Presentation Illuminates Data Center Development, Municipal Challenges

By BILL BELLEN
OTSEGO COUNTY

During the October 7 meeting of the Otsego County Board of Representatives, Assistant Director of Planning Trevor Fuller delivered a 45-minute informational presentation on artificial intelligence data centers. The report—organized by Planning Director Tammie Harris, who was unable to attend the meeting—compiled her department’s research into the potential benefits and impacts of data centers on rural communities across the country.

The report was largely conducted in response to the public outcry that followed the Eco-Yotta Inc. proposal to construct an AI research data center in the Town of Oneonta. The public discussion and negotiations process conducted by the town indicated to the Planning Department that more knowledge was needed on data centers to better inform future regulations and decision-making processes in the county. Fuller clarified that none of the individuals who composed the report are experts, but that they wanted to learn more about the strategies municipalities can take when approached with data center development and to share those strategies with the public.

Fuller explained that data centers are conventionally defined as facilities that house network equipment that can store and transfer large volumes of digital data, run “the cloud,” and support web applications.

He broke down the scale of data centers into four categories based on footprint and energy consumption.

Edge facilities are the smallest, offering a supplemental boost to service capacity for a local area. Enterprise centers are for a particular company, such as a medical health center, that may need stronger computing power for research or high volumes of data. Colocation facilities are mid- to large-scale developments utilized by multiple companies that rely on the data services provided by the single complex. Finally, hyperscale data centers are the ones that often make news headlines, having massive footprints and housing the infrastructure needed for cloud hosting and AI. Fuller noted as a point of comparison that 1 MW powers roughly 1,000 homes.

Fuller shared that data center construction increased 188 percent in a single year, thanks largely to the buildout of AI infrastructure. Most existing data centers are in urban areas, while many of the sites that have been proposed in recent years are in rural regions. This is driven by the principle needs of large-scale data center development, those being land, abundant water and electrical capacity.

“Rural communities are really the hotspot right now for data center development,” Fuller said. “We have the space, [and] we certainly have the water.”

Data centers currently account for roughly 4.4 percent of U.S. energy consumption, a statistic that could triple by 2028. The facilities need proximity to transmission lines and a reliable 24/7 grid. Fuller said that with much of the U.S.’s energy infrastructure aging, ratepayers are often the ones paying for grid upgrades that come with these developments.

Fuller said one ChatGPT prompt consumes 0.34 watt-hours of energy and 0.322 mL of water, statistics that compound immensely when considering the fact that billions of prompts a day are given to just ChatGPT models alone. The water consumption of data centers equates to the water use of 6-10 million Americans per year, while the carbon emissions from powering these sites is expected to be equivalent to 5-10 million additional cars on the road by 2030.

Concerns have also been raised regarding the low frequency noises often emitted from these facilities, including generator humming, security lighting and sometimes even the servers themselves. There has been research into how these noises may negatively affect animal migration patterns and habits, and it has been shown that the decibel levels often recorded may be harmful to human health and the body’s circadian rhythm.

Despite these evident concerns, Fuller said that it is still important for municipalities to conduct thorough cost-benefit analyses when presented with a data center proposal in their community.

“These things are going to be proposed,” Fuller noted. “They are going to be developed, to some extent, and so municipalities should get ahead of it rather than scrambling once perhaps a hyperscale shows up as a proposal.”

Proposals across the state are highly variable in size, and zoning often does capture them in the same way as other industrial sites because of their energy usage and 24/7 operation. Fuller highlighted a Community Investment Framework created by Empire State Development that municipalities can use in negotiations. The framework includes a number of negotiating levers that can be pulled by municipalities, including the condition that every megawatt hour of demand required by a new facility equates to $1 million put toward the community by the developer in the form of public infrastructure, services or amenities.

When municipalities have site proposals brought before them, Fuller said they can respond in a number of ways. One approach is the course of action the Town of Oneonta took, using moratoria to give the municipality time to establish proper regulations. Fuller said outright bans on data center construction have not been as successful due to risk of lawsuits. He also emphasized the importance of Community Benefit Agreements, which can be used to negotiate with developers and bring tangible benefits to the community and compensation for any negative developmental impacts. Fuller added that it is very important to not sign nondisclosure agreements with developers in order to ensure transparency between the company and government, as well as the government and public.

Fuller said that Harris is developing an online hub for municipalities and the public to reference for general information on data centers, which will include links to documents with guidance on decision making.

As the presentation wrapped up, Fuller answered a few questions from the board regarding the county’s role in disseminating information about data centers and best ways forward for local municipalities.

“Something [towns] really need to think about is how might we need to adjust our laws and local regulations, not because we love data centers or despise them, but [because] we recognize they are a real development potential,” Fuller responded. “Some communities have really lost. Some have done well, in my opinion, but that means being very specific about what benefits you’re getting.”