New York Governor Kathy Hochul is recommending that local governments seek community investments of at least $1 million per megawatt from developers proposing new data centers. The proposal aims to ensure communities share equitably in the economic value created by these projects, especially as data center construction faces growing backlash due to increased power demand and electricity bills.
The proposal could increase the cost of building new data centers, potentially impacting the expansion of AI infrastructure and cloud services. It also reflects a growing trend of local and state governments seeking to regulate data center development to mitigate impacts on energy consumption, water usage, and community economics.
New York Governor Kathy Hochul is proposing that local governments require developers of new data centers to invest at least $1 million per megawatt of utility demand in the communities where they are built. This recommendation, detailed in a document released Tuesday, aims to ensure that local areas benefit economically from the construction of these facilities.
The proposal comes months after New York implemented a moratorium on new large data centers, reflecting a broader trend of growing opposition to data center expansion across the U.S. This expansion is contributing to increased power demand and higher electricity bills, leading to bipartisan political backlash.
Empire State Development President Hope Knight stated that the growing demand for data centers must be met with shared standards benefiting communities, noting that data centers do not create the same level of local jobs as traditional manufacturing.
In parallel, Texas Governor Greg Abbott has directed state regulators to penalize data centers that do not disclose their water consumption. Meanwhile, Republican lawmakers in the U.S. House of Representatives are planning legislation to curb electricity bill increases linked to data center growth, with similar bills being introduced in state legislatures nationwide. A recent Reuters/Ipsos poll found that a majority of Americans oppose building data centers in their own communities.