Critics of the rapid burgeoning of data centers in and around Atlanta are fighting back.
Over the last few years residents' and politicians' opposition to the data centers, partly built to service artificial intelligence programs and companies, has grown.
There are state legislative bills to eliminate sales tax exemptions for the data centers, to mandate public disclosure of their water and electricity usage, to end tax credits for the centers, to place a one-year moratorium on data center applications, and others.
Data center providers QTS, DataBank, EdgeConneX, Flexential and Digital Realty operate centers in Atlanta and/or its suburbs. They operate so-called colocation centers that rent out space for companies to install their own computer servers while providing the building, cooling, electricity, high-speed internet and other services.
Most of the existing and under construction data centers are in the city or in western and northern suburbs including Douglas, Fulton and Cobb counties. Some are scattered in other Atlanta suburbs.
Some residents are concerned about the centers' vast demands for water and electricity. They are worried that the centers will push electricity rates up and even cause blackouts.
Many say the centers are unlikely to provide significant long-term employment.
Over the next five to ten years the spread of data centers in the city and suburbs will likely be a net negative, said Muni Credit News Publisher Joseph Krist. "The combination of physical impact, electric demand impact and water impact is enough. To the extent that incentives result in foregone revenues, it's another net negative. They don't produce enough jobs to generate enough of a local economic benefit so there's not much there."
Georgia State Senator RaShaun Kemp said, "Data centers bring some opportunity and also risk for local governments. In the near term, they can grow tax bases and generate construction jobs. But over the next five to ten years, the real question is whether revenues keep pace with the infrastructure costs they impose."
The Atlanta Democrat continued, "Water, sewer, and energy, are long term public assets. If we don't fully understand and plan for the scale of demand data centers place on those systems, local governments could face significant capital and operating costs that taxpayers ultimately absorb." Kemp said he is sponsoring
State Sen. Matt Brass
Water is used in the air conditioning used to cool the data center facilities.
"Current supply studies that supported residential development never anticipated the demands of data centers on water," Krist said. "It may be the biggest source of concern in the immediate area of a facility even above noise or electricity prices."
Kemp said, "Data centers consume enormous amounts of water… A sustained drawdown can affect water tables, treatment capacity and long-term planning for water and sewer utilities. If usage projections are wrong,
Brass said, "Most of the data centers can go to a close loop system which would help protect the water supply. The downside is that those systems require more power usage."
Cumberland Vice President and Chief Investment Officer John Mousseau said counties' battle "for water might be louder than the complaints about higher utility rates.
Observers are also concerned about the
"Unless a data center is required to be self-powering or district rate schedules are established, it's pretty inevitable that retail electric rates go up under current rate regimes," Krist said.
Kemp said, "These massive data centers consume enormous amounts of electricity and that demand doesn't exist in a vacuum. If it isn't planned for carefully, it can strain generation and transmission systems, which raises legitimate concerns about cost-shifting to residential and small-business consumers.
"I'm not opposed to data centers but I am very much opposed to a scenario where everyday Georgians subsidize private infrastructure through higher utility bills," Kemp said. "Transparency around projected energy use is essential so regulators and communities can understand whether rates will rise and who will bear that burden."
Georgia Power, a private utility, provides electricity to most of the Atlanta area. Brass said the Georgia Public Service Commission has dictated "data centers cannot pass down any of the cost of upgrading the [electric infrastructure] system to the residential taxpayers." He said there were several state legislative bills that would codify the ruling.
However, Mousseau said, "There is no question that rates for electricity will be going higher. Georgia Power will be going to the Public Service Commission for more rate relief. This might become a vicious circle with residents throwing brushback punches at the local utilities. I would imagine it would be akin to the NIMBY attitudes we have seen in the past regarding projects such as nuclear plants and resource recovery facilities."
Mousseau said the rate commissions will try to "compartmentalize the rate increases so local citizens are not clobbered with rate rises and the largest part of increases being picked up by the AI-oriented users. Probably easier said than done."
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In December KBRA
In November Hilltop Securities commented on the building of artificial intelligence infrastructure and associated data centers, "Taxpayers should carry minimal to no risk. The private sector, especially the tech giants driving this surge, must shoulder the financial burden. If they don't, progress will slow and the political appetite could fade."
Atlanta's issuer default and general obligation bond ratings are Aa1 by Moody's Ratings and AAA by Fitch Ratings.
In August Fitch explained its rating by saying it expected the city's reserves would remain above 7.5% of spending. Fitch also noted the city's growing population, high educational level and record of below-national level unemployment rates. It said the city's economy is large and diversified.
As a challenge, Fitch cited the city's weak long-term liability burden compared to other Fitch-rated U.S. local governments.
Atlanta Mayor Andre Dickens didn't immediately respond to a request for a comment.
