In Data Center Development the Abatement Is a Rounding Error
On July 22, OpenAI announced a $20 billion data center campus in Effingham County, Georgia. 1,400 acres inside a privately developed logistics park outside Rincon. 3.2 gigawatts from Georgia Power under a 25-year contract, delivered in phases from 2028 through 2032. A 50% property tax abatement for 15 years. Talks with the industrial development authority started last November. The next day, nearly 1,000 residents packed an open house to ask about water and power and noise. The zoning amendment that made data centers a permitted use in that county was contained inside a document that ran 771 pages. Effingham County is now standing up a community compact with an annual independent audit. That is the right instrument. It is just arriving after the signatures.
The sequence is worth digging into: The power contract, the abatement and the zoning change were all finished before the community was in the room. There is nothing illegal in that order. It just means the public dollars were committed before anyone independent tested the numbers under them.
The day before that announcement, El Paso did nearly the exact opposite. After nearly six months of research and public engagement, the city council adopted a data center framework. Future hyperscale projects need a special permit with public hearings. They have to meet tougher environmental standards. And they get no local economic incentives. This is not a ban, permits are still available, just without the local subsidy. In the same week, Coffee County in Tennessee, Pocono Township in my home state of Pennsylvania and Brookhaven in New York all tightened their own rules, and Brookhaven did it with no applications pending. That path is slower and it will cost a deal now and then. It also gets the projection tested before the public money is committed to it.
Then the World Cup numbers landed.
The tournament ended July 19. Card spending across the 16 host cities came in up 5.4%, with spending by non-local visitors up more than 17%. But 70% of hotels in Dallas and Houston booked below their World Cup expectations. Houston’s mayor said plainly that the city did not see the occupancy that had been projected. Toronto occupancy fell 12% for a tournament week and Vancouver fell 21%. New York’s comptroller put city costs at $70 million against no more than $55 million in new tax revenue.
In every one of these stories, somebody committed public resources against a number nobody tested independently. Effingham County is looking at $320 million of water infrastructure underwritten against a private build schedule that runs to 2032. The host cities built stadium and district investment on impact studies that the actual data contradicted within a week of the final. What is different about El Paso is the sequence. They did the analysis in public, before an applicant was standing at the counter, and reached a conclusion they could defend afterward.
The instinct in this field is to argue about how much a community should give. That is the wrong argument. At $20 billion and 3 gigawatts, the abatement is a rounding error and the interconnection queue is the whole deal. Generosity and restraint are both beside the point. What separates the communities that do well from the ones that get run over is a process, the ability to test a projection before they sign it.
What does testing a projection actually mean? Take the base case and ask what it rests on. Jobs, visitor spend, absorption, tax capture, each one is an assumption until it is checked against something that already happened. The host cities’ impact studies were never measured against the last comparable event. Effingham’s water plan was never measured against a build schedule the county does not control. A real test is run by someone with no stake in the answer, it happens before the money is committed, and it produces a figure the community can defend after the announcement fades. An applicant’s pro forma and a signing deadline are not that.
Find out where your community sits in the interconnection queue. Read your own zoning ordinance for what a data center is currently permitted as, and do it before somebody files. And when a number only works in the base case, treat it as marketing.
By Chuck Peters
Advisor, ExecutivePulse | Chair, Government Affairs Committee, Erie Regional Chamber | Board Member, Infinite Erie & Ben Franklin Technology Development Authority | Managing Partner, Altair Holdings.