El Paso leaders to weigh ending incentives for future hyperscale data centers

EL PASO, TEXAS (KFOX14/CBS4) — El Paso city leaders could soon take steps to limit future hyperscale data center development by ending the incentives often used to attract the projects, as questions continue about their long-term impact on the city’s resources.

An agenda item set for discussion on Tuesday calls for the city to stop offering tax abatements, permit fee waivers, rebates, or other economic development incentives for future hyperscale data center facilities.

City leaders say the discussion comes as concerns grow over the long-term impact these facilities could have on El Paso’s power grid, water supply, and infrastructure.

Emily Schmalz reports on El Paso leaders to weigh ending incentives for future hyperscale data centers (Credit: KFOX14)

El Paso City Rep. Chris Canales, who is behind the item, said the goal is immediate action to prevent the city from pursuing or encouraging additional projects.

“My item really is focused on the city taking an immediate action to implement the policy that we don’t want to proceed with or pursue or incentivize any new data center developments,” Canales said.

Canales said one of the main concerns with future data centers is whether the cost of supporting them could fall on residents.

But El Paso Electric Director of Government Affairs Daniel Perez said new developments would cover the cost of any needed infrastructure.

“If any customer moves to our region and needs infrastructure any type of assets to be built to serve them They will burden those costs,” Perez said.

Some El Pasoans said they see both benefits and risks with large data center developments, while others said more questions should have been answered before current projects moved forward.

“It would be good to actually see if we can halt the current ones or get more information about the current ones,” one resident said.

“I wouldn’t think we need them, but I think they’re gonna help out a lot with our future,” another resident said.

“I feel like we should definitely be a little bit concerned like what they’re all going to cause and what’s going to happen with them,” the resident added.

“I think it’s bad for the city,” another resident said.

“I don’t think they really care because if they would have cared, they would have asked our opinion in the first place before wanting to build these two,” another resident said.

Canales said ending incentives could make El Paso less competitive for future projects, but he said the city should not encourage large developments without understanding their impact.

“They most likely aren’t going to look to locate in a city that isn’t willing to give them a substantial incentive because many cities are granting those incentives,” Canales said.

“Again, I think right now we just want to make sure that we’re not incentivizing a large project like a data center without understanding the impact of that.”

The proposal would direct the city manager to develop a future data center policy framework for City Council review.

City Council is set to discuss the item Tuesday, when leaders could decide whether to move forward with the policy.

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