The shady deals behind data centers

Data centers in rural towns

0:00Hey, everyone. You're listening to Code Switch, the show about race and identity from NPR. I'm B.A. Parker. And I'm Gene Demby. So, Gene. Yes, Parker. It's time to talk about data centers. Oh, OK. You've got to narrow it down to a few million things. It seems like all I see on my feed are protests against data centers. People being upset about data centers. A group of protesters are taking a cross-country road trip to demand stronger guardrails in the build-out of data centers in towns all across America.

0:35And we're at risk at losing the SNAP program, yet we will give billions of dollars to developers while we can't even feed Kentuckians. So why do data center companies keep choosing Alabama? Here's how they describe the sound. Like a jet that just hasn't taken off or a crawfish cooker. The group Save My Louisiana stood outside this bus late Saturday night as protesters with the activist group Humans First.

1:00They're cropping up more and more all over. And according to Pew Research Centers, almost 70 percent of planned construction is in rural areas, concentrated mostly in the South. And there are over 750 more planned in the region. How are these things getting built so fast if there's all this opposition to them? Excellent question. So at the planning stage for many of these data centers, city officials are signing NDAs that obscure what companies they're working with and even what they're trying to build.

1:32So the process can kick off before it becomes public information. Townspeople are informed on a need-to-know basis, and apparently they don't need to know. They don't need to know if they're going to run out of water. How is that legal? How is the NDAs and the secrecy from officials, how is any of that legal, though? Oh, that tends to be a theme on this show. How is that legal? How do they do that? How do they do that? How can they do that? Oh, my gosh. So, Gene, I'm going to take you to a place where all of this is happening.

2:05Clarksdale, Mississippi. Wait, so isn't that the center's place? Yes, it is, Gene. It's the birthplace of blues. But it's also a town that is struggling. There isn't even a movie theater where people could go see centers. Clarksdale has been a declining town for a number of years. When I say declining, that means population. That means disappearance of local businesses, whether that's restaurants, factories. Like, it's been struggling to get this investment to kind of reinvigorate the local economy.

2:42I spoke with Aaliyah Wright, a rural issues reporter for Capital B News, about her reporting on Clarksdale, her hometown. Folks are working two to three jobs. Folks are traveling outside of the town to find work. So it's in a struggling place. But it's so beautiful. There are movers and shakers, and people just want to see the best. And so I love that about Clarksdale. So you can see why some people in a town like Clarksdale might be more open to a data center, if it means some development. But Aaliyah said, like in places all over the country, it's been frustrating to navigate because they can't even confirm if there are concrete plans.

3:20You have an ordinance that is rezoning property that can make way for a data center that no one has the details about. Not even the city officials say that they know what could come. So in today's episode, we look into how data center plans sneak into city planning and the hard bargain residents have to make around plans they can't even confirm exist. You're a daughter of the South.

3:55You're from Clarksdale, Mississippi. Correct. Tell me about the town. Like, what's it like? What's going on there? How big is it? All that stuff.

Clarksdale and blues tourism

4:04Yeah. Clarksdale is a town of about 14,000 people. It's majority Black. About 81% of folks live there are Black. It is or has been, like, an international gem because on any given day, there are tourists from all over the world who are, like, invading the streets of Clarksdale to, like, find authentic blues music. They're frequenting the restaurants. Morgan Freeman has a blues spot there that a lot of people go to.

4:37It's a thing. People also like to go to Red's, which is, like, one of the few remaining juke joints in the country, and it's Black-owned. So people are always, like, into the music and history of culture of Clarksdale. And blues tourism isn't enough to help the economy of the town? That's the interesting piece, is that blues tourism, tourism period in Cahoma County, which is where Clarksdale sits, brings in millions of dollars a year. And that has been the central concern by Black residents, is that if folks are coming in, they're spending money, and they're coming to, you know, these annual festivals, why are people still living check to check?

5:22Why are there still abandoned storefronts? Why does downtown only have a host of buildings? And when you go outside of downtown, there's not really much there. So why are people still living in the conditions that they've been living in for years? And no one seems to have the answer for that.

The secret data center proposal

5:40So you wrote about the plans for a hyperscale data center in Clarksdale, but there was a lot of confusion involved. Tell me about how people in town started hearing about it. Yeah. The first official sign of a data center kind of came in December when an engineer named Terry Smith basically filed an application for rezoning to the city's planning commission. That application, while it did not specify a data center, it did say for economic development.

6:14So once that application went to the planning commission, and they held a meeting, the planning commission was under the impression that this would be an economic development project. They would rezone this land from commercial and agriculture to light industrial, again, which makes way for economic development projects. So they voted four to two to move that project forward to the city. After that application was moved forward, that's when the words data center began to come up.

6:48So it wasn't until between January and early March where conversations really started to happen. There was a city council meeting around March 9th, which was packed out because people had started to hear that maybe there was a data center. So after that kind of sparked public backlash, the city then says, you know what, we're going to have a community town hall about this data center. So that's where a lot of the lack of transparency confusion comes in because even the planning commission, the folks who approve or deny these applications, they did not know that this was happening.

7:28And so when we fast forward to that town hall, you see 200 plus people show up. You have white folks and black folks who are like, no, we don't want this. There's potential health concerns. There's environmental concerns, pollution. And we don't even know if there will actually be jobs, permanent jobs that will stay. You also have some black and white folks who are just like, Clark still needs this investment. Who are we to turn down an opportunity that will possibly bring in millions of dollars for the city?

8:01But despite that town hall and majority of folks opposing the project on March 23rd, two commissioners, along with the mayor, decided to vote for the proposal to rezone that land to possibly move the project forward. Now, I should say, even though they've talked about this possibility of a data center, the city of Clarksdale has doubled down to say, just because we passed this ordinance, it doesn't mean a data center is coming. It just means we're setting ourself up for if it does in fact come.

8:34We're going to set our town up for the possibility of a data center. What does that entail? So once folks were asking more questions, there's been conversations. And I've also talked to sources who said that NDAs had been signed, so they could not even talk about any particular details. So that's one thing. The second thing is that the city put out an FAQ in March after residents began to have questions about if a data center was coming or not.

9:04Was it clarified?

9:07No. I mean, the FAQ was a pretty lengthy document, and it basically responded or had responses for general questions, right? Like, what is a hyperscale data center? What does it do? So they're listing out these things, and it's still very vague. But there's one particular section in the FAQ where there is some specificity, and that's where they mention, if a data center was to come, you have to, what, one, pay a one-time $5 million impact fee.

9:44That there could be 1,000 jobs during the construction phase. There could be 200 to 300 permanent jobs. So they're still kind of— Heavy on the could.

9:55Right. If a data center comes, they have to get all of the permits. They have to limit their water usage. They have to pay for, you know, upgrades to the utility system. They're naming all of the things that have to happen if it comes. But if you're publicly saying, we don't know if a data center is coming, how do you have that sort of specificity about what is required or what has to happen or what it will even entail in terms of economic impact if there's nothing on the table?

10:30And I think that's really where the concern has come from. So it seems like the lack of transparency from higher-ups in the town has led to an understandable frustration.

Lawsuits and financial desperation

10:46Yeah.

Lawsuits and financial desperation

10:47And it led to a lawsuit that was filed by 15 Black residents who live in the Round Yard, which is the closest neighborhood to where the proposed site would actually be. And in that particular complaint, which was filed in local court in Cahomet County, they're basically asking for the judge to rule that that ordinance is null and void, that it has to go back to the Planning Commission with the actual details of this project.

11:18And they're hoping that that will then allow the public to have more input and that they will know what's actually being voted on. The city has tried to dismiss the suit. Technically, you know, it's still pending in the court. But there has not been much conversation since that lawsuit was filed, which was at the end of March. I mean, at one point, there was like a one-person protest outside of City Hall. There was so much conversation and videos and there were meetings at local churches. So much movement from the citizens trying to demand answers. And since the lawsuit, it's really been on mute.

11:56So from my understanding, there are all of these reasons for townspeople to be against the data center. But the main argument for the data center is like the potential promise for temporary jobs during the construction phase and like the $5 million that potentially is coming down to the town in some fashion. Yeah. And they also estimated that there could be increase in revenue that they could get from the property taxes. I think one of the estimates in the first year was like $15 million that the city would get.

12:36And like within six years, they would get about $78 million in property tax revenues. And so, again, they have these very specific figures. But what is it? Right. And how do you guarantee that that is actually going to happen? So the folks who are for it are looking at the money, right? They're looking at the temporary jobs that they're hoping could help revitalize Clarksdale. And they hope that like that could lead to other investment in schools, in the community, and that it will bring other companies to Clarksdale. But again, that's unclear, right? That's uncertainty. You don't know if that's actually going to come true. And I think that's the promise that they're holding on to.

13:19I'm curious because, like, does it seem likely that the money could go far enough to cover what the city is trying to promise? I don't know. And again, I think that's the thing. We don't even know what we're looking at. I mean, one of the statements that was made by one of the commissioners, Eddie Earle, he said that the city is on the verge of going bankrupt and that we've had to pull out of our reserves to keep the city going.

13:53I think that statement does warrant a look at the city's budget, analyze some of those documents to see, OK, what hole, if any, the city is in or what would they need to cover whatever costs, right, to keep them going. And there hasn't, from what I've seen or in what I've read, there hasn't been a number that someone has thrown out, like, oh, if we had X amount of dollars, this could do X, Y, and Z. There's still not, again, a lot of specificity on any of this stuff. And so it has minds wondering, like, what is actually going on? What do we need?

14:31Coming up, more about the hard bargain Clarksdale and towns like it make with data centers. What is the trade-off? If you decide that this one-time $5 million impact fee and maybe you get $15 million in tax revenue in the first year and maybe a couple of jobs, is that what you want? That's coming up. Stay with us.

15:05Parker. Just Parker. Code switch. So I'm talking to Aaliyah Wright, a rural issues reporter for Capital B News, about her reporting on a proposed data center in Clarksdale, Mississippi, the town where she grew up. Aaliyah, what's it been like reporting on your hometown? It's been interesting, to say the least. I mean, it's hard not to be emotionally invested, right? Because I know this place so intimately. I still have families who live there, my mom and my dad and so many close family members, you know, my teachers, folks that I have personal relationships with.

15:46And so, yeah, it's hard not to feel away, right? When you're talking about trade-offs of someone's health and the environment and more, and then the, you know, possible economic opportunity or gain that can come from it. But I think for me, it truly feels like a responsibility to find answers, especially when you have the local newspaper that doesn't really do investigative work or can do thorough reporting because, well, it's like a staff of one or two.

16:22Like, it's very small. And when I see these conversations on Facebook and there's so much confusion and people want answers, if I have the resources and the support from my newsroom, I feel like that, yeah, it's a responsibility to help provide some clarity on a very confusing effort. I'm curious, like, what's the recent history in the town of development there? Like, you reported on how companies have promised and pulled out of building there before. How has that affected people?

16:58I think one of the direct impacts has been out-migration, right? Like, if there's no jobs coming into the town, folks are having to move, if you have the means to do so. I think the second thing is that it has made it difficult for residents to actually build trust with city leaders and also, you know, trust companies when they say that they're coming in because the deals fall through. I mean, I think about Kroger, which was the main grocery store in town, and it closed its doors, what, in 2018?

17:32And one of the major reasons that it closed, according to a press release by Kroger at the time, was that it wasn't basically making enough money to continue. And that wasn't the only store that had closed. And so after that, the mayor at the time was like, oh, we're confident, you know, someone will come in. Those doors will not be closed for long. It's 2026. Nothing has replaced that Kroger. Nothing has come into that building. Wait, so where are people getting their groceries? So there are a few smaller shops in town, like the Save-A-Lot, people go there.

18:08Or if you're in Clarksdale, you might go to Walmart. But when I talk to my mom and she's trying to find certain things at the Walmart and it's not there, well, now you have to drive 30, 45 minutes to Batesville to the nearest Piggly Wiggly. So, yeah, even if there are options, sometimes it's always not the freshest options and sometimes it's out of stock. So you have no choice. And for many people, they're carpooling just to get to the nearest grocer. And beyond that, like when we talk about this data center and the land where it could be, there was an announcement at one point that a Piggly Wiggly was going to come there and a sports complex was going to come there.

18:49But it never happened. And so you get people's hopes up. And when you talk or you ask officials, you know, what is going on, sometimes people may not want to sell their land. But oftentimes they're saying because of Clarksdale's high crime rate, quote unquote, because of the lack of housing, because of the performance of schools, they point to all these other factors of why companies then decide that they no longer want to invest.

19:20And so, again, it's really hard to pinpoint what the actual reasons are. But anecdotally, that's what people have been saying. And that's denying them a Piggly Wiggly? Listen, I'm sure it's deeper than that on the surface. But yeah, but that's how it happens, right? You have these groundbreaking ceremonies. You have these press opportunities. Oh, they're doing like all of that. All of the things. And then nothing happens for the most part. I mean, physically, you can see the deterioration of the town, right?

19:55Those abandoned storefronts, the Kroger that is not being occupied. When you drive through the town, you see that. But what would it take to actually change that? I'm not sure. Yeah.

Environmental fallout in the South

20:08To zoom out a little, Clarksdale isn't far away from where Elon Musk's ex-AI is causing environmental concerns. Can you talk about what's happening not far away in South Haven and Boxtown in Memphis? Yeah, so they have this power plant in South Haven with gas turbines or generators that are used to basically power the data center that's happening in Memphis. And South Haven and Memphis are like this close.

20:41Like you cross the state line and you're over in Memphis. And what the NAACP has alleged is that, one, they're illegally operating those turbines because they did not get permits. They started with like 18 and I think the number now is like up to 60 or something like that. Yes, it has increased tremendously. They're also saying that these turbines, which are, you know, basically releasing all of these different chemicals and pollutants, are harming, you know, the schools, the churches, the folks who live in these Black communities in South Haven.

21:19So they had that lawsuit, right? Like recently, this summer, there were also three residents that filed a class action lawsuit against XAI. And they're basically alleging some of the same things, mostly about the nuisance of the noise, the vibrations from the turbines and saying that it has truly degraded their quality of life. And so when we think about, one, the NAACP lawsuit and what the state is saying, they're saying, well, you know, those turbines are temporary and they're mounted on tractors and they're mobile.

21:55So you don't necessarily have to have a permit to do that, which is quite interesting. Yeah, the DOJ also intervened in that lawsuit and was like, this is part of national security. And so we're not basically going to do anything with that. Now, bring that back to Clarksdale. Please. Because one of the concerns is that, OK, if you bring this thing in and you say you're going to make sure they're restricting, you know, certain amounts of water per day,

22:26that they're going to get their permits, that they're going to follow all environmental laws and policies. You're saying that. But the question also then becomes, who's going to enforce that, right? Are you actually going to hold them accountable? Because if you see what's happening in South Haven, these folks are filing lawsuits, right? And you're getting pushback from the state. And the governor has touted that this is going to be a huge investment for Mississippi. And so it's just a challenge on all sides. Like, do you fight back and try your best to win this thing?

22:58Or do you just sit back and let this thing happen to you? And I think the former is happening. Folks, no matter what they're up against, they're going to fight back. Well, what does that look like? I mean, Clarksdale has taken this first step, right? They filed this lawsuit before anything has actually come on the land. They filed this lawsuit and is hoping a judge will say it has to go back to the planning committee. We need to know the details of this proposal. And so they didn't just sit back and say, OK, you passed this ordinance and we're just going to let it go.

23:33They actually took action. So I guess we just have to continue to see what happens from there. I want to explore this a little bit because you've talked about it some. There's been plenty of reporting on how these hyperscale data centers affect the electric grid. But what are the potential energy impacts in Clarksdale specifically?

Grid capacity and heavy utility bills

23:53Yeah, when I talked to Curtis Boschert, who is the general manager of Clarksdale Public Utilities, who has there's about, what, 6,000 residents who rely on the utility service. He, again, didn't have an actual answer, but he basically said that he called it a large load customer, which is basically someone who's going to soak up a lot of energy and water. And he basically said, in so many words, they don't have the current capacity to support a large load customer.

24:28However, if a data center was to come, they would have to pay for any upgrades to their electrical grid, any upgrade for the costs that are associated with using the public utility company. So he's putting it all on, you know, this developer, this data center that will come, that they would have to basically pay for what they're going to use or to expand the services that they would plan to use. So it's still kind of up in the air.

24:59But, I mean, if you're saying you currently can't handle what may be coming, I mean, that tells you that it's more than what you're probably bargaining for. How does this coincide with, I know that you've spoken about the utility debt within Black households? Yeah, Black households are usually the one to bear the brunt of higher utility costs. And there have been some reports that that has increased as a result of data centers.

25:32And in Clarksdale, folks have already complained about high electric bills with Clarksdale Public Schools. Utilities, it's been going on for years, folks with $200, $500 bills that can't afford to pay for them. So you're already stretching a household that's already stretched thin when they're already complaining about higher utility bills. And so the concern or fear is that folks will have to go without if that is the case.

26:03But they're saying, as of right now, that that's not going to happen. But we don't know that, to be true. I'm curious. Okay, so again, so I talked to another reporter named Hannah Beckler, who covered data center trends nationally. And she mentioned that there have been cases where data center construction has gotten in the way of more development in the town because, like, a Walmart or a factory couldn't build near a hyperscale data center because the burden on the electric grid.

26:40So at that point, even if there is, like, a data center in your town, now the Piggly Wiggly can't even get built there because it'd be too much burden on the grid.

26:53I don't know. I've been thinking, as you were talking, I was thinking about that. Yeah, and so I guess the question, too, is, like, what is the tradeoff? If you decide that this one-time $5 million impact fee and maybe you get $15 million in tax revenue in the first year and maybe you get, you know, a couple of jobs that comes from this, is that what you want? And if that is what you want, are you not looking at other development?

27:28I'm just, you know, I'm just interested in what is the driving force behind this? Has there been any conversations about whether this can actually hinder the possibility of, to your point, a Piggly Wiggly coming into town? I don't know if those conversations are being had. Maybe they are, and I'm just not in the room for those. But again, when you talk about a community that has dealt with job loss, the potential of the hospital closing, and maybe not, you talk about the comment that the commissioner made about, we're on the brink of, you know, we need money.

28:14Like, we need money now, or we will not survive. And so thinking about the investment, when you're talking about, you know, the harm when it comes to the health and the wellness of a community that's already plagued by food deserts and all of these other negative health statistics, how do you, I mean, I can, yeah, I can understand again why people are saying we need this. But I can also understand why people are like, no, we can't allow our health and our ability to exist hinge upon this very thing that could harm us.

28:53And it's usually, you know, poor, small Black communities that are often bearing the breath of those very questions. I can understand why it's so frustrating in this same question about what is the right development for these sorts of towns is at the forefront of all of these communities. Oh, boy. This is, okay, this is for my own edification. So when people are leaving Clarksdale, where are they going?

29:24I mean, they're going to DeSoto County, where South Haven is, they're going to Memphis, they're going to other parts of Mississippi, or maybe they're leaving Mississippi entirely. But most residents are in, like, the DeSoto County area. So even though they're moving there, right, which is a place that has a plethora of what grocery stores and restaurants and shopping centers and movie theaters and all of the things that people want to enjoy.

29:54It's still the same place where XAI is. And I think that's the thing I've been thinking about a lot, to go to a place where you're like, I'll have a better quality of life. And then you're dealing with, you know, what they're saying, what noise pollution, vibration, pollutants in the air. And it makes you think, like, how, it's like, are you ever really winning?

30:24And that's our show. Public media is a rare space built around curiosity and community and great storytelling. And to keep this vital resource thriving for everybody, join NPR+. You'll protect independent journalism and enjoy perks like bonus episodes and more, right? So keep public media going today at plus.npr.org. This episode was produced by Jess Kong. It was edited by Courtney Stein and Jasmine Romero.

30:55Our engineer was Robert Rodriguez. Special thanks to Hannah Beckler. And we'd be remiss if we did not shout out the rest of the Cold Switch Massive, right? I mean, that's Christina Calla and Xavier Lopez and Kayla Lattimore and Leah Dinella and Dalia Mortada and Barton Girdwood and Yolanda Sanguini and Maya Dangerfield. As for me, I'm Gene Demby. I'm B.A. Parker. Be easy, y'all. Hydrate. Hydrate.