Data Centers!

Much has been written recently regarding the build out of Data Centers which provide the infrastructure for AI (Artificial Intelligence). Opposition to the construction of Data Centers seems to be raging across the political spectrum and many red and blue state governors have issued Executive Orders regulating Data Center construction in their states!

I read a recent article in the Wall Street Journal which discusses the business, legal, and political turmoil underway in the Maysville, Kentucky community regarding land acquisition for the construction of a Data Center which is rumored to be under consideration by Meta. I have included the link to the article and recommend it as an excellent read for illustrating the competing interests and viewpoints on Data Centers with some residents standing to receive millions of dollars in proceeds for the sale of farm land while other residents are convinced that the construction of a Data Center will totally destroy and corrupt the community and make it unlivable for its residents. https://share.google/O3FLAX2ux0U7UaxIp.

Reading the Wall Street Journal article on the controversy regarding Data Centers enabled me to recall one of my earliest and most memorable work experiences I had as a young Bell Telephone real estate manager seeking to acquire land sites for Bell Telephone operations in rural eastern Kentucky. To be sure, my acquisition work involved thousands of dollars for land acquisition while Data Center land acquisition typically involves millions of dollars. However, I believe the approach taken in Maysville by the Data Center land acquisition team and the residents’ reaction are very similar to my experience in eastern Kentucky. I will attempt to discuss below these similarities; the lessons I learned; and how these lessons might be helpful for those seeking to acquire land for Data Centers.

As I discussed in my book, Almost Finished (https://a.co/d/0gpxZpwK), I undertook my work in rural eastern Kentucky brimming with confidence bordering on hubris! I was representing a well-known and well-heeled corporation with resources available to purchase land, and I was also attending law school and well into my first semester and studying contract law. This surely prepared me to negotiate and sign land purchase agreements, so what could possibly go wrong? As it turned out, plenty!  I should have understood from my own eastern Kentucky family heritage that there is a natural distrust of outsiders in rural Kentucky. The dress code for the Bell Telephone corporate office in Louisville, Kentucky was not the same as for Pike, Lee, Floyd, and Breathitt Counties in rural eastern Kentucky! I should have understood that. I should also have understood it is essential to first contact some powerful community leaders and explain the reason for your visit and that your work in the community is for a legitimate purpose which will benefit and not harm the community. If the community leaders understand this and support your presence in the community, you have at least a fighting chance to accomplish your business objective without undue opposition from the residents. These were difficult but very important lessons I learned for doing business in rural eastern Kentucky.  

Everything that I have read regarding land acquisition for Data Centers suggests to me that the land acquisition teams have failed on at least two counts. They have not adequately explained the environmental impact of a Data Center in the community and the economic benefits to the community from a Data Center. The working assumption for most residents is that a Data Center will have a voracious appetite for water and electricity which will cause water and electric bills to soar while producing toxic water pollution in nearby rivers and streams. This might have been the case in the early days of Data Center construction, but this should no longer be a major concern. It is my understanding that most Data Centers under construction today will use recycled water and provide their own electric power transmission source through free standing turbine generators. But none of this is relevant unless it is clearly explained to residents and binding legal agreements are executed with governmental entities which require these commitments to be honored. You can sure that, in the absence of inaccurate information, residents will assume the worst possible inaccurate information. In addition, residents need to understand the positive economic benefits flowing from the construction of a Data Center. To be sure, the numerous construction related jobs will be temporary, but there will also be permanent good paying jobs associated with Data Centers which will create spending power for these employees which will in turn generate positive economic benefits which will ripple across the community.

Let me conclude with this observation. Just as Bell Telephone was able to make necessary land acquisitions and complete facility construction in rural eastern Kentucky, land acquisition for Data Centers will ultimately be consummated, and Data Centers will be built across rural America. The AI genie is out of the bottle and the appetite in our nation for AI in medicine, law, education, finance, agriculture, military, and government is ravenous. It is highly unlikely to be abated. The question to be decided is how land acquisition and Data Center construction will proceed. Will it be done in a thoughtful, orderly and peaceful manner throughout our nation, or will it be done in a chaotic and confrontational manner with residents at each other’s throats and local communities deeply divided? The jury is still out on these questions. Will leaders emerge in Corporate America, among elected officials in state and federal government, and in local communities to ensure that this work is handled lawfully and responsibly so peace and civility are maintained in local communities? To borrow from President Abraham Lincoln’s First Inaugural Address delivered on March 4, 1861, let’s hope that the better angels of our nature take the lead on this contentious issue sooner rather than later.

God bless you and thank you for the privilege of your time in reading my blog.

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