Trepp | No Taxation Without Data-Center Regulation

While no tea has been thrown into any harbors just yet, local communities throughout the country have been increasingly pushing back on data-center developments.

In fact, a panelist at Trepp Connect (in NYC) in May noted that community pushback is the greatest challenge that data-center developers are facing today.

Last year, at least 25 data-center projects throughout the country were canceled because of local resistance, a quadrupling of the number of projects that were canceled in 2024, according to Newmark.

Communities oppose data centers because of their potential to strain local power grids, increase utility costs, generate noise pollution, and create few permanent jobs. Water usage is the biggest concern, cited in more than 40% of contested projects.

The consumption of water varies widely depending on cooling technology, climate, as well as building design and size. However, the Environmental and Energy Study Institute reported last year that large data centers can consume up to 5 million gallons of water per day, roughly equivalent to the daily water usage of a community of 10,000 to 50,000 people.

Local governments are responding to the pushback by enacting moratoriums on data-center development. Officials in Lake County, Ill., recently entered discussions about an eight-month ban on new data-center projects, according to a report from The Daily Herald.

The pause would also give officials time to assess the long-term impacts of such properties and develop regulations before additional projects move forward. Currently, the county’s zoning code does not include specific definitions or regulations governing data centers.

The concerns brought up by board members included energy and water consumption, infrastructure requirements, and land use.

These regulatory “fireworks” are bursting across the country as 77 other local data-center moratoriums were in effect through June, according to Interconnected Capital’s U.S. Data Center Moratorium Tracker.

From May to June, 27 new data-center moratoriums were enacted.

Nonetheless, the global inventory of data-center properties totals 115 gigawatts of power capacity this year, up nearly 12% from 103 gigawatts in 2025. It is expected to increase by 97 gigawatts over the next five years, representing $1.2 trillion in real estate value creation, according to JLL.