New York Proposes $1M Per Megawatt Community Investment for Data Centers

New York Governor Kathy Hochul is recommending that local governments seek community investments of at least $1 million per megawatt from developers proposing new data centers, according to a document released on Tuesday.

The recommendation comes months after New York became the first U.S. state to impose a moratorium on large new data centers. The suggested investments, set at a minimum of $1 million for every megawatt of utility demand, are intended to help host communities "share equitably in the long-term economic value created by these projects," the document states.

"The innovation economy's growing demand for data centers must be matched by shared standards that ensure communities benefit," Empire State Development President Hope Knight said in a statement. "Because data centers are not major local job generators, their economic development profile differs from traditional manufacturing."

Spokespeople for Amazon, Meta and Alphabet's Google, among the world's largest data center developers, did not immediately respond to requests for comment. Microsoft declined to comment.

The expansion of data centers across the United States is driving up power demand and electricity bills in large swaths of the country, drawing local and bipartisan political backlash. Texas Governor Greg Abbott, a Republican leading one of the world's fastest-growing regions for artificial intelligence infrastructure, directed state regulators on Monday to penalize data centers that fail to disclose details about their water consumption.

Only one in three Americans approve of the fast pace of data center construction, and most would oppose building one in their own community, according to a recent poll. Republican lawmakers in the U.S. House of Representatives plan to bring legislation that seeks to rein in electricity bill increases tied to data center expansion, according to a spokesperson for House Speaker Mike Johnson. Legislatures in dozens of U.S. states have introduced similar bills.