As data center projects expand into new markets, they are drawing increased scrutiny from local governments and communities. In a session this week at NAIOP’s I.CON Data Centers in Jersey City, New Jersey, panelists explored how developers are navigating misconceptions, engaging with stakeholders, and moving projects forward.
Led by moderator Scott Ziance, Esq., partner, Vorys, Sater, Seymour and Pease LLP, the panelists included Daniel English, managing partner, Legacy Investments; Hank Evans, economic development and community engagement, OpenAI; and Martin Romo, vice president, external affairs, Rowan Digital Infrastructure.
“We’ve been investing in data centers for 15 years, so we’ve been at this for quite a while,” Romo said. “I was lamenting that nobody knew what we were doing for 14 of them, and then suddenly we were hated but never loved. So, I’m happy to talk about what we’ve been up to.”
The panelists shared their key recommendations for working successfully with local stakeholders to launch a successful data center project.
Listen to the local community.
When a development team is first coming into a community, they don’t necessarily know the history, personalities or needs of that community. “I think the first thing really is just to listen – I think that is really underrated,” English said. He likes to hold a listening roundtable and talk about the project at a high level and then revisit the conversation later to share project details.
People may have concerns about data centers, but hearing from the local community is critical to getting off to a great start, Romo said. The project team can hear from the community about their economic development goals and translate how the data center project fits into their vision.
Address misconceptions with truth.
“There’s a massive misunderstanding of what data centers are,” English said. “Most people I talk to don’t know what a data center is; they’ve heard of it, they think it’s bad and scary, and they might have some sense that data lives in it.”
English noted a data center project in downtown Minneapolis his team worked on that repurposed a building built in 1988 into a modern, high-tech facility. After touring it, the mayor was pleased to learn that the project was not only aesthetically pleasing but generated tax revenue and did not have the environmental drain that was feared.
From a city’s perspective, vacant buildings are considered dead assets. They are not being leased, not being used, not producing tax revenue – and sometimes declining right in the urban core. In these cases, when a data center development team has harnessed existing electrical power and water infrastructure, increased the tax basis, and brought in significant amounts of investment into the downtown area, city leaders are excited about welcoming a data center, English said.
Balance transparency with confidentiality.
“[Non-disclosure agreements (NDAs)] have become a weird lightning rod, but for some of our clients, it has long been a part of the script for engaging in a community,” Ziance said, and asked the panelists how they balance the need for confidentiality versus the need for transparency.
“For us, it’s paramount to start establishing trust from the very first conversation, and to build on that trust,” Romo said. “It doesn’t start with handing over a piece of paper and saying, ‘Please sign here.’”
“[The approach] has changed significantly in the past decade,” Evans said. “Now, we don’t use NDAs in communities.” When you’re briefing a city’s board of commissioners early on in the project, you need to trust that they’re not going to share that information with the community or with the press, he said, even knowing that it’s likely that some members won’t be favorable toward this asset class.
There will always be aspects of a project that can’t be shared because they are still changing or confidential, such as the company expected to occupy the data center.
Engage across multiple platforms.
Early and iterative engagement across multiple platforms helps address concerns from community members, said Romo. Some people want to come to an open house; some people go online to learn more and can read FAQs or submit their questions through a portal on a project website; some prefer to go to a community dinner to meet the project leaders face to face.
“If you want to have that type of open dialogue, it has been pretty helpful to allow people to let out their frustrations and learn a little bit about how we actually are developing versus what their misconceptions may be,” Romo said.
“The best community meetings I’ve been to are ones where we’re not on the hot seat – it’s the city manager or mayor on the hot seat there, and they own the own the project more than we do,” Ziance said. This is the result of those months of building trust.
Invest where it matters.
“At Rowan, we sponsor community grants,” Romo said. “We have a Community Catalyst program where we sit down with local leaders and understand what’s missing, what’s wanted [in their community].” His team tries to determine how they can address local priorities, such as sponsoring STEM centers in elementary schools or creating apprenticeship programs with their construction teams.
From workforce development programs to supporting affordable housing, “It’s really about identifying some of those local leaders and the key drivers in that community and becoming a true partner,” Romo said. “These aren’t huge capital expenditures, but they actually go a really long way in helping to build that trusted developer partner that we all want to be.”
“One of the biggest benefits that we hear from residents is they’re so excited that we can come in and build a curriculum at the school so their kid might actually be able to have a job in the community where they grew up instead of having to leave to look for work,” Evans said. “That is, far and away, a huge focus for us and really impactful.”
