Shown is an Amazon Web Services data center located near single-family homes. (Photo: Nathan Howard/Getty Images)
Ohio Senate Democrats have introduced a series of provisions aimed at reining in data centers. The bills would eliminate tax breaks, require developers to cover infrastructure costs and impose greater oversight of data center projects. Although Democrats in the chamber are overshadowed by Republicans, their proposals come at a time of growing skepticism about the fast-growing industry.
“Data centers come with unique infrastructure, land use and energy demands,” explained Senate Minority Leader Nickie Antonio.
YOU MAKE OUR WORK POSSIBLE.
“We want to ensure that no community in Ohio feels forced to accept a facility that increases utility costs or strains local resources against the express will of residents,” she added.
Across the country, representatives of all political stripes have opposed data center projects in their neighborhoods. Many more have seen the industry’s impact on rising energy and water bills. Despite studies While touting the positive impact data centers can have on the local tax base and labor market, there appears to be growing resistance.
As reported by the Heatmap News news site, the companies will be shelved in 2025 25 data center projects all over the country.
Closer to home, Microsoft has decided to put on hold a $1 billion investment in three data centers in central Ohio last spring. A company called Sentinel has put another billion-dollar project on hold in West Jefferson in October last year after it couldn’t provide enough power. At the end of last month, hundreds of residents of Mount Orab They crowded into the high school gymnasium to express concerns about a 1,000-acre project they suspect may be a data center. Last week, a city councilor introduced the measure suspend development of any data center for 180 days.
Ohio Regulators Reject Appeal of OK Data Center Billing Plan
Late last year, Ohio regulators approved AEP’s proposed data center-specific services agreement. This tariff requires businesses to cover expansion costs representing a percentage of their expected demand (if actual utilize is insufficient) and imposes an exit fee if they close shop before the contract expires. The Ohio Manufacturers Association is challenging the plan in the Ohio Supreme Court.
Still, all this resistance feels more like a speed bump than a roadblock. Ohio still does sixth place in terms of the number of data centers in the country according to the industry tracker Data Center Map, and 102 more announced or pending. The response at the local level is not just one of rejection. For example, city officials in Marysville approved a 15-year tax break for a $1 billion data center project in December.
Dems plan
The Democratic proposals include six bills, as well as a resolution reaffirming Ohio’s constitutional protections for data center development. One bill would add such a provision to the statute – giving counties, municipalities and cities the power to reject proposed projects.
State Sen. Bill DeMora, R-Columbus, highlighted a data center project in Hilliard where Amazon is installing a natural gas power system with diesel backup generators over opposition local officials.
“We need to let local residents decide what is best for their local communities rather than having the state shove issues down their throats,” DeMora said.
At the same time, state Sen. Casey Weinstein, D-Hudson, wants state regulators at the Ohio Public Utility Commission to also have more influence over the data center approval process. He said data centers should be reviewed to ensure their energy demands do not impact energy prices or reliability for the local community.
“We support economic growth and new technologies,” Weinstein said, “but that growth should not come at the expense of reliability and affordability for Ohioans.”
Another measure would eliminate Ohio’s sales tax exemption for data centers. The idea actually made it into the state budget last summer, but Gov. Mike DeWine vetoed the provision. In his veto messagethe governor defended the tax break as a discretionary incentive and an critical tool as Ohio competes with other states for investment.
But state Sen. Kent Smith, D-Euclid, argued that the costs outweigh the benefits. He quoted A December report from pro-technology industry group American Edge Project. Between existing data centers and planned projects, the group ranks seventh in the country in terms of demand for data centers.
“But they also did a table of how much taxes would be raised on all the data centers in different states,” Smith said. “Ohio ranks 22nd in taxes that will be delivered to Ohio taxpayers.”
Smith has taken action in the past to eliminate the sales tax exemption and said legislative researchers estimate its repeal would save Ohio $187 million a year.
Pay your way
Other measures require data center developers to pay for their impact on local power and water systems.
Smith proposes a broad-based solution that would force data centers to cover any costs of additional power generation or transmission.
“It would prohibit any costs from being borne by other payers,” Smith said. “This bill seeks to protect ratepayers from bearing increased infrastructure costs from billions of dollars of corporations and their desire to place additional data centers in Ohio.”
State Sen. Willis Blackshear, D-Dayton, noted that many data centers do not monitor water utilize and “communities should not be left in the dark about the true costs of having data centers in their backyard.” He is working on a proposal that would introduce regular reporting, cap water utilize at 5 million gallons per day and require data centers to invest in local water infrastructure.
Blackshear also said data centers should go even further and invest in programs that benefit local payers. He suggested that community energy projects could provide more power faster than a conventional power plant, and that improvements to residential buildings, such as weatherization or heat pumps, could improve efficiency and create more slack in the system.
“Bottom line,” he said, “if a community hosts a data center, they deserve immediate, long-term benefits in return. That’s the right thing to do.”
Follow Ohio Capital Journal reporter Nick Evans on X Or on Bluesky.
YOU MAKE OUR WORK POSSIBLE.
