Attracting Data Centers: A Guide for Economic Development Organizations

Data center site searches are usually confidential and fast. A site selector may contact a state or regional organization with a short brief: a megawatt load, an acreage range, a schedule and a few requirements on fiber or water. The organizations that stay in the search are the ones that can answer quickly with accurate information.

• Which sites can support the load, from which substations, and on what timeline?
• How much buildable acreage does each site have, and who owns it?
• Is the use allowed under current zoning, and what is the approval process?
• What fiber, water and sewer service is available?
• What incentives apply, and what are their conditions?
• How has the community responded to similar projects?

The site selection criteria guide shows how developers weigh these factors, and hyperscale, edge and colocation site needs explains why the answers vary by project type.

Most industrial parks were planned for manufacturing or logistics. They may have good roads and water but not the transmission access or contiguous acreage a data center needs. Screening an inventory against data center criteria shows which sites are worth promoting and which are not.

A useful inventory records, for each site: buildable acreage, distance to transmission and the voltage, nearest substations, serving utility, zoning, ownership and willingness to sell, fiber routes, and water and sewer providers. Our guide to screening a land portfolio describes how to do this at scale, and gross vs. buildable acreage explains why stated acreage often overstates capacity.

Some preparation makes a site meaningfully more competitive. The table below lists common steps, why they matter and who usually leads them. The lead varies by state and by how the organization is structured.

The power step deserves the most attention. Read the large-load interconnection process and our guide for utilities to understand what utilities need before they can give meaningful answers.

The single most useful thing an economic development organization can bring to a data center search is a reliable read on power. That requires a working relationship with the utilities that serve its sites, built before any specific prospect appears.

• Know which utility serves each priority site, and where service territory boundaries fall.
• Understand, at least generally, which substations and transmission lines near those sites have room and which are constrained.
• Learn how each utility handles large-load requests: who to call, what information it needs, and how long a preliminary answer usually takes.
• Share the site inventory with the utility, so its planners can flag sites that cannot be served soon.
• Agree on how confidential prospect information will be handled between the organizations.

Utilities cannot promise capacity without a study, and they are right to be careful. But many can say which areas are more or less constrained. That alone helps an organization focus its inventory and stop promoting sites that will not survive a developer’s first call to the utility.

Many local codes do not mention data centers. That leaves developers to fit the use into another category or seek a special use permit, which adds uncertainty for everyone. Clear standards for setbacks, noise, generators, lighting and screening can make approvals more predictable and give residents a clearer picture of what to expect. See zoning for data centers and noise, setbacks and buffers.

Some communities respond to fast growth with pauses or new restrictions. Developers screen for these, so economic development staff should know where local policy stands. Moratoriums and local restrictions explains what they look for. For large, multi-phase projects, a development agreement can set terms on both sides.

Incentives can influence a decision between otherwise comparable sites, but they rarely overcome a power or land problem. Common forms include sales and use tax treatment on equipment and property tax abatements, with structures that vary by state and locality. Data center tax incentives covers how they work and what conditions usually attach.

Be candid about benefits and impacts. Data centers can add significant tax base and bring large construction workforces for a period, but permanent employment is modest compared with the size of the investment. They also bring questions about noise, water, power costs, transmission lines and land use. Communities that set those expectations early tend to have smoother approvals. See community engagement for data centers.

Residents often ask whether a large new load will raise their electric bills or strain local water supplies. Those are fair questions, and the answers depend on the utility’s tariff structure, how upgrade costs are allocated and the project’s cooling design. Economic development staff do not need to answer them alone, but they should know who can: the utility for rates and cost allocation, the water provider for supply, and the developer for its design choices. Bringing those parties to early public conversations tends to build more trust than general reassurance.

• Promoting sites as data center ready without a utility capacity conversation.
• Listing gross acreage and ignoring floodplain, wetlands and easements.
• Overstating job creation, which can undermine community trust later.
• Offering incentives without clear performance terms.
• Leaving zoning standards undefined until a specific project files.
• Sharing confidential prospect details too widely.