Balancing big tech data centers and local risk

Transcript:

Allie Barefoot: Welcome back to Data in Context. I’m Allie Barefoot with Cotality. As AI becomes more of a factor in everyday life, from the way we work to the way we shop, have you ever wondered how it affects your house?

We talk about the cloud like it’s floating somewhere in the atmosphere, but the truth is, the cloud is made of bricks, mortar, and massive amounts of power. It’s moving into neighborhoods, it’s changing local zoning laws, and it’s sitting right next door to cul-de-sacs. So today we’rejoined by Cotality's Principal of Public Policy and Industry Relations, Chay Halbert, to discuss the neighbor you might not have seen coming. Let’s go ahead and jump into today’s questions with Chay. Thank you so much for joining us here on Data in Context, Chay.

Chay Halbert: Yeah, great to be with you, Allie.

Allie Barefoot: Yeah, we’re talking about a very exciting and evolving topic, that is data centers being built around or near neighborhoods. And to set the—set the scene here, Chay, when we think of neighborhoods, we think of them as families and fences. But AI is bringing us windowless buildings and cooling fans. When a data center moves in, does the neighborhood actually stay residential or does the nature of the zip code kind of change overnight?

Chay Halbert: Well, I mean, it’s definitely possible, you know? You think about, you know, what these buildings are, you know? They’re just huge, kind of multi-football-field sized, you know, sort of like warehouses, but they just have a lot of kind of, like, computer infrastructure in them. And so, and you know, they’re—they’re big and they—they can definitely change the—the character of a neighborhood. So, you know, it’s really important to, you know—the devil is really in the details and kind of like where they’re placed and, you know, making sure that they’re going somewhere, you know, if they are going to be near a community, um, that, you know, that you—that you pick it right, so that way it’s not something that just kind of looms over the homes.

Allie Barefoot: And Chay, a data center needs more than just water. You just mentioned a community, and that’s really what a lot of data centers in the surrounding areas also need. They need a livable ecosystem for the employees, and they can employ up to 6,000 workers in this area, which they’ll need malls, restaurants, schools, to provide a livable ecosystem around them. How do tax incentives balance the immediate need for a data center with long-term need for a livable infrastructure? What are some factors that local governments need to consider to get the big data companies to their city?

Chay Halbert: Well, you know, that’s, you know—it’s like you make a great point. It’s like, you know, you can—you can put these data centers, you know, really wherever, um. You know, it’s like that’s one of the—the good things about, you know, this kind of technology, it doesn’t necessarily have to be in a specific place. But, you know, at the end of the day, it’s like you need people that live in the area, you know, to work there. You need people to—to build the data center to begin with. So another consideration, you know, would be, for example, you know, it’s like Cotality has high-growth indicator data. So you can understand the communities that are kind of on their way up, so to speak. And, you know, those are communities that are going to need those kind of upgrades, right? They’re growing, and you want to be able to incorporate something, maybe like a data center, into that growth plan. So that way, you can, you know, take advantage of it, and it’s kind of like a—a win-win situation.

Allie Barefoot: And Cotality has analyzed regions across the US, including promising regions in Missouri, such as Franklin County and Independence, and our data suggests that these are areas that are meeting key criteria—land use, new building patterns, infrastructure access. This is making them great locations for data centers. How can local governments use these type—types of indicators to ensure data centers become an economic anchor rather than a community burden?

Chay Halbert: Well, yeah, I mean, that’s, you know—that’s really important because you can—you can attract a business, you know, on paper with tax incentives and abatements. Um, but you know, that’s something that’s upfront and it’s on paper. You know, it’s like when you’reputting something on land, uh, you really need to know it’s like, you know, what are the long-term effects of being there? Yeah, so that’s where something like Cotality’s climate risk analytics comes into play. You know, it’s like you have a building that’s going in now, but you really want to think about what’s going to happen 10, 20, 30 years down the road. Because, you know, you may get those tax incentives now, and it may look like a good deal now and pencil out, but if you don’t think about the future, if you don’t think about mitigating for natural—natural disasters, natural hazard events into the future that are happening with, you know, more frequency and more severity, you know, it really doesn’t pencil out in the long term. So, you know, those are the kind of considerations that you really have to, you know, bring in when you—when you think about something like a—like a data center that’s going to be there for a long time.

Allie Barefoot: And Chay, one of the biggest friction points for homeowners isn’t necessarily the data center itself, but the work that it takes to build it. Utility crews that are blocking roads as they expand them, or like laying fiber along property lines, that’s where homeowners are kind of starting to speak up. So how much of the local "Not In My Backyard" resistance could be solved if utilities used higher accuracy parcel data to ensure that everybody knows what’s going on and they’re on the same page? Both legally and physically. Can this help reduce delays and possibly cost of projects?

Chay Halbert: You know, I think quite a bit because, you know, this is—you know, it’s like these data centers, you know, this is an issue that really is getting a lot of attention at the local level. People are showing up to, you know, it’s like town halls, um. They’re showing up to, it’slike, you know, local electeds when they have the, you know—these events where they’re talking about and they’re, you know, thinking about rezoning and those kind of things. And so, you know, even in—in the wake of, you know, it’s like a—a municipality, you know, it’s like citizens in any given area kind of, you know, thinking twice about doing a data center, you know, it really hits home if it runs through their front yard, you know? And so, it’s really important to get, you know, those kind of construction details right because, you know, if you’re tearing up someone’s front yard, they’re really going to feel that. And they’re going to, you know—that’s, you know—that’s really personal. And so, being able to have, you know, you know, for example, it’s like Cotality’s data that has, you know, I think greater than 99% accuracy when it comes to, you know, understanding where property lines are, you know? Just a few feet, you know, that’s going to make a big difference to any given homeowner. And that really changes, you know, the perception, you know, of what folks, you know, think about—not just data centers, but you know, any projects that are going up in their backyard.

Allie Barefoot: And Chay, if a utility company knows exactly who owns that 10 feet of land that they need to access, Cotality has products such as CLIP that can help send a notification weeks in advance to make sure that the homeowner and the utility company, they’re on the same page. Both legally and physically. Can this help reduce delays and possibly cost of projects?

Chay Halbert: Oh yeah, absolutely. Again, you know, these kind of things, they really come down to the—the nitty-gritty. And you know, again, when you’re talking about stuff that’s in people’s front yards and their backyards, you know, they’re going to fight tooth and nail if it’s something that they feel is really encroaching on them, or if they don’t feel like they’ve been given enough notice, or they haven’t been given any notice at all. So again, you know, really fine details like this, and you know, being able to give notice ahead of time, knowing exactly where you need to put something and when, you know, that can really be the difference—it can really be a make or break thing because, again, when it comes to these local projects, the people that live in these communities, they have a lot of say, you know? It’s like, that’s why you see a lot of these stories about folks, you know, fighting these data centers because they have the venue and the opportunity to do that. And so, making sure that, you know—you don’t want to have, you know—if you want to build one of these projects, you want to make sure that you’re kind of like taking any, you know, potential issue, you know, out of the way or any potential roadblock out of the way.

Allie Barefoot: And my last question here for you, Chay, is a specific state. I want to talk about Texas for a minute. It seems to have become a hotspot for data centers. But the state faces several natural perils: tornadoes, hail, flooding. How much weight is given to environmental risk and the safety of residents versus economic gain? And—and is this a plan to follow, you know, what’s happening in—in Allen and—and Stargate, or is this a plan to deviate from?

Chay Halbert: You know, I think that, you know—the the broad answer is probably not enough consideration is given to natural hazard—natural hazard, uh, natural disasters. You know, it wasn’t that long ago when these kind of things were thought of as, you know, really unplannable, or it’s like, you know, we weren’t really able to understand, you know, what would happen and when. And you know, of course, it’s not that, you know, we can say, you know, whatever, on—you know, this Wednesday, three months from now, exactly what’s going to happen. But we certainly do have a lot of understanding about, you know, again, through like things like our climate risk analytics, you know, to get an idea of what 10, 20, 30 years down the road is going to look like. And it’s going to give you a, you know, a broad idea and understanding of the kind of risk that, again, anything that you put into the ground, anything that you’re going to want there for a long time, the type of risk that it’s going to face. And so, you look at these kind of projects, and again, you see municipalities giving these kind of tax—tax abatements, tax breaks upfront. And you know, that can, you know—that can be a good thing and it can—it can spur growth. But, you know, what good does it do you if 10, 15, 20 years down the line, you know, these—you know, the building is, you know, hit with some kind of hail event, or a flooding event, or a wildfire, or any of these kind of things that you hear about a lot in the news now, and you know? Again, in the past, that was something that was, you know—it was much harder to understand those kind of risks that, you know, the built environment faces, but now we have a—a much better grasp on that. And so, I think when you use the tools that are available now, you know, it can really—it can really balance that out between, you know, the—the economic incentive that you want to kind of continue and maintain into the future by taking into account the kind of natural disasters that, you know, that are happening now.

Allie Barefoot: Absolutely. And obviously, data centers are constantly evolving, and this is a—not a new territory that we’re diving into, but definitely one that is going to take a lot more steps to create as many as they wanted to, knowing there’s tools out there that can help with the planting of a data center or the area around it is great to know. So Chay, thank you so much again for joining us here on Data in Context.

Chay Halbert: Of course, Allie, great talking with you.

Allie Barefoot: Thank you again to Chay Halbert for joining us here on Data in Context, and thank you guys so much for listening. If you haven’t already, please subscribe to Cotality's YouTube channel. And if you want to find out more information, as always, head on over to cotality.com.