We Are Mercer County KY

What is a data center?

Data centers aren’t just “buildings” — they are massive industrial facilities.

These are physical sites filled with servers and IT equipment, and the largest ones are enormous. Some “mega” data centers reach 1–4 million square feet, which is roughly 17–70 football fields — and some are even bigger.

To put that in perspective, a single 4 million square foot data center has already been compared to about 70 football fields.

Because of their size and importance, these facilities require heavy security, constant monitoring, and huge amounts of community resources to operate.

They depend on:

• Massive amounts of electricity
• Large volumes of clean water for cooling
• Fire and emergency response support

And research shows these facilities can place real strain on local infrastructure — from the power grid to water systems.

So when people say “it’s just a building,” that’s not accurate.

These are industrial-scale complexes — and they rely heavily on the communities around them to function.

Tax revenue promises vs. realities.

Data centers are often promoted as major sources of tax revenue, but the reality is more complex. Across the United States, many states offer significant tax incentives—including sales tax exemptions on equipment and long-term property tax abatements—to attract these facilities. These incentives often apply to high-value infrastructure such as servers, cooling systems, and electrical equipment, meaning a large portion of a data center’s total investment may not be fully taxed. At the same time, because data centers are highly automated, they require relatively few permanent employees. This limits the amount of local economic activity generated through payroll, reducing the broader tax base compared to other types of development occupying similar land area. Research from the World Resources Institute highlights that while data center growth is accelerating, the infrastructure demands—particularly energy and water—can outpace the economic benefits returned to local communities (World Resources Institute, 2023). Similarly, the Massachusetts Institute of Technology Energy Initiative notes that the rapid expansion of AI-driven data centers presents significant infrastructure challenges, raising questions about whether public incentives are aligned with long-term community value (MIT Energy Initiative, 2024).

In Kentucky, recent legislation has expanded these incentives even further. House Bill 775 (2025) broadened eligibility for data center tax breaks statewide and allows companies to receive sales and use tax exemptions on equipment if they meet certain investment thresholds. These exemptions can last for decades—up to 50 years—meaning some facilities may operate for most or all of their lifespan while paying little to no tax on their most valuable assets. The law also expanded incentives beyond urban areas to all Kentucky counties, making it easier for large-scale projects to qualify. Critics argue that these policies shift the financial burden away from corporations and onto local communities. Because data centers require substantial public resources—such as electricity infrastructure, water supply, and emergency services—while receiving long-term tax relief, the overall return to local governments, schools, and taxpayers may be significantly lower than advertised. In this way, the gap between perception and reality becomes clear: while data centers represent large private investments, the public subsidies used to attract them can sometimes outweigh the long-term tax benefits returned to the community.

Massachusetts Institute of Technology Energy Initiative. (2024). The multi-faceted challenge of powering AI. https://energy.mit.edu/news/the-multi-faceted-challenge-of-powering-ai/

Stites & Harbison, PLLC. (2025). Kentucky vastly expands data center tax incentives. https://www.stites.com/resources/client-alerts/kentucky-vastly-expands-data-center-tax-incentives/

World Resources Institute. (2023). U.S. data center growth and its impacts. https://www.wri.org/insights/us-data-center-growth-impacts

Kentucky Association of Counties. (2025). 2025 new laws now in effect. https://kaco.org/articles/2025-new-laws-now-in-effect-talk-of-special-session/

Louisville Public Media. (2025). The AI data center boom is coming for Kentucky. https://www.lpm.org/news/2025-12-09/the-ai-data-center-boom-is-coming-for-kentucky-what-will-lawmakers-do-about-it

Louisville Public Media. (2026). GOP bill seeks guardrails for new data centers. https://www.lpm.org/news/2026-02-12/gop-bill-seeks-guardrails-for-new-data-centers-to-pay-their-own-way-in-kentucky

How much electricity do they require?

Data centers don’t just use electricity — they can raise your power bill.

Here’s the part people aren’t being told:

Utilities have to build massive new power lines and power plants just to support these facilities. But those costs aren’t just billed to Big Tech — they’re often spread across everyone. That means you help pay for infrastructure built for billion-dollar companies.

And the demand? It’s enormous. A single hyperscale data center can use as much electricity as 50,000 homes.

When demand jumps that fast and supply can’t keep up, prices go up. Utilities pay more — and pass those costs on to you.

Even Harvard Law School warns this can happen. Click here to find the article.

So while data centers profit, communities can be left covering the cost — every single month on their electric bill.

How much water do they use?

Data centers rely heavily on water to keep servers from overheating, and their demand can be significant. Large facilities can use millions of gallons of water per day, adding up to hundreds of millions of gallons each year, often drawn from the same local water supplies used by residents and agriculture. While companies often point to newer “closed-loop” cooling systems as a solution, these systems do not eliminate water use. Instead, they reuse water but still require constant replacement due to evaporation and system losses. Research from Lawrence Berkeley National Laboratory and reporting by The New York Times show that even more efficient cooling technologies still require substantial, ongoing water withdrawals.

In addition, maintaining these cooling systems requires chemical treatments such as biocides, corrosion inhibitors, and anti-scaling agents to prevent microbial growth and equipment damage. This creates wastewater that must be treated or discharged, raising concerns about local water quality and infrastructure capacity. A report from University of California, Riverside highlights that data center cooling practices can introduce environmental concerns related to both water consumption and wastewater management.

In short, while newer technologies may improve efficiency, data centers still require large, continuous water use and chemical management, meaning the long-term impact on local water supplies and environmental systems remains a serious consideration.

Click here for an article on data center water use from Berkley Lab. Click here for a New York Times article on data center water use. Click here for an article on data centers and water consumption from the Environmental and Energy Studies Institute

Do data centers really create jobs?

Data centers often do not bring the high-paying tech jobs many communities expect because they function more like infrastructure projects than traditional job-creating businesses. Once constructed, these facilities require relatively few employees, as they primarily house automated systems of servers and computers. The local jobs that are created are often limited to lower-wage, non-technical roles such as security, maintenance, and janitorial services (Nguyn, T. & Green, B. 2025). In addition, tax structures in some states further reduce their economic contribution. For example, in Michigan, data centers can receive tax exemptions on personal property—including high-value equipment like servers—meaning they contribute far less to local school funding than other industries (Nguyn, T. & Green, B. 2025).

The long-term value of these developments is also limited by their lifespan. Many AI data centers are expected to operate for only 15–20 years, yet some tax exemptions extend decades into the future—potentially allowing these facilities to avoid significant taxation throughout their entire operational life (Nguyn, T. & Green, B. 2025). Meanwhile, communities may still experience increased infrastructure costs. In Grand Rapids, for example, water rates have risen steadily since the construction of a large data center in 2015, with household rates increasing for ten consecutive years at a pace exceeding the statewide average.

This issue is not theoretical or distant. Kentucky already has at least 37 data centers, with additional large-scale projects under consideration (Kentucky League of Cities, 2025). Taken together, these trends suggest that while data centers bring substantial physical infrastructure, their long-term economic and community benefits may be more limited than initially promised.

Click here for Nguyn, T. & Green, B. 2025. What Happens When Data Centers Come to Town. University of Michigan. Click here for Data Centers in Kentucky: Opportunity and Considerations. Kentucky League of Cities.

What happens to the land?

When data centers are built, the land is typically converted from its previous use—often agricultural or undeveloped land—into a highly engineered, industrial site. Construction involves large-scale grading, paving, and the installation of extensive infrastructure, including substations, transmission lines, cooling systems, and backup generators. This process can significantly alter natural drainage patterns, reduce soil permeability, and fragment local habitats. According to the U.S. Environmental Protection Agency, large-scale land development increases impervious surfaces, which can lead to greater stormwater runoff, erosion, and impacts on nearby waterways. Click here for reference.

Once operational, data centers continue to shape land use through noise, heat output, and restricted access. These facilities often include diesel backup generators and cooling systems that require buffer zones and security perimeters, limiting surrounding land use compatibility. Over time, the site becomes highly specialized for a single purpose, making it difficult to repurpose for agriculture, housing, or small business development. Research from the International Energy Agency notes that data centers are part of energy-intensive infrastructure networks that require long-term integration with power and cooling systems, further embedding them into the landscape. Click here for reference.

Decommissioning presents another challenge. Data centers typically have operational lifespans of 15–20 years, after which rapid technological change can make them obsolete. However, there are currently no universally standardized requirements for decommissioning or site restoration. Without clear policies, communities may be left with large industrial structures, buried infrastructure, and potential environmental concerns such as fuel storage remnants or contaminated materials. The National Renewable Energy Laboratory and other federal research bodies have emphasized the importance of decommissioning plans and financial assurance mechanisms for large infrastructure projects to ensure proper site cleanup and restoration. Click here for reference.