Communities across America are pumping the brakes on data center development, recognizing that the decisions they make today about AI infrastructure will reshape their regions for decades to come. A Purdue University expert recently laid out the stakes for local officials in Indiana, explaining that data centers represent one of the largest capital investments in modern history, yet most communities lack the knowledge to negotiate fairly with tech giants seeking to build massive facilities in their backyards.

What Makes Data Centers So Different From Traditional Industry?

When most people think about industrial development, they picture factories from the 1970s and 1980s. Data centers are fundamentally different beasts, according to Roberto Gallardo, an associate professor at Purdue University's Center for Regional Development. He recently presented "Data Centers 101" to the DeKalb County Plan Commission in Auburn, Indiana, where officials are currently operating under a six-month development moratorium on data centers adopted in April.

Data centers are secure facilities housing computer servers, storage systems, and networking equipment that form the physical backbone of the internet, cloud computing, artificial intelligence (AI), and digital services. Unlike factories, they operate as critical infrastructure for banking, healthcare, government, and everyday applications that billions of people rely on. The distinction matters because it changes how communities should evaluate and regulate them.

"This is massive, folks. The amount of capital expenditures on data centers over the past three years and projected this year are more than the Apollo program, the interstate highway system and the Manhattan Project combined," explained Roberto Gallardo, associate professor at Purdue University.

Roberto Gallardo, Associate Professor, Purdue University Center for Regional Development

The scale of investment is staggering. Gallardo emphasized that if AI becomes what economists call a General Purpose Technology (GPT), a technology that ends up being everywhere and transforms entire economies, then whatever decision a community makes about data centers will have repercussions for generations to come.

Which Types of Data Centers Should Communities Actually Worry About?

Not all data centers are created equal, and Gallardo stressed that communities need to distinguish between different categories before deciding whether to welcome or restrict them. The hyperscale data centers operated by Amazon, Google, Microsoft, and Meta are the ones generating massive investment and causing most of the conversation. These are the facilities that come "knocking at your door" with enormous capital commitments, but they also bring the biggest challenges.

However, communities might also encounter other types of data centers with very different footprints and impacts:

• Enterprise Data Centers: Owned by a single company such as a bank or hospital for its own information technology needs, typically smaller and more contained than hyperscale facilities.
• Colocation Data Centers: Shared facilities where many businesses rent space for their servers, offering a middle ground between enterprise and hyperscale operations.
• Edge Data Centers: Small, distributed sites located close to users for low-latency applications like autonomous vehicles and real-time AI processing.

Gallardo cautioned that if a community decides to shut down all data center development, that is a valid choice. But he urged officials to first ask developers what type of facility they are proposing, because the impacts and opportunities vary dramatically.

What Are the Real Costs Communities Face?

Energy demand is the number one issue that data centers present, and there is no way to sugarcoat it. The chips consume enormous amounts of electricity, and they also require significant electricity to cool them down. Gallardo noted that electricity prices were already rising from 2020 to 2025 due to outdated grids and insufficient investment in infrastructure. Adding massive data centers to that equation creates additional stress on power systems that may not be ready.

Beyond electricity, communities face several other challenges that deserve serious consideration:

• Water Consumption: Data centers require substantial water for cooling systems, though ongoing research into gas-based cooling methods may reduce this demand significantly in the coming years.
• Noise and Air Quality: When the electrical grid cannot accommodate these massive facilities, data centers bring their own generators, which create noise and air pollution when activated during peak demand periods.
• E-Waste Management: Communities must ensure that developers take responsibility for disposing of replaced equipment rather than leaving that burden on local governments and residents.
• Land Use and Character: Some communities prioritize preserving their rural character and way of life, a valid concern that local leaders must respect and honor in their decision-making process.

Gallardo emphasized that communities should not assume they will bear the burden of solving these problems. "You have got to ask those questions to the developers to say who's going to take care of the e-waste," he stated. "My point is it should not fall on the community to figure that out".

Gallardo

How to Evaluate Data Center Proposals Like a Savvy Community Leader

The good news for communities is that they currently have more negotiating power than they did during the manufacturing boom of previous decades. Here are the key steps local officials should take when evaluating data center proposals:

• Demand Transparency on Facility Type: Ask developers explicitly whether they are proposing a hyperscale, enterprise, colocation, or edge data center, as each type has different impacts on power, water, and employment.
• Negotiate Infrastructure Responsibilities: Before approving any project, secure written commitments from developers about who will manage e-waste, maintain backup generators, and handle environmental compliance issues.
• Understand the Employment Reality: Recognize that data centers do not generate anywhere near the number of jobs that manufacturing facilities do, so do not expect employment benefits comparable to traditional industrial development.
• Evaluate Economic Trade-Offs: Consider the potential benefits including tax revenue, construction jobs, operations jobs, and community grants, but weigh these against the infrastructure costs and quality-of-life impacts.
• Gather Community Input: Listen to residents who may have concerns about losing rural character or who worry about long-term environmental impacts, as these perspectives are valid and important to the decision-making process.

DeKalb County's decision to implement a six-month moratorium reflects a broader trend of communities taking time to understand data centers before making irreversible decisions. The moratorium allows the plan commission and county commissioners to gather facts about planning, zoning, site development, and environmental concerns while also collecting input from residents.

After the information-gathering period ends, the plan commission will write an ordinance to govern data center development in the county. This approach gives communities a chance to establish rules that work for their specific circumstances rather than simply accepting whatever terms developers propose.

Gallardo's presentation underscores a critical reality: the decisions communities make about data centers today will shape their economic, environmental, and social landscape for generations. With capital pouring into AI infrastructure at unprecedented levels, local leaders who take time to understand the issues and negotiate from a position of knowledge will be far better positioned to protect their communities' interests than those who rush into agreements without fully understanding the long-term implications.