Where data centers will end up when some community leaders see them as providing benefits, others see them as threats

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There are already thousands of data centers in the United States and more to come. Some community leaders say they benefit their community:

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The recently approved CyrusOne data center in Sangamon County is projected to bring $500 million in capital investments to the county. Marc Ayers, a former Sangamon County Board member, said it’s estimated to generate $5 million to $6 million in property taxes annually, with around $98 million in tax revenue over the next 20 years…

DeKalb Mayor Cohen Barnes said the Meta data center that has been operational since 2023 has contributed significantly to the city with community investments and around $250,000-300,000 in utility taxes…

Barnes said the data center in DeKalb employed more than a thousand union construction workers over the five years it took to build. Now, he said there are hundreds of permanent jobs working on tech, electricity and maintaining the HVAC systems.

Other local leaders describe the downsides:

Property tax revenue from data centers can be significant, but many say the massive centers aren’t worth the millions of gallons of water they consume or the stress they put on an already struggling electric grid. The ComEd territory in northern Illinois, for example, has enough large-load energy projects in its queue to more than double the amount of energy demand in the territory by 2040…

John Laesch, the mayor of Aurora, said the five operational data centers in his community have provided generous tax payments, but those benefits don’t outweigh the downsides data centers can bring to communities…

“But during our public hearings, we heard residents ask, is that $1.6 million worth the noise pollution and the strain on our power grid and potential long-term risk to our climate?” Laesch said.

With these different perspectives, are there and will there be clear patterns in which communities have data centers and which do not? With land uses that can be controversial, will most or all communities say no or will there be certain kinds of communities that approve data centers?

Given some existing patterns, these might be some fault lines:

-Communities with residents with higher incomes and higher levels of education vs. those with lower levels

-Communities who are seeking out new economic and development opportunities vs. those who are not

-The political leanings of local officials

-Communities with pro-business/jobs/growth/construction coalitions vs those where such coalitions have a lesser presence

-Metro areas with a stronger presence of big tech companies versus places that do not

I would bet some of this could be answered already but it would also be interesting to see what happens now with companies and communities having the advantages of seeing what has already happened and what might work for getting the outcome they want.

How big do the financial incentives have to be to actually have affordable housing built in Illinois?

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A proposed Illinois bill suggests offering incentives for middle housing or affordable housing is a better way to go:

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While Pritzker’s plan would require municipalities statewide to allow denser housing, the municipal league’s bill, introduced by Homewood Democrat Rep. Will Davis, makes participation voluntary by dangling state money as an incentive rather than wielding state authority as a hammer. Local leaders have spent months objecting to Pritzker’s plan as an unprecedented state intrusion into their authority to shape their own communities….

Cole characterized his organization’s proposal not as a counter but as “an alternative proposal” built around a voluntary incentive program of state funds to support local participation in expanding housing supply, including locally chosen overlay districts where middle housing would be allowed by right. He pressed his case at a House subject-matter hearing on Wednesday with pointed rhetoric…

In addition, the new bill would allow municipalities to prioritize blighted properties for redevelopment, potentially with state assistance; exempt certain housing building materials from some taxes; and prevent private homeowners’ associations from restrictions that “unreasonably prohibit” ADUs. It would also cap upfront rental costs at one month’s rent. Whether to allow single-stairway buildings — a provision of the governor’s proposal for many buildings up to six stories — would remain up to individual municipalities…

Cole argued Monday that many of his members would embrace denser housing if the financial incentives were right and pushed back on the idea local leaders are inherently opposed to growth.

This is a familiar debate in a number of American states: people generally like the idea of constructing cheaper housing but do not necessarily want it near them as they fear for their property values and who might be their neighbors.

Here is what I want to know on the incentives side: what incentives are needed to get developers, builders, and communities to move? How much money would be available? How much money do those on the developing and constructing side want in order to change their focus from higher-end housing to cheaper housing? Will these incentives push communities to actually approve cheaper housing (say for any new residents more than 10-20% below the existing household median income for the community)? Incentives are often pitched as the answer but rarely are the numbers discussed publicly.

At the moment, the debate is pitched as state control or local control, mandates or incentives. Do we actually know what incentives will work or are Illinois communities committed to not giving up any local control (and this is a bedrock of suburban local government, if not all local governments)?

Argument for no epidemic of college closings…yet?

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How many colleges in the United States have closed in recent years?

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But it is not, as the New York Times claimed, part of “an epidemic of college closures.” Nor is it part of “a slew of small colleges that have closed because of financial instability or are at risk of shuttering,” according to the Christian Science Monitor. It is simply false that, as the Washington Postreported, “college closures have become increasingly common as campuses compete for a shrinking pool of U.S. students.” And Hampshire’s demise is certainly not an example of “a structural realignment” linked to an intentional “downsizing” program led by the Trump administration, as per the Washington Times.

The facts: According to a very good compilation list, since the beginning of 2020 exactly 49 degree-granting nonprofit colleges and universities have closed or announced their closures. That’s an average of seven per year, out of the 3,227 such institutions that existed in 2020. Now, I’m no epidemiologist, but an annual mortality rate of 0.02 percent does not sound like an epidemic to me.

Furthermore, the schools that have closed fit a specific type: super small. Hampshire had 844 students when it announced its closure, and that puts it at the high end of the 49 schools. Only five had over 2,000 students. Nine had less than 200 students. (For reference, the average nonprofit institution enrolls about 5,500.) And most fail an obscurity test I like to call “Have I heard of it?” I study higher education for a living. But of those 49, I’ve previously heard of just 10. Hampshire is well known despite its small size, and places like Cardinal Stritch University in Wisconsin and Birmingham-Southern College in Alabama had local recognition. But Limestone University? Eastern Nazarene College? Alderson Broaddus University? Cazenovia College? I could go on. No offense to their alumni, but these are not exactly name-brand schools.

The reason for the “…yet?” in the title of the post is because, as noted later in the article, there seem to be some with vested interests in this area:

So who is pushing the “epidemic” narrative? Many of the recent news stories have cited, often without name, a recent report that trumpeted past closures and identified 834 American colleges and universities facing “existential threats” in the near future from declining enrollment and other financial pressures. It’s from the Huron Consulting Group, a “global professional services firm” that offers its wares to manufacturers, utility companies, oil producers, commercial real estate investors, and—you guessed it—higher education. The Huron report is not publicly available and their press release offers no details on methodology except that they “analyzed more than a decade of data to develop a model with some predictive potential.” No worries about that though; presumably, colleges and universities would get to learn all the details once they pay Huron to help them navigate “a platform for the coordinated exchange of institutional assets.”

Several quick thoughts in response:

  1. Numbers do not interpret themselves; humans measure and report data, making interpretations along the way.
  2. Do we have longer-term data on the closings of colleges and universities? Having a baseline over time could be helpful.
  3. Going back to #1, this is an example of how some social issues get discussed in media and in the public. There is some data or evidence and people start talking about it. Predictions are made. People look for patterns and trends. They can tend to look for patterns and evidence that fit their predictions.
  4. Even if there is not a big change at this point, does this necessarily mean there won’t be big changes in the years to come?

I’m sure there will be more to come on this topic.

Trying to imagine an older church building with an active congregation at the center of a new development

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Inspired by this article regarding an older church building and congregation on the site of what could soon be a big development effort on Chicago’s west side, I was thinking about when major development might include a church building in a prominent spot. Not just preserve a landmark building or provide space that might be used by religious congregations. New development centered around a religious building.

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These do not always go together in the American context. Churches and religious congregations are religious groups and community organizations. They do not generate jobs and revenues like businesses do. They do not pay property taxes. Churches may have been at the center of early European settlements in the United States but many of them moved as residents left commercial cores and the land became really valuable.

In new developments, developers might provide land for religious congregations or set aside land for such purposes. But put a religious building at the center? Imagine a new subdivision or condo building where a prominent place is given to a religious group – unlikely.

Maybe the only way this could happen is if the situation is similar to the article cited above: there is a historic congregation and building present and developers want to build something new. Construction could account for and even highlight the long-time congregation.

Another option: what if the development is led by or facilitated by a religious congregation? Imagine they have additional land and they want to stay. They could sell the rights to some of the land, stay put, and be there when the significant new development occurs. Or they undertake the development themselves, building around their own presence.

What counts as a “simple answer” for a social issue?

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With numerous social issues or social problems under discussion by the media, there are no shortage of answers provided. But, if someone says they have a “simple answer,” is it really that simple? Take this example from the Chicago Tribune editorial board in regard to the high price of new cars in the United States:

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The simple answer is that U.S. automakers decided the best way to combat the rising costs of unionized labor, which has secured massive gains, and ballooning material expenses was to chase the higher profit margins that come from the bigger SUVs, now the vehicle of choice for a broad swath of Americans.

We’d also add that decades of protectionist policies in the U.S. auto industry and a lack of fresh competition have not exactly been to the advantage of American consumers.

Simple answers might be satisfying. Few people probably want to pay such high prices for new cars. If there is a simple answer, this seems to get us closer to finding a solution.

But, the answer provided above may not be so simple (even though that is the claim. The first paragraph has multiple pieces triggering each other. Higher labor costs and paying more materials led to a particular decision by automakers. Why that decision and not others? What other options did they consider? And this all took place over at least a few years.

The second paragraph then adds an additional factor at work: policy choices that led to limited competition among automakers. These also unfolded over time and in particular contexts.

Is this a simple answer? It doesn’t seem to be so to me. There are multiple moving pieces. This all took time to develop.

Say others then enter the conversation. There are plenty of people with vested interests in this question. Someone says, “No, really, I have just one thing that needs to be changed,” and someone else says, “It is actually a difficult and nuanced situation and we cannot make any progress unless we acknowledge that first.”

Tackling big social issues is often hard. I’m not sure offering simple solutions – at least, making that rhetorical move, even if the diagnosis or solution offered is not really simple – is helpful.

Americans united in not wanting to live near data centers

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NIMBY responses to data centers are bringing Americans together:

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Lyon Township voted for Donald J. Trump in 2024, but party loyalties hardly seemed to matter. In an era when Americans are divided on everything — even the cars they drive and the TV shows they watch — data centers seem to have bridged the partisan divide.

Early evidence suggests that Americans — once agnostic — are now souring on them. Last month, Maine became the first state to pass a moratorium on data centers — only to have the governor, a Democrat, to veto it — and similar measures have been introduced in at least 13 other states and dozens of municipalities.

In Virginia, a recent poll found the public had turned sharply against data centers. The same is true in Wisconsin, said Charles Franklin, director of the Marquette University Law School Poll, which found that around 70 percent of people now say the costs outweigh the benefits.

Even more interesting, he said, the state’s deep partisan divide seems to have vanished when it comes to data centers.

I am a little confused why this is pitched as bridging political divides when there is a longstanding pattern in local American politics of residents resisting perceived threats to their property values and quality of life. If the American Dream continues to involve homeownership, often in suburban communities, residents will express concerns or protest strongly if a proposed nearby development will be near their homes.

Perhaps this is harder to see or remember when either only national politics are important or all local politics are seen as extensions of national politics. Local politics can often be about local interests. Locals are not necessarily opposed to growth and development – after all, growth is good in the American context – but they often do not want development that significantly changes their local experience.

At the same time, fewer Americans might be opposed to data centers in the abstract. If they want to use their AI powered devices and platforms, don’t these have to be built somewhere? This is common to NIMBY responses: people might acknowledge the need for a particular land use but few want it located near them.

How much smaller of a house do Millennials and Gen Z want?

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Younger American adults may now be less interested in owning a big house:

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This is very Millennial of me. My generation of Americans is the first in decades to collectively abandon the dream of a big house. In part, that’s likely a concession to reality: Real estate is so expensive that homeownership is, for many, a fantasy. But it also reflects changing ideas about what makes a good house and a good life, for both renters and owners. According to the National Association of Realtors’ most recent survey of American housing preferences, the majority of Millennials and Gen Zers would rather live in smaller homes in more walkable communities than larger ones in less dense areas. As a country, though, we aren’t building accordingly.

Smaller than what? This particular mentions “mansions” and “architectural marvels” in the opening and praises row houses in the latter part of the article. How small of a row house – 1,000 square feet, 1,500 square feet, etc.?

The median new home constructed in 2024 was 2,146 square feet. The United States has a lot of big houses. There is a reason it is known for McMansions. But that also means that there are plenty of units constructed that are under McMansion size.

Is it more about closer housing? This article hints at big houses amid sprawl whereas row houses offer density, walkability, and neighborhood opportunities. Or could it also be about household structures; younger generations planning to have fewer children need less space?

And are these smaller houses necessarily cheaper? Living in desirable areas – walkable, lots of cultural opportunities nearby – is not necessarily cheap, even with significantly smaller units.

We will see what happens as older generations eventually give up both McMansion era homes and other housing options plus new construction proceeds.

Zombie homes and the tax costs they might incur upon sale

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One firm suggests taxes are the reason for a number of zombie homes in the United States:

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Roughly 7.2 million single-family homes are sitting empty and being kept off the market, according to the real estate investment service Flock Homes, contributing to a nationwide housing shortage. But a closer look at these “zombie homes” shows that for many owners, selling just isn’t worth it…

According to Flock Homes, for many retirees “the tax bill triggered by a sale far exceeds the cost of simply leaving the home empty.” This includes capital gains taxes (paid on the profit from the sale) and depreciation recapture taxes (which sellers of rental properties face). The federal capital gains exemption, which applies to the sale of primary residences, was not factored into the analysis of vacant homes. Mortgage payments were not included in the analysis, since many older homeowners own their homes outright.

In the country’s biggest markets, the total tax liability for sellers 65 and older often adds up to more than $100,000 on a sale, and it can take years before the annual costs of keeping an empty home approach that amount. In the Los Angeles area, for example, the average exit tax for homeowners 65 and older is $185,000, while the annual cost of insurance, maintenance and property taxes on a zombie home is only about $10,000, the data showed.

Interesting calculations. In the short term, sitting on the zombie home appears to save money compared to selling now and paying a big tax bill. And while sitting on the zombie home, its value might go even higher!

At the same time, if someone sold one of these homes now, they would still likely pocket a lot of money even after paying taxes. The suggestion here is not that the tax costs would wipe out any gains from the sale; rather, the possible sellers just do not want to pay that much in taxes.

The overall pattern fits the shift of American houses from places to live and enjoy to commodities. Why sell if there is going to be a big tax bill? Why not try to gain as much as possible from the sale of a house?

A speed limit of 17.2 mph to help drivers pay attention

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Creative speed limits might help catch the attention of drivers:

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In a post on social media, officials with the Outagamie County Recycling and Solid Waste said they decided on a posted speed limit of 17.3 mph because it makes drivers pause and look twice, breaking up that “autopilot” feeling that can be experienced when driving on familiar roads…

Such a precise speed limit is unusual, but the Wisconsin waste facility is not the first to try it out. Another example can be found in Colorado Springs, Colorado, where the posted speed limit at a shopping center is 8.2 mph. The decimal point has confounded Redditors for years.

Transportation planners may be turning to these more creative methods as they seek to slow drivers down. One recent study found that simply lowering the speed limit doesn’t usually work.

Changes in road design, like speed bumps, roundabouts, or curb bulb-outs, are usually more effective than changing signage.

It would be great to hear back in a few months about how the 17.3 mph sign has affected driving. How many noticed it while driving versus the number of people who heard about it online?

More broadly, provide a wide, straight road with few to no barriers and drivers will tend to want to go fast. It feels safe. They feel like they can go fast.

Design and signs might help them go a slower speed. In my area, the primary road remedies seem to involve intersections – making new intersections, turn arrows, diamond interchanges, roundabouts, etc. Plenty of people speed on a relatively wide and straight roads and speed bumps or hump are relatively unusual outside of HOAs.

Taking the NIMBY approach to taxes

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As someone who studies suburbs, I am familiar with NIMBY responses to proposed development: residents do not want it near their dwellings, even if they agree it probably needs to be built somewhere. I was reminded of this common response when I read a description of how Americans feel about taxes:

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Over the past decade, the share of Americans who believe that their income-tax bill is unfair has climbed by 14percentage points. A majority of Americans, in both parties and at all income levels, say that they are kicking in too much. The National War Tax Resistance Coordinating Committee, which teaches people how to conscientiously object to income levies, reports surging interest in its training sessions. Grassroots groups around the country are fighting to “ax the tax.” Most people want rates to go up—just not on them.

Someone should pay taxes, but not me. I like the government programs I participate in (if they even know they are government programs – see later in the article) but someone else should fund them. The money should come from someone or somewhere else.

What does this lead to in the long run? On the NIMBY development side, it tends to put a buffer around wealthier communities who have the resources and voice to fight against development they do not want. Would the tax case equivalent be that certain groups are able to avoid higher taxes being placed on them or certain groups are able to obtain tax cuts while others are not?

At the local, state, and federal levels, it will be interesting to see how different taxing bodies try to close budget holes. There have to be some revenue sources – or cuts? – to make ends meet.