New data centers could pay $1M per megawatt to towns in New York
Governor Kathy Hochul announced a new Community Investment Framework in New York, recommending that data center developers pay host communities at least $1 million per megawatt of electricity consumed. This framework aims to help municipalities secure funds for public infrastructure, housing, and workforce training. The initiative builds on a previously enacted one-year moratorium on hyperscale AI data center approvals, intended to study their environmental and economic impacts on the state's power grid.
Governor Kathy Hochul announced a new statewide Community Investment Framework at the Manny Cantor Center in Manhattan, providing New York municipalities with a roadmap to secure millions from technology companies developing local artificial intelligence (AI) data centers. The voluntary framework recommends that developers pay host communities at least $1 million for every megawatt of electricity a facility requires, with a 50-megawatt data center, for example, investing $50 million into local community funds for public infrastructure, affordable housing, childcare, and workforce training.
Guidance from Empire State Development also advises developers to adhere to fair labor standards, pay prevailing wages, and hire locally. It recommends communities limit non-disclosure agreements with developers to genuine trade secrets and plan for ongoing maintenance costs, as well as establish rules for facility expansion or abandonment. Developers are also advised to minimize noise, light pollution, and water consumption.
This framework follows an executive order signed in July, which enacted a one-year moratorium halting approvals for new data centers to allow the state to study their environmental and economic impacts on the power grid. Hochul connected this moratorium to broader concerns about AI and the recent RAISE Act, which seeks to hold AI developers accountable. The governor noted that a new state law imposes civil penalties on large developers who fail to publish safety protocols or report critical incidents within 72 hours.
Residents and business leaders from upstate New York, including Rochester, Syracuse, and St. Lawrence County, have expressed concerns to Hochul regarding energy-intensive facilities that divert power without generating sufficient permanent jobs. Additionally, the Department of Public Service is developing a plan to require operators to build their own clean energy generation or contribute to a New York Grid Acceleration Fund to upgrade the aging power grid. Data center developers have requested 9,000 megawatts of new power, roughly a third of the state's annual consumption, with the one-year moratorium specifically targeting hyperscale AI data centers requiring at least 50 megawatts. The framework and moratorium aim to ensure developers align with the state's goals of lowering utility costs.