Department.Technology

Tag: Large Load Tariffs

  • How a Data Center Deal Actually Gets Made, and Where the Public Gets Left Out

    By the Founders, Department of Technology | San Diego, California | November 13, 2026

    Most data center deals are shaped long before residents hear a word. Here is a step-by-step walk through how a typical one comes together, who decides at each stage, where the public is shut out, and what an accountable technology leader would change.

    No two deals are identical, and we do not claim every project follows this path. Some officials negotiate openly, and some developers welcome scrutiny. But the pattern below appears again and again in public records and investigations, and understanding it is the first step to changing it.

    Step 1: A site is chosen, and it is not about you

    Data center developers pick locations for electricity access, water rights and fiber connectivity, not for population or local jobs, according to a Quartz analysis of the industry’s land-acquisition playbook. Your community may be on a list for reasons no one has told you.

    Who decides: the developer. Where the public is left out: everywhere; no one has been told. What would change: a technology leader would know the utility’s pipeline and whether your community is on it (see our first-year guide).

    Step 2: Land is quietly secured

    The next move is usually to lock up land. The most common tools are, according to that same analysis, shell LLCs, nondisclosure agreements, land options that tie up parcels before public review, and intermediary buyers acting for unnamed principals. The practice is old. In 2019, the Washington Post reported that Google had used shell companies in negotiations with at least five cities, and in Iowa created one LLC for the land sale and another for the development deal.

    There is a legitimate reason for some of this. Once a famous buyer is identified, land prices can jump sharply; the article cites Disney in Florida, where prices rose more than 1,000 percent. Sellers deserve a fair price, and developers deserve a fair negotiation. The question is how long secrecy should last and who else is kept out.

    Step 3: Officials sign NDAs, and projects get code names

    Local officials are then asked to sign confidentiality agreements. An NBC News review of more than 30 data center proposals across 14 states found that in most cases local officials signed NDAs and dealt with what appeared to be shell companies. In Louisiana, public records requests turned up 54 NDAs signed by elected officials since early 2024, and the agreements covered projects under code names like “Project Lightning.” In Minnesota, a project near Hermantown, code-named “Project Loon,” was identified as a data center only after the Star Tribune obtained public records, by which point the city had already changed land use plans and carried out preliminary environmental review.

    Who decides: a handful of local and state economic development officials. Where the public is left out: the officials who sign cannot discuss it, even with their own colleagues or constituents. What would change: a policy that the jurisdiction does not sign NDAs on development matters, with trade secrets protected by narrower means.

    Step 4: The utility is asked for power

    In parallel, the developer asks the utility for a connection. AEP Ohio, for example, charges a one-time fee of $10,000 to $100,000 for each load study and requires it to be paid within 45 days or the customer forfeits its place. These queues can be full of placeholders. AEP Ohio was facing 30 gigawatts of potential new load before its data center tariff, and one analysis found that its pipeline fell from roughly 30 GW to 13 GW after the tariff took effect.

    Who decides: the utility, under rules set by the state commission. Where the public is left out: the pipeline is rarely published, so local officials may not know which requests are real. What would change: public reporting of large-load requests by jurisdiction, and a local seat in the commission proceeding.

    Step 5: Incentives are negotiated

    The developer then seeks tax relief. In the Midlothian, Texas, case the Post described, Google reportedly used a shell company to negotiate a $10 million tax incentive with local officials. At the state level, thirty-eight states offer incentives, and in Ohio the break cost state and local governments about $2 billion last year, according to Policy Matters Ohio, far more than forecast. Those figures come from the incentive programs themselves, not from one negotiation, but they show the scale of what is decided in small rooms.

    Who decides: state and local economic development officials. Where the public is left out: the cost-benefit analysis, if one exists, is often not public. What would change: published cost-benefit analyses before approval, and clawbacks if promises are missed.

    Step 6: Land use is approved

    Only now does the public typically see a rezoning request or a site plan. If data centers are allowed by right, there may be no hearing at all. By this stage, the land is secured, the utility has been approached and the incentives are drafted, so the room to say no is small. In Hermantown, by one account, officials turned away questions from nearby residents about whether the project was a data center.

    Who decides: the planning commission and the county board or council. Where the public is left out: the decision arrives late and often looks finished. What would change: special-use permits instead of by-right approval, and a requirement for a public hearing with full disclosure before anything is signed.

    Step 7: The power contract is signed

    The utility and the developer sign a service agreement. In states with large-load tariffs, these carry minimum bills, long terms and collateral. Dominion’s Virginia tariff, for example, calls for 14-year minimum contracts and $1.5 million per megawatt of collateral. Elsewhere, the terms are weaker or negotiated one at a time. Who bears the risk if the facility closes or never fills is a question of contract design, and most residents never see the contract.

    Step 8: Construction, jobs and revenue

    Then the buildings go up. The jobs promised are mostly short-term. A Reno facility’s business records estimated 73 permanent jobs against more than 4,000 temporary construction jobs. An Illinois study projected that $57 billion of new data center investment would create 121,000 jobs, but only 2,800 would be direct, permanent positions, or about $20 million of investment per permanent job. Brookings researchers found effects of roughly 100 to 200 jobs at a typical affected county, along with a modest increase in home prices of 2 to 5 percent, and noted the effects vary by facility type.

    On the other side of the ledger, the tax revenue can be large. Loudoun County, Virginia, reports that data centers produce 38 percent of its general fund revenue on about 4 percent of its commercial land.

    The pattern

    Laid end to end, the steps show a consistent shape: the biggest decisions happen early, in private and without a public voice, and the public hearing arrives after the key commitments have been made. That is not necessarily bad faith. Many officials believe they are protecting a competitive negotiation, and many developers are responsive once the project is public. But a system that depends on goodwill at every step will not protect residents when goodwill runs out.

    The case against our case

    • Officials say NDAs are necessary. Louisiana’s economic development secretary told NPR that NDAs are “fundamental for economic development”, allowing the state to compete. Her point deserves weight. On the other hand, a parish president in the same state said economic development does not require NDAs, chose not to use them, and still saw a $10 billion data center built.
    • Early secrecy can protect sellers. As noted above, a named buyer can inflate land prices, so a limited period of confidentiality may serve landowners. We would limit it to land transactions and end it before any public vote.
    • The jobs numbers are disputed. A Maryland Tech Council study, for example, estimated that a typical 800,000-square-foot data center would support nearly 500 permanent jobs, a far higher figure than other studies, according to one review of the evidence, which also cites a Virginia state audit that found far fewer.
    • Many deals are fine. Some projects are welcomed by communities and deliver what they promise. The goal is not to stop deals but to make sure the public can see them before they close.

    What to do with this

    If you serve on a council or board, ask where your community is in this sequence, and who has signed what. If you are a resident, request the NDAs and incentive agreements under your state’s public records law. And if you are a candidate, tell voters who in your government is responsible for each of these eight steps. Right now, the honest answer in most places is that nobody is responsible for all of them. Our proposal is at department.technology/.

  • A Technology Leader’s First Year: A Guide for Counties and Cities

    By the Founders, Department of Technology | San Diego, California | November 13, 2026

    Most county boards and city councils are being asked to approve the largest infrastructure projects in their history with a planning staff built for strip malls. This is a practical first-year guide for the person whose job it should be to fix that.

    Our proposal calls for elected technology leaders at the local and county level. What would one actually do? Everything below has been tried somewhere, in communities of different sizes and politics. We cite examples as examples, not endorsements, and we flag where the evidence is thin. Local law varies, so check with your county attorney before adopting anything binding.

    Months 1 to 3: Find out what is coming, and stop the clock

    Inventory the pipeline. Ask your utility how many large-load connection requests are sitting in your territory, how many megawatts they represent, and how many are speculative or duplicated. This matters. AEP Ohio was facing 30 gigawatts of potential new load before it adopted a data center tariff, and one analysis found its pipeline fell from roughly 30 GW to 13 GW after the tariff took effect, suggesting much of the reported demand was speculative or duplicated across utilities. A local government that cannot tell the real projects from the placeholders cannot plan.

    End by-right approval. In March, the Loudoun County Board of Supervisors eliminated by-right zoning for data centers. Harrisonburg, Virginia, moved data centers to special-use permits, which routes proposals through public hearings and discretionary review. A Brookings researcher has recommended never allowing by-right data center development. Where a pause is needed, treat it as a tool with a work plan and an end date. A Federation of American Scientists review found that local moratoria share the same stated rationale: the zoning code does not yet define data centers, so the jurisdiction needs time to study impacts and draft rules.

    Ask the standard questions. Cuyahoga County’s playbook urges communities to ask about power demand, water use, grid upgrades, backup generators, jobs, infrastructure costs and decommissioning plans. Put those questions in writing and make every applicant answer them in public.

    Months 4 to 6: Write the rules

    Linn County, Iowa, adopted one of the most detailed local frameworks so far. Its ordinance requires a water study as part of the zoning application and a water-use agreement with the county before construction, and it also covers noise, light, road use and decommissioning bonds. The board finalized it unanimously after three readings and multiple public hearings. In Scott County, Kentucky, a draft ordinance would bar data centers from prime farmland and wetlands, require developers to pay for water system upgrades, and require a cleanup bond.

    One caution. Jefferson County’s committee worked to keep its draft legally defensible under recent Supreme Court rulings on land-use exactions. In general, what you demand has to relate to the project’s actual impacts. Have counsel review the ordinance before you adopt it.

    Months 6 to 9: Get a seat in the rate case

    Your county does not set electricity rates, but it lives with them. The state utility commission does the setting, and many have recently created separate rules for the largest customers. According to the Edison Electric Institute, 23 states had approved at least one large-load tariff as of May 2026, with seven more pending. Ohio’s AEP tariff applies to data centers above 25 megawatts, requires them to pay at least 85 percent of contracted capacity and commits them to initial contracts of at least twelve years. Dominion’s Virginia tariff sets 14-year minimum contracts and $1.5 million per megawatt of collateral. A Lawrence Berkeley National Laboratory brief lists minimum billing demand, exit fees and collateral as common building blocks.

    Find out whether your utility has such a tariff and, if not, whether a proceeding is pending. In many states, local governments can file comments or intervene, so ask your counsel. A county technology leader’s job is to make sure the people who live there are represented where the cost allocation is decided.

    Months 7 to 9: Negotiate in public

    Use community benefit agreements, carefully. The Federation of American Scientists found only eight data center community benefit agreements when it looked. Lancaster’s covers transparency, water, energy, noise, public works and decommissioning, but the reviewers noted it leaves much of the substance to be decided later, and that tax breaks can outweigh any financial benefit a community receives. The lesson is to write numbers and enforcement into the agreement now.

    Do not sign NDAs. Bloomberg Law reports that Microsoft is working to end any active NDAs governments have signed. Proposed Minnesota legislation would require at least two public hearings and disclosure of key details, including the company behind a project. You do not need to wait for a state law. A local government can adopt a policy that it will not sign NDAs on development matters and will post proposals, incentive terms and cost-benefit analyses on its website.

    Months 10 to 12: Budget for the upside and the downside

    Data center revenue can be a windfall, and it can be a trap. We cover the budgeting in a companion piece, “What Every County Treasurer Should Model Before AI Layoffs.” For your first-year report, the minimum is this: publish how much of your general fund depends on data centers, what happens to that revenue if equipment values fall, and what reserve you are holding against it.

    Then publish the whole first year in plain language: projects reviewed, conditions imposed, public hearings held and agreements signed.

    Your first week

    1. Ask the utility for the pipeline numbers. Megawatts, projects and status.
    2. Check your zoning. Is a data center allowed by right anywhere in your jurisdiction?
    3. Find out what has been signed. Any NDAs, development agreements or incentive deals.

    The case against our case

    • Data centers pay more than they cost. Speakers at a National Taxpayers Union discussion said Loudoun County receives about $26 in tax revenue for every $1 spent on services for data centers. Industry advocates argue that heavy requirements and delays can send projects, and that revenue, elsewhere. Loudoun itself credits favorable zoning and fast approvals for accelerating its growth, even though it later ended by-right approval. A good technology leader should make the process predictable and fast for projects that meet the standards, not just slower.
    • Small counties lack the expertise. A rural county may not be able to staff a water study or a rate-case intervention. That argues for shared staff across counties, or for state technical help, and we would support both.
    • Legal limits are real. Exaction rules constrain what localities can demand, and, as the FAS review shows, many agreements stay vague. This is a reason to involve counsel early, not to skip the work.
    • It might not need to be an elected office. A county could assign this to a staff director. Our view is that elected officials are accountable to voters for the tradeoffs, but a staff role is a sensible first step.

    Start with one question

    If your community is being asked to approve a data center this year, ask the person proposing it a single question: who in our government is responsible for the whole picture of power, water, land, taxes and jobs? If the answer is nobody, that is the position to fill. Find our proposal at department.technology/.