By JAMES ENGEL
Tribune-Review<\/p>\n
Supporters and opponents of data centers see different futures for the industry in Western Pennsylvania.<\/p>\n
Supporters use words like \u201cspeculation\u201d and \u201crenewal.\u201d Opponents say the industry could hit the region like \u201ca storm.\u201d<\/p>\n
Two things are clear: The industry is making a play for the Pittsburgh region, and residents are taking notice.<\/p>\n
In the past year, developers have announced proposals for hyperscale data centers, massive facilities mostly focused on artificial intelligence, in nearly every county in the region.<\/p>\n
Michael Archer, a civil engineer with Moon Township-based Civil and Environmental Consultants, said his company is involved in about a dozen data center projects in Western Pennsylvania, most of which he could not discuss.<\/p>\n
Still, evidence of the influx is apparent. The $10 billion Homer City redevelopment in Indiana County \u2014 which will be fueled by enough natural gas to power more than half of the homes in the state \u2014 began construction this year.<\/p>\n
Proposals in Springdale in Allegheny County, Shippingport in Beaver County and Upper Burrell in Westmoreland County have cleared some hurdles but need further approvals.<\/p>\n
Aligned Data Centers, the Shippingport developer, declined to comment for this story. Developers in Homer City did not provide a comment for this story. .<\/p>\n
Developers or landowners have expressed hopes to construct data centers in Aliquippa, Midland and Big Beaver in Beaver County, Monongahela in Greene County, and South Strabane in Washington County, among others.<\/p>\n
Speculation<\/p>\n
Some proposals are merely dollar signs in the minds of real estate speculators, said Brian Regli, a consultant for Dynamo DC. Formerly known as Allegheny DC Property Co., Dynamo DC is developing the data center in Springdale at the site of a former coal-fired power plant.<\/p>\n
\u201cYou do have more speculation than reality,\u201d said Regli, who has served as the main spokesman for the Springdale project. \u201cThere is much more smoke than fire.\u201d<\/p>\n
That\u2019s because data centers are hardly a getrich-quick scheme, he said.<\/p>\n
Many of the projects announced in the region come with multibillion-dollar price tags and yearslong timelines.<\/p>\n
Still, amid the AI-driven economic hype, landowners and real estate firms are champing at the bit to attract developers.<\/p>\n
\u201cI\u2019m exaggerating for effect, but right now it seems like everybody with a thousand acres and a gleam in his eye wants to announce a data center,\u201d said Sean O\u2019Leary, a senior researcher at the Ohio River Valley Institute, a think tank focused on economic development in Northern Appalachia.<\/p>\n
To Brian Kennedy, that\u2019s a problem. Kennedy, senior vice president for operations and government affairs for industry-advocacy group Pittsburgh Technology Council, criticized what he calls \u201cphantom data centers.\u201d<\/p>\n
Those are projects where landowners, hoping to score interest from developers, are touting their sites as the future home of a data center without the ability to offer details to concerned residents.<\/p>\n
That leaves a vacuum where misinformation about the industry thrives, Kennedy said.<\/p>\n
And it makes developers\u2019 jobs all the more difficult, Regli said.<\/p>\n
\u201cThere are people who are going to succeed. I don\u2019t want to diminish that \u2014 I hope, certainly, that we\u2019re one of them \u2014 but fundamentally, one of the things that the public has had to face, I believe unnecessarily, are all of these speculative deals that are floating around in the real estate community for folks that are hoping to get the quick buck,\u201d he said.<\/p>\n
Still, even in this early, uncertain period, Western Pennsylvania has the capability to become a strong regional hub for the data center industry, Regli said.<\/p>\n
There are several reasons, he said: Pennsylvania\u2019s power generation capacity, the region\u2019s history of industrial development and large workforce, and Pittsburgh\u2019s strong intellectual base in institutions like Carnegie Mellon University.<\/p>\n
Already here<\/p>\n
Data centers have been in Western Pennsylvania for some time, largely flying under the public\u2019s radar.<\/p>\n
Ed DeHart has operated a small data center along Penn Avenue in Pittsburgh\u2019s Bloomfield neighborhood for more than 25 years. The facility, called aspStation, was built as a data center for nearby West Penn Hospital before DeHart and his partners purchased it in 2000.<\/p>\n
\u201cNo one knows what it is,\u201d he said. \u201cIt\u2019s just a big brown building.\u201d<\/p>\n
DeHart\u2019s company rents server space to smaller companies that require 24\/7 data services, a business model called co-location.<\/p>\n
Other small centers exist throughout the region, notably at Nova Place on Pittsburgh\u2019s North Side.<\/p>\n
\u201cPeople don\u2019t know about data centers, but they know about the cloud,\u201d DeHart said, referring to the internet\u2019s vast storage and computing network. \u201cThe cloud is data centers. Our whole world relies on data centers.\u201d<\/p>\n
But the projects grabbing headlines and generating public backlash \u2014 mostly gigantic centers aimed at AI development \u2014 are orders of magnitude larger than DeHart\u2019s center, a three-story concrete brick structure on a half-acre lot.<\/p>\n
Regli said development of hyperscale data centers in Western Pennsylvania is unlikely to look like the massive build-up in Northern Virginia \u2014 often called \u201cdata center alley.\u201d There, hundreds of mammoth centers are clustered together throughout Loudoun, Prince William and Fairfax counties.<\/p>\n
The difference boils down to geography. The sections of Virginia with the greatest development are relatively flat and expansive, whereas Western Pennsylvania is replete with rolling hills and meandering streams \u2014 far less forgiving terrain for developers.<\/p>\n
What this region offers is plenty of brownfields, sites formerly occupied by other industries.<\/p>\n
Those sites are relatively cheap and flat and often have riverfront access. That means access to electrical infrastructure and fiber optic cables, making them attractive to developers.<\/p>\n
Among the proposed projects in Western Pennsylvania so far, almost all are positioned at old industrial sites, including Homer City, Shippingport and Regli\u2019s project in Springdale.<\/p>\n
\u201cI can\u2019t tell you there\u2019s thousands of communities or even hundreds of communities in Pennsylvania that want to say yes to a data center, but there are a lot of communities who do because they understand these old industrial properties don\u2019t really have a bright future and aren\u2019t just going to reinvent themselves or uncontaminate themselves,\u201d Regli said.<\/p>\n
Impact and regulation<\/p>\n
For Kennedy, the data center boom is a chance to breathe life into blighted properties and build up the economy.<\/p>\n
Kennedy said it\u2019s not so much the centers but the components that go in them that excite him.<\/p>\n
\u201cI do think we have a story about data centers in Western Pennsylvania \u2014 it\u2019s mostly a story of renewal,\u201d he said.<\/p>\n
He cited recent local expansions by electrical component firms Hitachi and Mitsubishi, both of which produce components vital to data center development and electrical grid upgrades.<\/p>\n
Hitachi is spending $70 million to transform its facility near Mt. Pleasant in Westmoreland County into a high-voltage product manufacturing facility. Mitsubishi is investing $86 million, including almost $7 million in state money, to upgrade plants in Beaver and Allegheny counties for the manufacture of circuit breakers and other electronic components.<\/p>\n
But O\u2019Leary \u2014 at the Ohio River Valley Institute \u2014 is more skeptical. \u201cWhen we talk about these huge numbers being invested, the question isn\u2019t, \u2018How much is being invested?\u2019 The question should be, \u2018How much of that investment is actually going to end up in local economies and end up as disposable income in those communities?\u2019 \u2014 and the answer is very, very little,\u201d O\u2019Leary said.<\/p>\n
Though data centers require significant labor during construction, full-time staff at big data centers is comparatively small after completion because the servers are mostly self-sufficient.<\/p>\n
Still, taxes derived from the industry could have some impact on Western Pennsylvania, O\u2019Leary said.<\/p>\n
In Loudoun County, Va. \u2014 the epicenter of the nation\u2019s data center industry \u2014 those taxes account for more than one-third of general fund revenues, according to the county. And, in recent years, Loudoun consistently has slashed property taxes, which now rank among the lowest in the area.<\/p>\n
If the growth of the industry has a similar effect around Pittsburgh, that could lead to more disposable income for residents, but O\u2019Leary said it would likely be isolated to local municipalities, not a regionwide trend.<\/p>\n
Real estate taxes on land and income taxes on employee salaries would provide some bump to government coffers. But the biggest tax boost would come from sales and use taxes, which mostly benefit the state.<\/p>\n
Even that wouldn\u2019t be seen for some time. Pennsylvania legislators passed a bill in 2021 exempting data center developers from those taxes temporarily, in an effort to attract the industry. It worked so well that the state recently changed course to strengthen oversight of data centers after intense public backlash.<\/p>\n
One bill, backed by Gov. Josh Shapiro, passed the state House in June with strong bipartisan support. It calls for establishing stricter transparency and environmental requirements for data center developers seeking state sales tax exemptions.<\/p>\n
Another bill would eliminate sales tax exemptions for equipment purchased for data center development altogether. It passed the House with near unanimous support a day later.<\/p>\n
Both bills are caught up in the state Senate. The vast backlash against data centers \u2014 and the government scramble to regulate them \u2014 isn\u2019t isolated to Pennsylvania.<\/p>\n
New York Gov. Kathy Hochul issued an executive order in July placing a one-year moratorium on hyperscale data center development in her state.<\/p>\n
Pennsylvania Treasurer Stacy Garrity, Shapiro\u2019s Republican opponent in the governor\u2019s race, said she also supports an indefinite pause on development \u2014 though her larger regulatory proposal for the industry remains hazy.<\/p>\n
The sudden influx of projects has left local governments rushing to create ordinances to regulate development.<\/p>\n
East Deer, Oakmont, Tarentum, Upper Burrell, Murrysville and Gilpin, among others, have made moves to shield themselves from the industry.<\/p>\n
Community reaction<\/p>\n
The local level is where Lauren Posey typically finds herself.<\/p>\n
A policy advocate with environmental group Protect PT, Posey has monitored the growth of the industry \u2014 especially projects in Springdale and Upper Burrell \u2014 for more than a year.<\/p>\n
What she has seen hasn\u2019t left her at ease. \u201cIt\u2019s the fact that it\u2019s the overwhelming scale of it. It\u2019s not just a few facilities in isolation,\u201d Posey said. \u201cIt\u2019s this kind of storm that\u2019s happening across our state and across the country.\u201d<\/p>\n
That storm has left deep frustrations in its wake.<\/p>\n
Recent Quinnipiac polling suggests that 74% of Pennsylvanians would oppose the construction of an AI data center in their community, up from 68% in February.<\/p>\n
The sudden political flashpoint has seen residents consistently lash out against projects.<\/p>\n
\u201cIt\u2019s somehow easier to get people to care about this issue than maybe other environmental issues,\u201d Posey said.<\/p>\n
Unlike other political issues \u2014 often centered in faraway Harrisburg or Washington, D.C. \u2014 fights over data centers often are set in cramped borough council chambers, a setting that\u2019s more accessible than Capitol Hill.<\/p>\n
Concerns about noise generated by data centers and rising power bills are tangible issues that prompt residents to resist, Posey said.<\/p>\n
Much of the pushback also might be reflective of general unease about the proliferation of AI, she said.<\/p>\n
Though often at odds throughout the Springdale project, Posey and Regli seem to agree on one point: Much of the backlash is also driven by a deeper issue \u2014 wealth and class disparities.<\/p>\n
\u201cIt\u2019s not as much about the data centers as it is about the money behind the data centers,\u201d Regli said.<\/p>\n
Regli \u2014 whose project is backed by multibillion-dollar hedge fund Davidson Kempner \u2014 said he believes many residents perceive the moneyed data center industry as taking advantage of small communities as many Americans continue to struggle through an affordability crisis.<\/p>\n
As long as economic circumstances don\u2019t change, he said he doesn\u2019t expect pushback from residents to budge.<\/p>\n
\u201cIt should mobilize people. People should ask questions. They should be engaged in civic communities. They should be fighting for more equality in the U.S., and the fact that data centers have become the fulcrum point of that conversation in many, many ways should not be surprising,\u201d Regli said.<\/p>\n
What comes next?<\/p>\n
Still an AI acolyte, Regli said he\u2019ll continue to push to expand the industry in Western Pennsylvania for what he called the \u201cbetterment of humanity.\u201d<\/p>\n
A third-generation real estate developer, Regli said the build-out will require \u201cdialogue \u201d with communities.<\/p>\n
That dialogue will have to involve community benefits agreements, contracts signed between developers and local governments that often seek further investment in the community or other project mitigation not outlined in ordinances, Regli said.<\/p>\n
It also will have to involve regulation at the state level. Having formerly served as executive director of critical investments in the Shapiro administration, Regli said he\u2019s supportive of the governor\u2019s efforts to tie tax breaks to transparency and firmer industry standards.<\/p>\n
Essentially, development \u201cthe right way,\u201d he said.<\/p>\n
But between the ramped-up use of fossil fuels to power the data centers and the increasing strain on the electric grid, Posey said she doesn\u2019t expect the region to come out of the buildup unscathed.<\/p>\n
For O\u2019Leary, the most important thing is that communities go into bargaining cleareyed.<\/p>\n
\u201cI\u2019m not saying we shouldn\u2019t have data centers. I\u2019m not saying communities shouldn\u2019t welcome data centers. I\u2019m just saying that they should make very sure that they\u2019re getting a good deal as a result of it,\u201d he said.<\/p>\n
Ten years out, O\u2019Leary said he expects a fair amount of data centers will be built in Western Pennsylvania, but he isn\u2019t holding his breath for any sort of large-scale economic impact.<\/p>\n
Western Pennsylvania isn\u2019t likely to become the next Loudoun County, but time will tell whether it becomes a strong data hub \u2014 or a speculative building bubble that proves anticlimactic.<\/p>\n","protected":false},"excerpt":{"rendered":"By JAMES ENGELTribune-Review Supporters and opponents of data centers see different futures for the industry in Western Pennsylvania.…\n","protected":false},"author":2,"featured_media":258295,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[28,30,29],"class_list":["post-258294","post","type-post","status-publish","format-standard","has-post-thumbnail","category-pennsylvania","tag-pennsylvania","tag-pennsylvania-headlines","tag-pennsylvania-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts\/258294","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/comments?post=258294"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts\/258294\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/media\/258295"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/media?parent=258294"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/categories?post=258294"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/tags?post=258294"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}