Authored by Charissa Huntzinger, Diode Community Relations Lead
Data isn’t going anywhere. From powering our everyday reliance on 24/7 connectivity to fueling the rise of artificial intelligence, the demand for secure, reliable data infrastructure continues to grow. In fact, U.S. data center facility spending soared from $1.8 billion in 2014 to more than $28 billion in 2024. As this digital backbone expands, data centers are becoming an increasingly valuable part of local economies. While they do require more infrastructure support, they also generate significant tax revenue and jobs for communities. In 2023 alone, data centers contributed $162.7 billion. According to the Ohio Chamber of Commerce, annual state and local tax revenues from the industry have grown from $431 million in 2017 to over $1 billion in 2024 (PDF).
With the right planning, they can generate millions in tax revenues, create jobs and deliver long-term community benefits. However, one of the biggest challenges communities face in attracting projects of this scale is the lack of data center-specific planning and zoning regulations.
Data Centers Create Opportunities for Your Community to Grow
Developers face uncertainty while residents may feel excluded by a lack of transparency within the process. Facing diverse hurdles to development, local governments risk losing projects that could help balance their budgets and diversify their tax base. Without clear rules and design, significant economic opportunities can slip away, derailed by confusion, inconsistency or public opposition. Cities without data center-specific codes also often struggle to evaluate proposals quickly and fairly.
However, with strategic planning and solutions, an efficient rollout and successful result is possible for data centers, utilities and communities alike.
Data Centers Can Be Resource-Intensive If You Don’t Plan
The path forward is clear: By designating where data centers are permitted and outlining development requirements upfront, municipalities reduce risk for all parties. Municipalities can look to places like New Albany, Ohio, that applied a future-facing lens to its master plan. The regulatory reform balanced the inclusion of data centers as a permitted use in commercial zones with the implementation of design standards to protect the community.
Over the past decade, the approach has helped to attract investment from hyperscalers. They are the global powerhouses behind cloud innovation — Amazon Web Services (AWS), Microsoft Azure, Google and others — that operate massive, automated data centers, enabling AI, analytics and digital services at unmatched scale and speed. As New Albany shows, clearly codified requirements paired with streamlined land-use processes can attract such high-quality development and promote economic benefits.
Attracting development cannot be the only focus, though, and well-crafted codes should directly protect communities and respond to concerns such as:
- Noise and aesthetics: Establishing design guidelines that fit local character and protect neighboring residents.
- Water and energy use: Managing resources responsibly and transparently.
- Environmental impact: Setting standards for sustainability.
- Proximity to neighborhoods: Protecting residential quality of life.
This approach gives residents confidence that their leaders are planning thoughtfully while giving developers certainty about local expectations. In short, data center-specific zoning puts communities in the driver’s seat.
The Bottom Line
Data centers are reshaping the economic landscape in communities across the country. Cities that take the lead in adopting data center-specific planning and zoning regulations can attract investment plus ensure development aligns with community values. With proper planning, data centers can be catalysts for growth, resilience and shared prosperity.
Visit the NLC Strategic Partnerships page to learn more about the organizations like Black & Veatch dedicated to making NLC the premier resource for local governments.
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