The Pros and Cons of Data Centers
The Pros and Cons of Data Centers
Westfield also recently rejected a data center proposal, though with better justification. While the city shares Holyoke's advantage of owning its municipal utilities, it lacks the broader water resources necessary to sustain the project. Ultimately, both cities missed out on substantial job creation and the supporting infrastructure that follows.
Accepting a data center is one of the most high-stakes decisions a municipality can make. It represents a massive influx of capital, but it also fundamentally alters the local infrastructure and environment.
The primary trade-offs break down into clear pros and cons:
The Pros: High Revenue, Low Municipal Service Burden
Adding Substantial Property and Utility Tax Revenue: This is the primary driver for most municipalities because data centers house millions of dollars in high-end server equipment that is regularly updated, they can generate enormous personal property and real estate tax revenue. This essentially would support local schools, parks, and public services without raising residential tax rates.
Adding Many Job Opportunities via Massive Short-Term Construction Boom: Building a data center is a multi-billion-dollar endeavor. The construction phase brings thousands of temporary, often high-paying jobs to the area and provides an immediate economic boost to local businesses, hotels, and suppliers.
Grid and Connectivity Infrastructure Upgrades: To win a data center project, utilities often upgrade local substations and fiber-optic connectivity. These long-term infrastructure improvements can improve overall system reliability for the surrounding community, and because both Holyoke and Westfield own their utilities, this is a win-win scenario if they put the development costs on the data center owners.
Minimal Demand on Public Services: Unlike residential developments or traditional corporate offices, data centers:
Don’t add children to the school system,
Don't generate significant traffic,
Don't require municipal emergency services or local police.
Basically they are quiet, insular "digital warehouses."
The Cons: Resource Voracity and Limited Job Growth
Enormous Power Demands and Rate Hikes: Data centers—especially modern facilities built to handle heavy artificial intelligence (AI) workloads—are incredibly energy-hungry. A large facility can draw as much electricity as 100,000 homes. If the local utility has to procure expensive new power or build fast-tracked transmission infrastructure, those systemic costs are frequently passed down to local residents and small businesses through higher electric bills.
Again, because both Holyoke and Westfield own their utility systems, they could negotiate any increase directly with the owners and developers. There are also indirect federal grants that can be secured to assist municipalities. That will be a separate future blog, subscribe to my blog so you get a notice when I publish it.
Heavy Water Consumption: Keeping thousands of servers cool requires massive amounts of water. Evaporative cooling systems in mid-to-large facilities can consume between hundreds of thousands to millions of gallons of water daily. In water-constrained regions, or communities reliant on vulnerable aquifers, this can create intense environmental and supply stress.
Holyoke was made for this particular “con;" it's called The Connecticut River.
Low Long-Term Job Creation: While the construction phase employs thousands, the operational phase does not. Modern data centers are highly automated. Once the building is running, it typically requires between 20 to 50 permanent staff members—mostly for security, facility maintenance, and basic hardware replacement. It is not a long-term engine for diverse white-collar or corporate employment.
I know this to be true because I repeatedly and unsuccessfully tried to secure a job at the above mentioned MGHPCC facility.
Environmental and Noise Pollution: Data centers rely on massive banks of industrial rooftop cooling fans that run 24/7, creating a constant, low-frequency hum that has led to significant quality-of-life complaints from nearby neighborhoods. Furthermore, their emergency backup diesel generators release localized air pollutants when tested or run during grid outages.
To ensure this is not a problem, location is the answer.
Massive Land Footprint: Data centers are expanding horizontally, often swallowing hundreds of acres of agricultural, forested, or industrial land. This can spark intense community pushback over the loss of rural character, historical preservation, or green space.
The Bottom Line
For a city or town, a data center is essentially a mechanism to trade local natural resources (power, water, and land) for a fortified municipal tax base. Whether it is a "good deal" usually depends on how aggressively local leaders negotiate protections—such as requiring closed-loop water systems, enforcing strict noise ordinances, limiting non-disclosure agreements (NDAs) during planning, and ensuring the developer covers 100% of their own infrastructure costs. Those items and the others included above make for a possibility for these two cities to reconsider their opportunities.
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