Without hitting pause on development negotiations, a South Bay city committee voted Wednesday to consider community investments.

Aug 13, 2026

Updated 3:23 pm PT

An aerial view of a 49.5-megawatt, three-level data center under construction in Vernon, California, on July 8, 2026. A City Council committee is calling for San José’s standards on data centers to specify how developers can make financial investments in their neighboring communities. (Mario Tama/Getty Images)

San José wants data center developers to pay for something beyond the buildings themselves: parks, job training, affordable housing, home solar and clean energy programs in the neighborhoods that end up living next to them.

A City Council committee voted Wednesday to direct city staff to fold community benefits into their ongoing drafting of standards for data centers, and to study whether a share of the tax revenue those facilities generate could be reinvested in a defined area around each site.

Councilmember David Cohen framed it as filling a hole in work already underway. The city has been drafting environmental standards since June, and he said the authors realized they should stipulate what residents might get in return.

The decision reflects a growing challenge as Silicon Valley leaders try to square the economic benefits of a growing data center industry with mounting concerns from residents who live near the projects. A recent Gallup poll found that 7 in 10 Americans oppose constructing data centers for artificial intelligence in their local area, including nearly half who are strongly opposed. About a quarter favor these projects, with 7% strongly in favor.

San José Mayor Matt Mahan speaks during a July 25, 2025, press conference in North San José about a partnership with PG&E intended to attract more data center development to the city.

Compared to other Bay Area cities, like Oakley, which have restricted data center construction, San José has historically been more open to tech-related development and is already home to about 25 data centers as of last summer. 

The city struck a partnership with PG&E that guaranteed power for 10 large projects and stopped the city’s plans to build its own utility. PG&E committed to investing $2.6 billion in South Bay infrastructure between 2026 and 2035. City officials estimated then that each data center could generate $3.4 million to $6.8 million a year for the city in utility and property taxes.

San José is now reviewing 11 more Data Center projects.

Downtown, developers want to stack them vertically alongside housing. A proposal at 180 Park Ave. would put an 11-story data center next to a 28-story residential tower and an expansion of The Tech Interactive science museum. Another project, at 300 S. First St., pairs a seven-story data center with three 30-story towers holding 1,164 apartments. A third, at 323 Terraine St., offers the city a choice between a residential building alone or a version that adds a seven-story data center beneath 345 units.

Pedestrians walk past City Hall in San José, California, on Aug. 1, 2023.

“This would also address what is clearly an unintended reverse incentive for rushed applications to be submitted now before sound regulations are in place,” she said.

San José resident Evan Brooks told the committee that a rezoning effort tied to the marketing of a site for a data center is scheduled for council action Aug. 18 — one day before the city’s first community listening session on the standards.

“If entitlements move first, projects filed in the interim escape rules the council has already determined are necessary,” Brooks said.

Christopher Burton, the city’s planning director, said a special use permit takes longer than six months to move through review, and that anything filed now would not reach a hearing before February or March. Cohen added that a new data center requires its own environmental impact report, pushing the timeline out at least a year.

Many residents who addressed the committee said the timeline was beside the point. 

Flags at City Hall in San José, California, on Aug. 1, 2023.

“The trade-off you’re asking us to accept is in exchange for some tax investment for our community to shoulder the health burdens imposed by AI data centers,” Dasha Leeds, the conservation coordinator for the Sierra Club’s Loma Prieta chapter, said, arguing that infrasound and generator emissions cannot be mitigated away.

Jasmine Jordan, a design student at San José State University, told the committee the buildings will cost her generation more than they deliver. She said the artificial intelligence economy has shrunk the entry-level job market she and her classmates are graduating into, and “the building of data centers in San José will destroy our environment further than it already has been.”

More than a dozen letters came in ahead of the meeting. Mani Bekele, writing for the city’s Climate Advisory Commission in July, urged the council to publish a live public dashboard of every existing, approved and proposed project, listing megawatt demand, water use, backup-generator capacity, revenue to date and permanent jobs created. The commission asked for numerical thresholds, rather than what it called “aspirational language,” and for a rule barring city staff, councilmembers and the mayor from signing nondisclosure agreements with developers.

Manuel Pineda, a deputy city manager overseeing energy projects, laid out an engagement plan that has been running since late July, involving small meetings already held with groups including the Sierra Club, Mothers Out Front and the local chapters of two building trades. 

“This isn’t the final opportunity to review, supplement or modify,” he said. “But I think it’s important that we have an opportunity to engage our residents.”