Matt Putnam: How taxpayers should consider data center transparency
Matt Putnam argues for increased transparency in data center development, particularly regarding non-disclosure agreements (NDAs) between developers and local governments, while acknowledging reasons for initial secrecy in land acquisition. He highlights Microsoft's decision to stop using NDAs with local governments as a positive step, contrasting it with state-level legislative efforts to ban NDAs for data centers, which he views as potentially discriminatory. Putnam advocates for thoughtful, industry-agnostic reforms to NDA practices.
In an opinion piece, Matt Putnam, policy manager at the National Taxpayers Union Foundation, discusses the ongoing debate surrounding transparency in data center development, particularly concerning the use of non-disclosure agreements (NDAs) between developers and local governments.
Putnam draws a parallel to Disney's secret land acquisitions for Disney World in 1965, explaining that shell companies are often used to prevent land speculation and inflated prices. While acknowledging the need for secrecy during land assembly, he argues that transparency becomes crucial when taxpayer subsidies, such as infrastructure improvements or low-interest loans, are under consideration. He points to an example in Woodbridge, Virginia, where a farm was listed at a significantly inflated price, demonstrating the market distortion that can occur when a large developer's interest becomes known.
He praises Microsoft's recent decision to cease using NDAs with local governments, viewing it as a response to public demand and a step towards rebuilding trust. However, Putnam criticizes legislative efforts in states like Kentucky, Michigan, North Dakota, Ohio, Oklahoma, and Pennsylvania, which are developing laws specifically targeting data center developers regarding NDAs. He argues that if lawmakers perceive NDAs as harmful to democratic processes, reforms should apply universally to all businesses rather than singling out one industry, which he believes could detrimentally impact local economies and data security.
Putnam concludes that developers use tactics common across industries to acquire land at fair market value and protect proprietary information. He urges lawmakers to implement comprehensive reforms on NDAs that apply broadly, rather than reacting with industry-specific legislation driven by political motives, emphasizing the need for a balanced approach that respects both developer needs and public transparency.