over the past decade.

The Ratepayer Equity Issue

Rural residential customers often end up subsidizing infrastructure for facilities that bring them limited direct benefit. The data center creates few local jobs, receives substantial tax breaks, but requires expensive grid upgrades paid for through higher monthly bills.

Some state regulators have pushed back, requiring developers to fund more infrastructure directly or limiting cost recovery from residential ratepayers. But the trend remains toward socialized costs, creating real economic burdens for households already struggling with energy affordability.

Water and Environment

Data centers need water. Lots of water. And in regions facing water scarcity, competition between data centers and traditional agricultural users is intensifying.

Evaporative Cooling Consumption

Most data centers use evaporative cooling systems that spray water over hot air to remove heat. The water evaporates, taking heat energy with it—an efficient cooling method, but one that consumes enormous volumes.

A typical consumption rate is 1-2 million gallons per megawatt per year. A 1 GW facility therefore consumes 1-2 billion gallons annually—enough to serve a city of 50,000 people. Unlike electricity (which can be metered and billed), evaporated water is simply gone, unavailable for any other use.

Groundwater vs. Surface Water

Data centers source water from municipal supplies, surface water bodies, or groundwater wells. Each approach creates different impacts:

• Municipal water: Competes with residential and commercial users, requiring expansion of treatment capacity
• Surface water: Affects river flows and downstream users, subject to environmental permits
• Groundwater: Depletes aquifers, potentially affecting agricultural wells and long-term water security

The Arizona Case

Arizona provides a stark example of water conflicts. The state has approved numerous data center projects in the Phoenix area despite being in the midst of a decades-long drought. The Colorado River, which supplies much of Arizona's water, is overallocated—existing users already claim more water than the river provides in most years.

Agricultural users, who face restrictions and mandatory conservation, have protested data center water permits. Why should tech companies receive water allocations when farmers must leave fields fallow?

The tension is economic and political. Data centers pay higher rates per gallon than agricultural users, generating more revenue for water utilities. They provide tax base and some jobs. But they don't produce food, employ large workforces, or support the rural communities that have depended on water access for generations.

The Water Rights Question

In the American West, water rights follow complex legal doctrines—prior appropriation ("first in time, first in right") and beneficial use. Data center water consumption doesn't fit neatly into traditional categories. Is cooling computer servers a "beneficial use" comparable to growing crops or supplying drinking water?

Courts and regulators are only beginning to grapple with these questions. The answers will shape where data centers can locate and what social license they maintain in water-scarce regions.

Visual and Noise Impact

Data centers are large, industrial-looking buildings that don't blend into rural landscapes. And they're loud.

Facility Scale and Visibility

A gigawatt-scale data center occupies 200-400 acres—roughly half a square mile. The buildings themselves are typically 200,000-500,000 square feet, rising 40-60 feet high. They're surrounded by:

• Parking lots for employee and visitor vehicles
• Electrical substations with transformers and switching equipment
• Cooling towers or air handling units
• Security fencing, often 8-10 feet high with camera systems
• Loading docks for equipment delivery
• Backup generator buildings

The aesthetic is industrial, not pastoral. In communities that value agricultural character or natural scenery, data centers represent jarring visual intrusions.

Backup Generator Testing

Data centers maintain diesel generators as backup power sources. These generators must be tested regularly—typically monthly, for several hours. During testing, the noise is substantial. Residents a quarter-mile away report hearing the rumble of dozens of generators running simultaneously.

Some facilities test at night or on weekends to minimize disruption. Others run tests during business hours. Local noise ordinances often don't anticipate industrial operations of this scale in agricultural areas, creating regulatory gaps.

Cooling System Noise

Cooling equipment runs 24/7, generating constant low-frequency hum from fans and pumps. For nearby residents, this can be particularly disruptive at night when ambient noise levels are low. The noise doesn't compare to a highway or factory, but it's noticeably different from the quiet of rural areas.

Lighting and Security

Data centers operate continuously and require extensive security lighting. The facilities are essentially lit like daylight all night, every night. For communities that have never had industrial neighbors, the light pollution can be striking.

Some facilities use downward-focused lighting and landscaping screens to minimize off-site impacts. Others prioritize security visibility over neighbor relations. Local regulations, where they exist, vary widely in their requirements.

Construction Period

The 2-3 years of construction bring disruption that communities often underestimate when approving projects.

Traffic and Road Damage

Building a data center requires moving massive amounts of material: concrete, steel, electrical equipment, cooling systems, and eventually the IT hardware itself. Heavy trucks make thousands of trips over roads designed for agricultural traffic.

Rural roads deteriorate under this stress. Potholes multiply. Pavement cracks. Dust becomes a constant nuisance in dry seasons. Some developers agree to road maintenance or reconstruction as part of development agreements. Others leave municipalities to cover repair costs from general funds.

Worker Influx Effects

Peak construction crews can number 1,500-2,500 workers. Where do they stay? Rural areas often lack hotel capacity for such influxes. Workers may rent local homes, fill available apartments, or commute from distant cities—adding to traffic congestion.

Restaurants and convenience stores see temporary business booms. But these are short-lived, ending when construction completes. Some businesses expand to serve construction workers, only to face reduced demand when the facility opens and the permanent workforce proves much smaller.

Dust, Noise, Disruption

Construction sites generate noise from 7 AM to 5 PM (or longer) five or six days a week. Pile driving for foundations. Diesel trucks idling. Backup alarms beeping. Concrete being poured and smoothed.

Dust from excavation and grading carries on the wind, settling on neighboring properties. In agricultural areas, dust can affect crops and livestock. Residents complain about needing to wash vehicles and windows constantly.

These impacts are temporary, but "temporary" means 2-3 years—a significant portion of a child's elementary school years, or an elder's retirement.

Long-Term Considerations

What happens in 20 years? The question receives little attention during approval processes, but the long-term trajectory of data center facilities raises important questions for communities.

Equipment Obsolescence Cycles

Server equipment inside data centers becomes obsolete on 5-7 year cycles. Every generation of AI hardware offers dramatic performance improvements, making previous generations economically inefficient to operate.

Facilities can be refreshed with new equipment indefinitely—the building and infrastructure remain valuable even as internal hardware changes. But this isn't guaranteed. If technology shifts toward different architectures or if a particular location loses competitive advantage, facilities can be abandoned or repurposed.

Facility Closure Scenarios

What if a data center closes? The building can potentially be sold to another operator or converted to different industrial use. But the specialized design—massive electrical capacity, sophisticated cooling, high security—doesn't translate easily to other purposes.

Communities that provided tax incentives based on long-term operation promises face revenue losses. Workers lose jobs. The industrial site remains, but without the economic activity that justified its approval.

No one knows how likely these scenarios are because the hyperscale data center industry is relatively young. The oldest major facilities date from the 2000s and remain operational. But the unprecedented scale and specialization of AI-optimized facilities creates new risks.

Community Identity Changes

Rural communities define themselves through agriculture, natural resources, or historical industry. Becoming "data center alley" represents a fundamental identity shift.

Is this good or bad? There's no single answer. Some communities embrace economic diversification and the tax revenue that comes with it. Others feel that the transformation happens to them, not with them—that decisions are made by distant corporations and state officials without meaningful local control.

The facilities are undeniably part of the landscape now. How communities integrate them—or resist them—will shape American rural development for decades.