How data centers transform and engage with local communities

Behind every successful data center lies a powerful community story waiting to be told. Beyond the technical specs and operational metrics, your facility can transform local economies, modernize infrastructure and pioneer sustainability efforts.

In today's challenging approval landscape, communicating these benefits has become as crucial as securing power and connectivity. This article shows how highlighting your data center's community impact can overcome local resistance, accelerate approvals, and build the supportive relationships your operation needs to thrive.

As powerful engines of municipal revenue, data centers deliver exceptional fiscal benefits to local governments. In Northern Virginia, Loudoun County's expanded tax base from data centers occupied by global tech companies has significantly improved infrastructure, schools and public service while reducing the tax burden on constituents, according to Jeff Groh, Vice Chairman at JLL. Data centers now generate 38% of the county’s General Fund revenue and nearly half of the county’s property tax revenue.

Throughout Virginia, the industry paid $640 million in state taxes and $1 billion in municipal taxes in 2022. These facilities are budget goldmines for local governments. In Loudon County, a data center pays $26 in taxes for every $1 of public services it uses – far exceeding the $4 paid by manufacturing plants.

Phoenix demonstrates similar economic strength. Data center developments in Metro Phoenix (both completed and under construction) represent capital investments exceeding $10 billion, generating $863 million in state and local tax revenues during 2023. Major operators like Google, Microsoft, Meta and numerous others have established significant presence in the region.

Emerging markets are also taking notice of the benefits of attracting data centers to their regions.

"The QTS data center campus strengthens our position as a center for emerging technology," says Jeff Pomeranz, City Manager of Cedar Rapids, Iowa, "demonstrating the value of our efforts to build diverse industry clusters."

The employment impact extends beyond the facilities themselves. "In Loudoun County, for every data center job, there are three-and-a-half jobs created outside the data center," Groh explains. Virginia's data centers supported approximately 78,000 total jobs with $6.2 billion in pay and benefits in 2023, while Arizona's industry created 14,430 direct jobs and supported over 81,000 total jobs.

"There's plenty of jobs," says Mark Bauer, Vice Chairman, JLL. "I mean, I can't tell you how many campuses for the last 10 years have had just contractors working there, and those are good jobs."

Through their substantial community investments, data centers often drive significant improvements to their communities' power infrastructure. These facilities fund infrastructure upgrades that ultimately benefit local residents, strengthening electrical grids, improving reliability and accelerating the development of renewable energy resources. Local and regional utilities continue to shift the economic burden for these upgrades to the data center providers by driving initiatives to ensure that rate payers are not negatively affected.

The digital infrastructure benefits are equally substantial. Bauer highlights Phoenix as an example where technology access has visibly improved, noting that non-locals are often surprised by advanced technologies they encounter such as driverless cars. These technological developments are only possible because of the strong network infrastructure that data centers help support.

When data centers establish operations in a region, they create a gravitational pull for supporting businesses. Hyperscale facilities attract companies that provide power distribution, IT hardware, cybersecurity and consulting services. Phoenix exemplifies this ecosystem development, where major financial institutions (e.g., BlueCross Blue Shield, AMEX), tech companies (e.g., PayPal, GoDaddy), and specialized data center operators (e.g., Digital Realty, Aligned Energy) have established significant operations. These clusters of businesses attract skilled talent and revitalize previously underutilized areas.

According to the CEO of a major data center operator, when a hyperscale data center moves into a market, businesses that support its services follow. If the applications using that facility are latency-sensitive, the need for speed pushes companies to locate nearby, too.

Data centers can even attract broader retail development. It's common for residents to expect amenities like a Trader Joe's store to follow a new development in the community.

Data centers have become pivotal drivers in the transition to renewable energy. Their concentrated power demands create economies of scale that make renewable energy investments more viable. Many providers are now committing to ambitious sustainability goals that benefit the broader community.

In fact, Aligned Data Centers gets 100% of its electricity from zero-carbon renewable energy, highlighting how data center operators are leading by example, said company CEO Andrew Schapp in a Fast Company article. Major hyperscalers like Amazon, Google, and Microsoft are making significant investments in clean energy sources – including wind, solar and nuclear power – with the U.S. sustainable data center market expected to double to over $35 billion by 2029.

Beyond renewable energy, data center operators are exploring advanced environmental tools that can benefit surrounding communities. In a Data Center Dynamics article, Jérôme Totel of Data4 Group noted that these include the development of biocircular data centers, where captured CO2 is used to grow algae for recycling as biomass. These approaches demonstrate how data centers can be laboratories for sustainability innovations that extend beyond their operations.

Water conservation efforts increasingly focus on community benefit. In drought-prone regions like Phoenix, nearly all data centers built in the past decade use closed-loop and air-cooled systems requiring minimal outside water. This industry-wide shift, exemplified by providers such as QTS, Edged and Aligned Data Centers, significantly reduces pressure on local water supplies while meeting critical cooling needs. “These data centers use the same amount of water (or less) than a large office build” as referenced by the State of Virginia’s Joint Legislative Audit & Review Commission.

Data center operators are increasingly engaging with local educational institutions to develop the next generation of talent. Microsoft exemplifies this approach in Phoenix with its Data Center Academy scholarship program at Maricopa Community Colleges, supporting students pursuing data center-related degrees and certificates. Virginia has similar programs with George Mason, Virginia Tech and Northern Virginia Community College. Other operators partner with universities and trade schools to build their talent pipeline, some even retraining military veterans to fill technical roles.Data4 has developed a particularly structured approach in its partnerships with local trade schools and universities, according to Data Center Dynamics. The company's goal is to train 100 students on each of its European campuses every year. These educational programs not only create career pathways but also help demystify data centers for community members.

Beyond formal educational initiatives, data center providers are finding creative ways to integrate with their communities. For example, Data4 participates in local life by organizing events such as music festivals and open-air cinema screenings, demonstrating a commitment to being more than just a technical facility.

Some providers are emphasizing local procurement, with Data4 running a "speed-dating competition for start-ups in the area every year, selecting some to work with us," Data Center Dynamics reports. This approach creates economic opportunities for local businesses while ensuring data centers benefit from providers with detailed knowledge of local conditions.

Despite these benefits, data centers face challenges in community relations. Communities are becoming increasingly organized in opposition efforts. The days of quietly acquiring space without public engagement are over, and data center developers must now be transparent about their intentions with their projects.

Overcoming these challenges requires engagement and education.

"I think a lot of people don't understand really what a data center does," Bauer says.

To overcome this, operators need to better explain the benefits a data center brings to local communities – from tax benefits to bolstering local employment. Industry associations are playing an increasingly important role in advocacy efforts, Totel told Data Center Dynamics.

As data centers continue expanding to support growth in AI and cloud computing, their relationship with host communities will become increasingly important.

“This is such a new and dynamic industry that the public relations efforts have not kept pace with growth. With the magnitude of related investment and importance to our country’s digital future, proactive enumerating of compelling community benefits will become a greater priority” stated Groh.

The most successful providers will be those who view community integration not as an obligation but as an opportunity to create shared value through economic development, infrastructure improvement, environmental leadership and meaningful engagement.

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