The tricky economics of welcoming data centers
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Communities across the U.S. courting data centers face an economic bargain: billions in private investment and potentially lucrative tax revenue, alongside mounting public backlash.
Case in point: New Albany, Ohio, a 22-square-mile Columbus suburb, has spent more than a decade welcoming data centers. Today, it has roughly 40 facilities operated by Meta, Google, Amazon and others.
- The city's strategy: Offer property tax breaks while requiring data centers to generate annual revenue comparable to what office or manufacturing developments would produce.
- Some of that revenue comes from special charges that help pay for infrastructure, parks and other public improvements.
By the numbers: Those charges generated roughly $10 million in 2024, equivalent to nearly one-fifth of the city's 2024 general fund revenue.
- A single hyperscale data center generated as much revenue for the city as it would collect in local income taxes from a company with $178 million in annual payroll.
- Officials also limit water and sewer use through agreements with developers.
What they're saying: Data center revenue helped school districts avoid having to ask voters to approve new property tax levies for years, Jennifer Chrysler, New Albany's economic development director, tells Axios.
- In one case, a hyperscaler's purchase of hundreds of acres generated enough additional property tax revenue to help a local school district avoid seeking a new tax levy for three years, Chrysler says.
- That's because the company's tax break applied to its buildings, not the land itself.
The intrigue: Even a community reaping financial benefits isn't immune to residents' backlash.
- At an Oct. 22 state hearing, 32 of 37 speakers opposed a proposed gas-fired power plant for a New Albany data center, citing health and environmental concerns, according to The Reporting Project. The five supporters represented construction trade unions.
- Residents have also complained about noise from Google and Meta facilities, prompting both companies to take steps to reduce it, according to the city.
Zoom out: Ohio Gov. Mike DeWine paused consideration of new data center sales tax exemptions earlier this year as lawmakers studied the industry's massive footprint.
- Sales tax exemptions to attract data centers cost the state nearly $1.6 billion in forgone revenue in 2025 — almost 12 times initial projections, according to local news reports.
Friction point: Residents "may feel their community is getting money but they personally are paying the cost of the data centers," Brookings Institution senior fellow Darrell West tells Axios, referring to higher electricity bills.
- Data centers create construction jobs but relatively few permanent positions.
- Chrysler says years of data center construction have helped attract and retain skilled tradespeople, supporting the region's broader manufacturing growth.
Reality check: The financial payoff depends heavily on the terms local governments negotiate.
- "That's where the details of the deal matter most," says Kate German, who has studied data center agreements across the country for the Federation of American Scientists.
- Even substantial payments from developers may not offset the tax revenue communities would otherwise collect, the Urban Institute warned in a September analysis.
What to watch: Growing opposition is giving communities more leverage to negotiate with tech companies "than they had a year ago," West tells Axios.
- Voters in nearby Pataskala, Granville and Sunbury will consider measures restricting or banning new data centers in the Nov. 3 election, Axios Columbus reports.
