Chapter 2 of 10
What You're Up Against
The developer has done this dozens of times. This book closes the gap.
Summary
Before you can fight effectively, you need to understand the industry you are up against. This chapter maps the players, the money, and the promises.
The data center industry has three main groups of players. First are the tenants — the big tech companies like Amazon, Microsoft, Google, Meta, and Oracle that actually use the servers. These hyperscalers have committed over $440 billion in capital spending. Second are the builders — companies like Digital Realty and Equinix that construct and operate the physical buildings. Third is the money — private equity firms like Blackstone that pour billions into data center investments because they see guaranteed returns.
Your community was chosen for a reason, and that reason is almost always power. Surveys show that 84 percent of data center developers rank access to cheap, reliable electricity as the number one factor in choosing a site. If your area has affordable power, available land, and a cooperative local government, you are on someone's list.
Developers make three promises: jobs, tax revenue, and economic growth. Each one deserves scrutiny. The jobs promise sounds good, but a billion-dollar data center typically creates only 30 to 50 permanent positions. That is a fraction of what a factory, hospital, or school of the same size would provide. The tax revenue promise also falls apart under examination. Virginia lost $1.6 billion in tax revenue through data center exemptions. Every state audit that has examined data center tax breaks has found a net loss to taxpayers. The economic growth promise is the vaguest — data centers are enclosed campuses that buy almost nothing locally.
The costs, on the other hand, are real and measurable. Electricity rates go up for everyone because the utility spreads the cost of grid upgrades across all ratepayers. Water supplies get strained. Property values near data centers can decline. Air quality suffers from backup diesel generators.
The chapter explains how the deal gets done: there is an information gap between the developer, who has done this dozens of times, and the community, which is doing it for the first time. Closing that gap is the purpose of this book.
The central question to keep asking: if the optimistic projection is wrong, who bears the downside?
Key Question
"If the optimistic projection is wrong, who bears the downside risk?"
Action Plan
Your checklist for this chapter
- 1
Identify the three players
Find out who the tenant is (the tech company using the servers), who the builder or operator is, and who is financing the project. Each has different pressure points.
- 2
Examine the jobs promise
Ask for the exact number of permanent, full-time jobs with salary ranges. Compare the jobs-per-dollar ratio to other industries. A billion-dollar data center creates 30 to 50 jobs; a hospital or factory creates far more.
- 3
Examine the tax revenue promise
Request a full accounting of tax breaks, abatements, and exemptions. Ask what the net tax impact is after incentives. Look for independent audits in other states.
- 4
Calculate the costs to your community
Estimate the impact on electric rates, water supply, property values, and air quality. Ask the utility what grid upgrades would be needed and who pays for them.
- 5
Ask who bears the downside
For every promise the developer makes, ask what happens if they are wrong. If jobs do not materialize, who loses? If the company leaves in ten years, who pays to clean up?
Checklists & Step-by-Step Guides
Before the First Hearing — Get Answers to These Five Questions
- Ask how many permanent jobs the facility will create — not construction jobs — and what the cost per job is in tax breaks.
- Ask who funded the economic impact study, whether it subtracts the cost of tax breaks from projected revenue, and whether anyone independent has reviewed it.
- Ask for peak water and electricity numbers, not averages — and ask who pays for grid upgrades.
- Ask what the tax abatement is worth and how long it lasts, then calculate what the property tax bill would be without it.
- Ask who the actual owner is — not the LLC on the permit application — and whether there is a decommissioning bond if the company leaves.
Reference Tables
Three Kinds of Companies in Every Data Center Project
| Type | Who They Are | Role |
|---|---|---|
| Tenants (Hyperscalers) | Amazon, Microsoft, Google, Meta, Oracle, plus AI companies: CoreWeave, xAI, OpenAI | Run the software inside. Control about 63% of global cloud revenue. |
| Builders (Operators) | Digital Realty, Equinix, QTS, Compass, Vantage, CyrusOne, Switch, Aligned, Stream, CloudHQ | Build and own the building. Lease space and power to hyperscalers. |
| Money (Private Equity) | Blackstone (owns QTS, $70B+ in DC assets), infrastructure funds, pension funds | Provide capital and set deal terms. Usually invisible to the community. |
The Uncertainty Test
| Claim Area | If Projection Is Right | If Projection Is Wrong — Who Pays? |
|---|---|---|
| Jobs | 100 people have good jobs. | Facility creates 30 jobs instead. Tax break is already locked in. |
| Electricity | Rates stay stable. | Utility allocates grid upgrade costs to all customers. Every household pays more. |
| Water | Supply holds at projected levels. | Drought year. Data center contract does not change but reservoir level does. |
| Tax revenue | Community receives $50 million annually. | 80% abatement makes real payment $10 million. Locked in for a generation. |
| Technology | Demand continues. | Market shifts, facility becomes stranded asset. Who pays to demolish? |
State Tax Break Costs
| State | Cost | Notes |
|---|---|---|
| Virginia | $685M (2023), $1B (2024), $1.6B (2025) | Gets back 48 cents for every dollar given up. |
| Illinois | $10M (2020) → $370M (2023) | 3,600% increase in three years. |
| Georgia | Loses 60–70 cents on the dollar | 70% of construction would have happened without any tax break. |
| Ohio | 13 agreements: $5.1B investment, 356 jobs | $965,000+ in subsidies per permanent job. |
Warning Signs
- When the developer says '500 jobs,' ask: how many are permanent? Construction jobs are temporary (18–24 months).
- The developer's economic impact study rarely mentions the tax breaks.
- Most data center water contracts guarantee a fixed daily allocation that does not change in a drought year.
- Not a single state tracks both jobs promised and jobs delivered.
- Fewer than half the states with incentive programs disclose how much revenue they give up.
- Communities targeted are often small townships and rural towns that lack zoning codes and negotiating experience. That is not an accident. It is site selection strategy.
- QTS told Iowa supervisors their data center buildings have a 20-year lifespan. Twenty years from now, who owns the cleanup?
Questions to Ask
- 1. How many permanent jobs will the facility create — not construction jobs?
- 2. What is the cost per permanent job in tax breaks?
- 3. Who commissioned and paid for the economic impact study?
- 4. What are peak water and electricity numbers, not averages?
- 5. Who pays for grid upgrades — ratepayers or the developer?
- 6. Who is the actual owner — not the LLC on the permit application?
- 7. Is there a decommissioning bond if the company leaves?
- 8. If the optimistic projection turns out to be wrong, who absorbs the loss?
Key Facts
Hyperscaler companies have committed over $440 billion in capital spending on data centers.
84 percent of data center developers rank access to power as the number one site selection factor.
Virginia lost an estimated $1.6 billion in data center tax exemptions in 2025 alone — up from $685 million in 2023.
Every state audit that has examined data center tax breaks has found a net loss to taxpayers.
A typical data center creates 30 to 50 permanent jobs per billion dollars invested.
Case Studies
Virginia's Escalating Tax Loss
Virginia became the data center capital of the world, but the cost of its sales tax exemptions ballooned from $685 million in 2023 to $1 billion in 2024 to $1.6 billion in 2025 alone. A JLARC audit found the state gets back just 48 cents for every dollar given up.
Resources
State business registry
Search for the registered agent of the LLC on the permit application to trace ownership.
State environmental agency website
Find the air permit application for backup generators.
Search by state to see which companies received tax breaks, how much, and what they promised.
Key Quotes
"If the optimistic projection is wrong, who bears the downside risk?"
"That imbalance is not an accident. It is the business model."
"The developer has done this dozens of times. Your community is doing it for the first time. This book closes the gap."
Glossary Terms in This Chapter
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