Briefing 03/13/2025

Mar 13

This week’s roundup: Prince William County moved to increase its data center tax rate, raising concerns about long-term industry viability in the region. Meanwhile, Amazon’s Indiana data center project faces public scrutiny over wetland destruction, and Elon Musk’s xAI expansion in Memphis continues to stir opposition over environmental and political concerns.

Prince William County to Propose a Data Center Tax Hike

Prince William County's Board of Supervisors will propose an increase in the data center tax rate from $3.70 to $4.15 per $100 of assessed value as part of its fiscal year 2026 budget discussions. While the board has yet to finalize the rate, this follows last year’s increase from $2.15 to $3.70, which generated $54.8 million in additional revenue.

Impacted data centers

Prince William County has emerged as a major data center hub with an estimated 26.5 GW of data centers in the area.

Prince William Digital Gateway: The largest project currently underway is the PW Digital Gateway Project, accounting for a potential investment of $24.7 billion, which is currently halted in court.

Why it matters:

Rising Costs: Higher taxes could make Prince William County a less attractive location for data center development compared to neighboring jurisdictions with lower rates.
Activist Impact: Increasing taxes on data centers is a common demand among data center opposition groups. However, the fact that higher taxes on data centers are not accompanied by lower tax rates for other sectors could fuel local opposition narratives.

Public Input Sought on Amazon Data Center’s Wetland Impact in Bendix Woods Indiana

Amazon’s proposed data center near Bendix Woods County Park in Indiana would remove nearly 10 acres of wetlands and over 5,000 feet of streams. The company plans to mitigate the environmental impact by purchasing wetland and stream restoration credits. However, local residents are raising concerns about potential harm to the Kankakee Aquifer, which supplies water to the region.

Public comments on the environmental impact are open until March 20 (U.S. Army Corps of Engineers) and March 21 (Indiana Department of Environmental Management).

Why it matters

Water Resource Concerns: As data centers require significant water for cooling, growing public pressure on aquifer preservation could lead to stricter water use regulations for the industry.
Community Engagement: Amazon has tried to address some of the local community's environmental concerns. However, this does not seem to be enough for opposition groups. They will continue to push back against Amazon’s data center development, which could lead to further delays or even derail the project

Elon Musk’s xAI Buys 1 Million Sq Ft Site for Second Memphis Data Center

Elon Musk’s xAI has acquired a 1 million-square-foot site in Memphis for a second data center to expand its Colossus supercomputer operations. The $80 million purchase includes an existing warehouse and adjacent land near the Southhaven Combined Cycle Plant, 780MW natural gas power plant. The facility could host up to 350,000 GPUs and will feature Tesla Megapack batteries for backup power.

Local utility Memphis Light Gas and Water is conducting a study on the site's potential 260MW power needs. Local environmental groups, already opposed to the facility, raised further complaints about the potential expansion.

Key Opposed Groups to xAI Colossus Memphis:

Why it matters:

Environmental and Grid Challenges: Colossus Memphis has faced local backlash since its opening, with activist groups concerned over energy consumption, environmental impact, and strain on the local power grid.
Political Risk: Elon Musk has become a highly public and polarizing figure due to his role in the current Trump administration. This has further fueled existing public backlash against xAI over environmental concerns—including violent threats on the facility—which could escalate if the company moves forward with expansion.

What to expect:

Musk's current public exposure could fuel opposition narratives against data centers. It remains to be seen whether hostility toward xAI will be confined to that company or extend to other data center operators in the area.