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In a few years, the city of Saline, Michigan, will have renovated its recreation center’s locker rooms, tiled the pool deck, expanded the children’s play area, installed a waterfall and constructed a lazy river. Down the road, part of OpenAI’s Project Stargate, a 2.2 million-square-foot, $43 billion data center, will hum away, churning out the next generation of artificial intelligence.
As public sentiment on data centers has soured, AI companies are leveling up their efforts to sweeten the deal for communities that host them. In Saline, that included a $10 million donation from OpenAI, Oracle and other companies for a new and improved recreation center.
In Richland Parish, Louisiana, teachers got $50,000 bonuses from Meta. Compass Datacenters forked over $15 million for a new animal shelter in Ellis County, Texas. In Florida, developers for the failed Project Tango offered to hide their building from view with a small forest of pines, palms and native shrubs. NorthPoint Development has proposed giving $10,000 to every household in Hazle Township, Pennsylvania, if it’s allowed to build a massive data center for Amazon — a dangling carrot some residents have characterized as a bribe.
Politicians from both parties are pushing the deal sweeteners too. Maryland Gov. Wes Moore’s energy office told counties to make “wish lists” for data center developers, and Ohio gubernatorial candidate Vivek Ramaswamy is pitching free electricity for towns willing to play host.
This summer’s data center backlash has underlined a glaring lack of guidance from federal and state leaders on what tech companies owe the communities they’re building in; in Washington, a growing slate of proposals range from requiring developers to procure and pay for their own power, and taxing data centers to prepare for potential AI-related job losses.
In the absence of comprehensive federal regulation, local officials are largely left to negotiate agreements with data center developers themselves. For many of the towns being targeted by developers, the scale of wealth AI companies can bring to the table could be transformative. The benefits they promise, though, rely on the success of a nascent industry that’s been met with fear and doubt. And as developers try to fight widespread distrust and opposition, even multimillion-dollar donations don’t seem to be moving public opinion.
In Michigan, Saline Township’s leadership had voted last year to block the data center development. The developer sued over the zoning decision soon after. The township settled, with officials negotiating several community benefits: a few million dollars for emergency services, farmland preservation and other community investments.
The recreation center revamp came up more casually, said Saline Mayor Brian Marl.
Once it was clear the data center would be built, Marl organized a lunch with Oracle and the other developers. He gave them a tour of the recreation center, and told them about all the work the city hoped to do on the building. Then, the Friday before the groundbreaking, he got a call at 8 p.m. — the companies wanted to give the city $10 million dollars to help with that project.
Marl says the move was an obvious attempt by the companies to ingratiate themselves in the Saline community. But it’s not clear that $10 million went very far toward that goal. Marl is still fielding calls and taking meetings with residents who are fervently trying to stop the project, even as construction moves forward.
“I don’t think it’s game-changing locally, in terms of people’s feelings toward this specific data center, or data center developments more broadly,” he said.
Some offers from developers have backfired.
In Osage County, Oklahoma, Google’s efforts to win support for a data center were thwarted when a local volunteer fire department rejected a $250,000 donation — a sum larger than the department’s annual budget — because of the community’s concerns. That project is the subject of three separate lawsuits, one involving attacks over a lack of government transparency.
City officials in Sand Springs, which annexed the land that would be used for the data center, have negotiated tax agreements and other contributions from Google for community projects. But Osage County Commissioner Steve Talburt hasn’t been impressed.
He’s refused to sign nondisclosure agreements related to the project, despite pressure from Google. The company offered the county a few hundred thousand dollars per year as a payment in lieu of taxes, Talburt said. When he and the other commissioners pushed back, the company cut the county out of the tax agreement completely.
A few weeks ago, a contractor for Google came to visit him, asking what the company could do to smooth things over. The contractor offered to put up extra money for county schools or infrastructure, Talburt said. He declined.
“Google’s just trying to throw money around to get everybody on board, and that’s not good enough,” he said. “It’s not going to make it right. And Osage County is not going to sell out.”
Many negotiations have revolved around similar informal donations or contributions from data center developers. Those aren’t always legally enforceable, said Daniel Metzger, a legal expert with Columbia University’s Sabin Center for Climate Change Law.
Anti-bribery laws make it difficult for local governments to accept benefits explicitly in exchange for approving projects. Local officials can create binding agreements for benefits that are connected to the potential harms a project may cause, regulating water and electricity use, or forcing companies to pay to improve the emergency services they may rely on.
In one of the first formal benefit agreements for a data center in the U.S., the city of Lancaster, Pennsylvania, cut a deal with developers that requires them to use only clean energy, hire locally, make yearly reports and pay $20 million dollars into community development funds.
Agreements like those are filling a gap where coordinated federal or state legislation is absent, Metzger said, especially agreements that include transparency requirements around water and energy use.
The benefit agreements can be so lucrative that some state and local officials are banking on AI companies to fund their most pie-in-the-sky ambitions. St. Louis officials got a developer to pay roughly $15 million toward public Wi-Fi across the city, among other projects. In West Virginia, where Nvidia and Microsoft are building what could be the largest data center on earth, the state’s 20-year plan published last month aims to eliminate state income tax and boost funding for local schools by attracting massive hyperscale projects.
Still, evidence that community benefit agreements lead to better situations — especially in smaller towns — is mixed, said Devashree Saha, director of the U.S. Clean Energy Economy Program at the World Resources Institute.
“Typically it’s not an even playing field between communities and developers,” she said. “It becomes difficult for community coalitions to hold the developer accountable.”
If a company goes bankrupt or sells a development to another entity and those benefits dry up, it can leave a community that was banking on financial support scrambling, Saha said.
Even without formal agreements or massive donations, a new data center can fundamentally change a place.
In Ellendale, North Dakota, a data center development has more than tripled the town’s tax base. Mayor Don Flaherty says in the next three years, it’s projected to grow from $3.5 million to $37 million.
The data center has touched seemingly every part of life in Ellendale — for better and for worse, Flaherty says. Heavy trucks have torn up the roads. This summer, about 2,600 workers are in town to construct the buildings — more than doubling the town’s population of 1,100. Flaherty says it’s been fun to meet new people, though concerns about crime and traffic have increased.
Hundreds of jobs for locals in Ellendale are on the horizon. The full-time population could grow by up to 600. With all the new tax revenue, the town is planning to upgrade the senior center and ambulance hall, refresh the downtown and work on a walking trail. Down the road, Flaherty is eyeing a new fire department building and a law enforcement center.
Meanwhile, residents are saving money on energy bills as their utility company sells more power to the data center and its profits increase, South Dakota Searchlight reported. Applied Digital, the company behind the development, is helping to finance new housing.
But rent has in some cases doubled, pushing families out of town. And there’s a constant hum at the edge of town.
Flaherty didn’t do any formal negotiation with Applied Digital — which he acknowledges could have been naive. He says he has some concern about a data center bubble bursting, leaving Ellendale behind. Mostly, though, he’s seeing the benefits.
“This is what I believe is the answer for rural America, and it doesn’t necessarily have to be data centers, but some type of project of this nature that can stimulate your economy,” he said. “I guess those are the things that outweigh the worries.”