El Paso City Staff Propose New Data Center Policies, Recommend No Tax Incentives
El Paso city staff have proposed a new policy framework for future data centers, recommending the elimination of tax breaks and incentives. The framework would require community benefit agreements, special permits, environmental disclosures, and minimum distances from residential areas. These proposals stem from public opposition and concerns over potential negative environmental impacts like increased air pollution and greenhouse gas emissions.
El Paso city staff are set to present a nearly 40-page policy framework to the City Council in the coming weeks, which proposes significant changes to how the city manages future data center developments. Key recommendations include discontinuing tax breaks and incentives for new data centers, instead requiring binding "community benefit agreements" from developers. The proposed rules would also mandate a minimum distance between data centers and residential neighborhoods or ecological sites, and require a new type of public permit with increased oversight.
The framework, developed after the City Council directed staff to address public discontent in a 5-3 vote in February, suggests data centers pose environmental risks such as increased air pollution and greenhouse gas emissions. The policy document cites Meta's hyperscale data center construction in the Northeast and a proposed facility at Fort Bliss as examples, estimating data center power generation could increase the city's carbon dioxide emissions by 21% from a 2019 baseline.
While the policies would only apply to future facilities within El Paso city limits and would not affect Meta's ongoing construction or projects in El Paso County outside city limits (like the Carlyle Group's proposed data center at Fort Bliss) or in neighboring Doña Ana County, New Mexico (like Oracle's Project Jupiter), they reflect strong public opposition. The city's memo noted "deep-seated distrust, fear of resource depletion, and frustration over the lack of transparency." Lauren Keeler, an associate professor at Arizona State University, supports the community benefit agreement approach as a way to channel wealth from the AI economy back into communities for public projects like schools and public works, and to ensure proper stewardship of resources such as water.
El Paso City Rep. Chris Canales will also present a separate proposal on May 26, independently recommending against offering incentives to data center projects. Meta has already committed $500,000 in education funding and $25,000 for El Paso Water ratepayers.