- Communities across the U.S. are pushing back against data center projects, citing noise, pollution, and unfair tax breaks.
- In Kansas City, a historic building's preservation easement is at the center of a controversial high-rise data center proposal.
- Lowell residents sue over secret permit agreements for diesel generator expansion, highlighting environmental justice issues.
- Data center land acquisition is driving up prices and outbidding residential development, especially in Northern Virginia.
The rapid expansion of data centers across the United States is stirring up a storm of controversy, with local communities, environmental groups, and even state governments pushing back against the facilities that power the AI revolution. From historic downtown buildings to quiet residential neighborhoods, the battle lines are being drawn over noise, pollution, water use, and the very character of American cities.
In Kansas City, a proposal to turn a 126-year-old building into a high-rise data center has raised questions about tax incentives and historic preservation. Meanwhile, residents in Lowell, Massachusetts, have taken their fight to court over secret permit agreements for diesel generators. And in Northern Virginia, data center developers are outbidding home builders for land, driving prices to astronomical levels.
Historic Preservation and Tax Breaks Under Scrutiny
In Kansas City, Revitalization Unlimited’s plan to build a 19-floor data center inside the historic Western Newspaper Union building has sparked a heated debate. The developer placed a preservation easement on the property, which allows for a charitable tax deduction based on the lost redevelopment opportunity. Critics argue the move is a clever way to maximize tax breaks while still demolishing parts of the structure. The building is on the National Register of Historic Places, and any demolition would require a review by the city’s Historic Preservation Commission. The City Planning Commission is set to decide the project’s fate in August 2026, with public testimony expected.
Environmental Justice and Community Lawsuits
In Lowell, Massachusetts, residents have filed a lawsuit against the state Department of Environmental Protection over a secret consent order that allowed the Markley Group to install more diesel generators at an existing data center. The plaintiffs claim the state violated their right to a public hearing and ignored cumulative impact regulations designed to protect environmental justice communities. The facility, located in a densely populated neighborhood, already has 23 generators and stores 250,000 gallons of diesel fuel. Similar concerns are playing out in Utah, where dozens of residents opposed a water discharge permit for the Tooele Valley inland port and data center project, and in St. Louis, where the Board of Adjustment approved a $3 billion Midtown data center despite appeals over energy use and pollution. The board added conditions, including a ban on generator testing during bad air quality days and a requirement for on-site renewable energy.
Land Competition and the Housing Crunch
Northern Virginia, often called the data center capital of the world, is seeing land prices skyrocket as tech giants and developers snap up acreage for new facilities. Amazon paid $700 million for 189 acres in Prince William County, while Microsoft spent $465.5 million for 124 acres in the same area. In Loudoun County, SDC Capital Partners paid $6.3 million per acre for a 97-acre site. These prices are far above median land values, which hover around $125,000 per acre. The trend is not limited to Virginia: in Illinois, Stream Data Centers razed 55 homes in Elk Grove Village for a data center campus, and in Texas, land that sold for $20,000 per acre a few years ago now fetches over $350,000. Home builders say they simply cannot compete with data center developers, and local governments are struggling to balance economic growth with housing needs. The Home Builders Association of Virginia has testified that data centers are outbidding residential developers for both land and grid capacity.
Utility Responses and Regulatory Shifts
Exelon, a major utility serving the Midwest and Mid-Atlantic, reported a nearly 40% drop in its high-probability data center load, from 18 GW to 11 GW, as it weeded out speculative projects. The company has been signing transmission security agreements that protect existing ratepayers from data center costs. Exelon is also pushing for utility-owned battery storage to meet capacity needs, including a 500-MW project in New Jersey and 150 MW in Maryland. Meanwhile, Oregon Governor Tina Kotek halted the sale of state land for a Salem data center, and Massachusetts paused tax breaks for data center developers. In St. Louis, Ameren Missouri is building new natural gas plants partly to serve data centers, while the city crafts its own regulations for large facilities and infrastructure.
From Kansas City’s historic preservation fight to Lowell’s environmental justice lawsuit, and from Northern Virginia’s land grab to St. Louis’s regulatory compromise, the data center boom is forcing communities to weigh economic benefits against quality-of-life concerns. While utilities and developers argue that these facilities are essential for AI and cloud computing, residents and local officials are demanding more transparency, stricter environmental reviews, and a fairer share of the benefits. The outcome of these battles will shape not only where data centers are built, but how American cities grow in the age of artificial intelligence.
