What the Midterms Mean for Data Center Development

The Nov. 3 midterms sent a loud message about data centers. According to preliminary results reported by CoStar News, voters in 10 states approved most of the 41 local data center restriction measures on the ballot. Texas, Georgia and Ohio, three of the busiest data center states in the country, elected leaders who campaigned on tighter oversight. The headlines since have been brutal.

Our take: for now, it's still business as usual. The demand behind the AI build-out hasn't changed, and neither have the fundamentals of a great site: power, land, fiber and a workable path to approval.

What has changed is how this industry talks to the public. The companies and developers that come out ahead over the next two years will be the ones who show up in communities earlier, work with leaders of both parties and move past the culture of confidentiality the industry has gotten used to.

What happened at the ballot box

The local results weren't close. Ohio accounted for 21 of the 41 measures, and early counts showed at least 14 Ohio towns approving bans or restrictions, several by margins most politicians would envy.

Further up the ballot, the statewide races told the same story:

• Texas: State Rep. Gina Hinojosa unseated Gov. Greg Abbott to become the state's first Democratic governor since 1990, and Texans sent a Democrat to the U.S. Senate for the first time since 1988. Hinojosa wants a moratorium on new data centers until the Legislature convenes in January.
• Georgia: Former Atlanta Mayor Keisha Lance Bottoms, who called for a statewide moratorium on data center approvals, defeated Rick Jackson, who opposed a blanket ban.
• Ohio: Former Sen. Sherrod Brown made data center opposition a centerpiece of his campaign and unseated Sen. Jon Husted.
• Congress: Democrats, many of whom ran on tighter data center regulation, now control both chambers.

The ballot was just the visible part. Through late October, 490 U.S. cities, towns and counties were weighing moratoriums or other restrictions, and roughly 53% of hyperscaler pipeline growth sits in states where governors now favor tighter rules.

People aren't against AI. They're against the bill.

It's tempting to read the results as a vote against AI. We don't buy it. Voters weren't rejecting AI itself, they were rejecting the local costs they believe come with it: higher electric rates, heavy water use, lost farmland and tax breaks that don't seem to benefit their own communities.

Most people aren't anti-technology. Many of them use AI at work and on their phones every day. But when a large AI campus is proposed down the road, they ask a simple question: what will this mean for my power bill, my water, my view and my property taxes? Right now, a lot of them don't like the answer.

How we got here

Our industry earned some of this. Six pressures have been building for the past couple of years:

• Scale outran trust. Projects jumped from a few dozen megawatts to gigawatt campuses in counties that had never seen anything like them.
• Power bills got personal. Residents assume they'll pay for the new lines and plants these large campuses require.
• Water became the headline. Most new facilities use closed-loop cooling and very little water, but the old image of data centers as water hogs still sticks in drought-prone places like Arizona and West Texas.
• Farmland started disappearing. Trading cropland for a new digital warehouse is as emotional as it is economic.
• The benefits got lost. Residents heard plenty about tax abatements and almost nothing about the permanent jobs, construction payrolls and long-term tax revenue that came with them.
• Secrecy fed suspicion. Code names, NDAs and unnamed end users created a vacuum that opponents were happy to fill.

Some of these concerns are overstated, and some are fair, but all are real to the people raising them.

Plenty of communities are still saying yes

Plenty of communities have run the numbers and decided data centers are a great deal. Three stand out:

• Loudoun County, Virginia: The world's largest data center market has cut its real property tax rate nearly every year for a decade, from $1.145 per $100 of assessed value in 2016 to $0.805 in 2026. By the county's own math, it collects $26 in taxes for every $1 it spends serving data centers.
• DeKalb, Illinois: Meta's campus, online since 2023, now generates roughly $19 million a year for the local school district, more than 20% of its property tax revenue. That money helped open a new elementary school sooner while the district lowered its tax rate.
• Round Rock, Texas: City officials estimate one data center generates as much property tax revenue as 500 homes while using the land of about 100 homes and the city services of about 15.

In each case, the benefits are concrete, local and easy to point to. That's the story this industry needs to tell, everywhere it builds.

Even Texas changed its mind

Texas built its economy on saying yes to big infrastructure, from refineries and pipelines to wind farms. Yet Gov. Abbott had already paused new data center approvals in August pending a state audit, and Gov.-elect Hinojosa has made clear the state's long-term tax breaks for hyperscalers are up for review.

Will Texas see more regulation? Yes. Will it stop companies from building here? We don't think so, and we'd bet on Texas again tomorrow. The land, the generation, the ERCOT market and the workforce haven't gone anywhere, and neither has the demand. What's going away is the silent approval followed by a groundbreaking six months later. Texans want to be part of the process, and we think this industry is ready to earn their support.

The irony: Pushback makes existing data centers worth more

Every moratorium makes the data centers already operating more valuable. Demand for AI capacity didn't drop on Election Day; the number of places willing to host it did. Existing projects can command higher rents, and some new ones will shift to remote sites or smaller, phased designs.

The leasing data backs this up. North American data center leasing topped an estimated 15 GW in the third quarter, with a near-record pipeline of more than 12 GW in new deals. Capital markets are getting pickier, but we read that as more evidence for business as usual. Capital and communities are now rewarding the same thing: real projects with real power, real customers and real local support.

The one big change: more communication, less confidentiality

Silence isn't a strategy anymore. Confidentiality has been standard practice for good reasons, but when a community first hears about a billion-dollar project through a rumor or a code name, that project has already lost the story. Here's what we think the new standard looks like:

1. Introduce yourself early. Once the land is secured, get in front of residents, county commissioners and school superintendents early. The zoning hearing should be a formality, not a first impression.
2. Protect only what truly needs protecting. Keep a tenant's identity confidential during negotiations if needed, but share who you are and what you're building as soon as you reasonably can.
3. Put real numbers on the table. Publish expected water use in gallons per day, peak power demand in megawatts, noise levels at the property line and construction truck traffic. Share the site plan too, including building setbacks, berms and landscape buffers that screen the facility from neighbors and nearby roads.
4. Make benefits binding. Tax revenue, permanent jobs and school funding belong in an enforceable community benefit agreement, not a press release.
5. Pay your own way. Funding your own substation and transmission upgrades takes the biggest objection, higher rates for everyone else, off the table.
6. Keep the conversation going. Send regular updates through construction and operations to build trust for the next project.

Done right, none of this slows a good project down. It keeps a good project from getting stuck.

The market is already moving this way. Days after the election, OpenAI released a policy blueprint that would bar developers from requiring public officials to sign NDAs, call for public reporting on water, energy and jobs, and require developers to pay the full cost of serving their campuses. When one of the world's biggest buyers of AI capacity puts transparency in writing, the new standard is here.

Where this goes from here

There will be more regulation, and with Democrats controlling both chambers of Congress, the national debate will shift toward who pays and who benefits. But the most likely outcome is targeted state and local intervention, not a national moratorium. Even with an estimated 41% of the planned U.S. pipeline now in places facing new restrictions, the election doesn't signal the end of the data center boom.

Capital is already sorting itself. Some investors are reducing exposure in states where leadership changed hands, while projects in states with consistent, data center-friendly policy are gaining momentum. Predictability is worth a lot when you're committing billions of dollars to a single site. That isn't a retreat, it's the market finding the clearest path to power, approvals and customers.

The developers who thrive from here will show up early, share more and treat communities as partners. The public has made its expectations clear, and we're optimistic this industry will meet them.