Economic Impact: What Data Centers Can Mean for Tax Base, Jobs, Suppliers, and Long-Term Community Value

Data centers are often discussed in extremes.

Some people describe them as major economic engines that can strengthen a city’s tax base for decades. Others dismiss them as large, resource-intensive buildings that create few permanent jobs.

The truth is more practical and more local than either of those views.

Data centers can create significant economic value for a community, but that value depends on the type of project, the local tax structure, the incentive agreement, the infrastructure costs, the utility impact, and whether the community negotiates for clear public benefits. In other words, the question is not simply whether data centers are good or bad. The better question is whether a specific project creates more long-term public value than public cost.

For Metrocrest and North Texas, that question matters now.

Dallas-Fort Worth is already one of the country’s major data center markets. CBRE reports that Dallas-Fort Worth is a 1 gigawatt colocation data center market, with approximately 700 megawatts of colocation space under construction, 94.5 percent of that space preleased, and another 3 gigawatts of planned greenfield development. Demand from hyperscale and artificial intelligence users remains strong, while power delivery and power-queue issues have become more important to the market.

That level of growth creates opportunity. It also creates responsibility.

The tax-base opportunity is real

The strongest economic argument for data centers is usually not direct employment. It is tax base.

Data centers are capital-intensive facilities. They often involve expensive buildings, electrical systems, cooling systems, backup generators, fiber connectivity, security systems, servers, storage equipment, and other technology infrastructure. For local governments, that can translate into valuable real property and business personal property, depending on how the project is structured, appraised, exempted, and incentivized.

In Texas, business property taxation matters because businesses generally file renditions for taxable inventory, furniture, fixtures, machinery, equipment, and other property owned or managed as of January 1 each year. The appraisal district may use that information to set property values. For data centers, this is why the building itself is only part of the fiscal picture. The equipment inside the facility can also be important, although the final local impact depends on ownership, depreciation, exemptions, appraisals, and any local agreements.

Texas also has a state sales tax exemption program for qualifying data centers. A qualifying data center must be at least 100,000 square feet and must meet requirements that include at least 20 qualifying jobs in the county and at least $200 million in capital investment over five years. Certain items necessary to operate the data center, including electricity, electrical systems, cooling systems, servers, storage devices, network equipment, software, and related systems, may be temporarily exempt from the 6.25 percent state sales and use tax. Local sales and use tax is still due for qualifying data centers under that part of the program.

Texas also has a separate category for qualifying large data center projects. Those projects must be at least 250,000 square feet, create at least 40 qualifying jobs, involve at least $500 million in capital investment over five years, and contract for at least 20 megawatts of transmission capacity. For those larger projects, the exemption applies to both the 6.25 percent state sales tax and applicable local sales and use tax.

That distinction is important. A large investment announcement does not automatically tell residents what the local net benefit will be. Communities need to understand how much value will be taxable, what will be exempt, whether local incentives are involved, what infrastructure is required, and who pays for it.

The Loudoun County example shows both the upside and the caution

The most frequently cited example of data center fiscal impact is Loudoun County, Virginia, often called “Data Center Alley.”

Loudoun County says data centers generate almost half of the county’s property tax revenue, contribute significantly to county resources, and have helped lower pressure on residential taxpayers. The county reports that data centers added $16 billion in value to its real property portfolio in 2024, bringing total data center real property value to $41 billion. Loudoun also says that for every $1 in county services provided to data centers, the county receives $26 in tax revenue.

The county’s FY 2026 budget materials show the same fiscal scale. Loudoun reported that data centers generate over one-third of the county’s General Fund revenues and almost half of county property tax revenues. The same budget presentation stated that data center parcels represent a small share of total commercial parcels but have much higher assessed value per square foot than other commercial uses.

That is a powerful tax-base story.

But Loudoun is also a cautionary story. Heavy reliance on one industry creates risk. Loudoun’s FY 2026 budget materials specifically reference a Revenue Stabilization Fund created to manage risk tied to data center-related real and personal property tax revenue. Loudoun has also changed its land-use approach. The county says it has moved data centers from by-right development to a conditional-use process requiring Board of Supervisors approval, while also working on zoning standards for land use, compatibility, aesthetics, infrastructure, and environmental resources.

For Metrocrest, the lesson is not “become Loudoun.” The lesson is more practical: data centers can create substantial public revenue, but communities need to manage placement, infrastructure, public expectations, fiscal dependence, and long-term risk.

Jobs matter, but the jobs story should be honest

Data centers do create jobs, but not always in the way people expect.

Construction can create meaningful short-term employment for electricians, technicians, HVAC workers, engineers, construction trades, security contractors, and related vendors. The World Resources Institute notes that data center construction can generate hundreds of well-paying, though temporary, jobs, along with full-time roles such as technicians, security staff, and facility managers.

At the same time, permanent on-site employment is usually more limited than with a corporate headquarters, hospital, university, or large manufacturing facility. WRI cites a review of more than 1,200 U.S. data centers finding that even the largest facilities employ fewer than 150 permanent workers, and sometimes as few as 25.

That does not mean data center jobs are unimportant. It means the jobs argument should be specific.

The strongest workforce story is usually broader than the people working inside one facility. It includes construction trades, electrical work, mechanical systems, cooling technology, security, fiber, managed services, facilities maintenance, backup power systems, engineering, and specialized suppliers. The U.S. Census Bureau reported that employment in U.S. data centers increased by more than 60 percent from 2016 to 2023, growing from 306,000 to 501,000 workers, and that Texas accounted for 10 percent of U.S. data center employment. Within Texas, the Census Bureau found that nearly 75 percent of data center employment was concentrated in Travis, Bexar, Collin, and Dallas counties.

That matters for Metrocrest because our local economy already includes companies connected to data-center operations, cooling, cloud services, colocation, managed services, and IT infrastructure. A community does not need every job to be located inside one large facility to benefit from the broader digital infrastructure ecosystem.

Suppliers and related businesses are part of the economic impact

The data center economy is larger than the buildings themselves.

A data center may need construction contractors, electricians, HVAC and cooling specialists, security providers, engineering firms, network and fiber providers, software vendors, generator maintenance, facility-management teams, landscaping, legal services, accounting, insurance, and other professional services. Some of these opportunities are temporary. Others can become recurring business for local and regional companies.

That is why the Metrocrest story should not focus only on whether a city lands a single large campus. The regional opportunity is also in the supplier network.

Carrollton’s LiquidStack, for example, shows how data center growth can support specialized manufacturing, research and development, service training, and cooling technology. Addison’s data-center operations and professional-services activity, Carrollton’s colocation and IT providers, and Farmers Branch’s managed services and infrastructure firms all point to a broader economic ecosystem.

This is where chambers of commerce can be especially useful. Chambers can help connect local businesses to procurement opportunities, workforce needs, training programs, and supplier relationships tied to digital infrastructure growth.

Data centers often use fewer city services than other land uses

Another part of the economic equation is service demand.

A data center generally does not create the same traffic pattern as a shopping center, the same student population impact as a new residential development, or the same daily public-service demand as some other land uses. This is one reason data centers can be attractive from a municipal finance perspective. Loudoun County’s reported $26 in tax revenue for every $1 in county services is one example of how that math can work in a mature data center market.

But “lower service demand” does not mean “no public impact.”

Data centers still require emergency planning, fire protection standards, utility coordination, road access, security coordination, generator permitting, stormwater management, and inspections. Their public costs may be different from other land uses, but those costs still need to be understood before a community evaluates the project.

Incentives should be earned, measured, and enforceable

Data centers often involve large investments, and large investments often lead to incentive discussions.

In Texas, cities and counties have economic development tools available to them. The Texas Comptroller explains that Chapter 380 allows municipalities to offer loans or grants of city funds or services to promote state or local economic development and stimulate business activity. Chapter 381 allows counties to negotiate directly with developers and businesses to provide incentives, and counties may also enter into tax abatement agreements under Chapter 312. Local governments are required to report these agreements to the Comptroller.
For communities, the issue is not whether incentives are always good or always bad. The issue is whether the public receives a measurable return.

A responsible incentive agreement should answer basic questions clearly. What private investment is being promised? What public revenue is expected after incentives? What jobs, if any, are required? What infrastructure must be built? Who pays for utility upgrades? What happens if the company does not perform? Are there clawbacks? Are public benefits clearly defined? Are residents and small businesses protected from hidden costs?

Brookings has warned that the standard data center development model, marked by fast dealmaking and opaque negotiations, can produce short-term construction jobs and revenue without much durable local economic upside. Brookings also argues that communities should treat data center negotiations as opportunities to secure broader commitments to local innovation, talent, and industry strengths.

That is the right mindset for Metrocrest. The goal should not be to chase every project. The goal should be to support the right projects under the right terms.

Ratepayer protection is part of economic development

A data center project should not be considered economically successful if residents and small businesses end up subsidizing the utility infrastructure needed to serve it.

This is why ratepayer protection belongs in the economic-impact discussion. The National League of Cities has noted that local leaders are weighing the positives of data center development, including tax revenue and temporary construction jobs, against concerns about water and energy use, grid strain, and costs potentially being passed down to ratepayers.

Texas has already recognized this issue at the state level. Senate Bill 6, passed by the 89th Texas Legislature, addresses planning, interconnection, operation, and costs related to serving large electric loads. The bill requires the Public Utility Commission to ensure that certain large-load customers contribute to the recovery of utility costs needed to interconnect the large load. It also directs the commission to establish standards designed to support business development while minimizing stranded infrastructure costs.

For local communities, that principle is simple: growth should pay its way.

That does not mean communities should oppose data center development. It means economic development should include utility-cost transparency, fair cost allocation, infrastructure planning, and protections for residents and small businesses.

What a strong local economic deal should include

When Metrocrest communities evaluate data centers or data-center-related projects, the strongest deals will likely include several elements.

First, the project should create a clear net fiscal benefit after incentives, exemptions, abatements, and infrastructure costs are considered.

Second, infrastructure obligations should be clear. If the project requires electric, water, wastewater, roadway, or other upgrades, the public should understand who pays, who benefits, and who carries the risk.

Third, ratepayer protection should be built into the conversation from the beginning.

Fourth, the project should include enforceable performance standards. That may include capital investment, job commitments, local procurement goals, workforce partnerships, water-use standards, noise limits, design requirements, or community-benefit commitments.

Fifth, the community should look beyond the individual facility and ask whether the project strengthens the broader local economy. Does it create opportunities for local vendors? Does it support skilled trades? Does it connect to community colleges, technical programs, apprenticeships, or workforce partners? Does it help attract related companies?

Google’s recent Texas announcement shows how large data center investments are increasingly being paired with workforce and energy commitments. Google announced a $40 billion investment in Texas through 2027 for cloud and AI infrastructure, along with a $30 million Energy Impact Fund, more than 6,200 megawatts of contracted energy generation and capacity, and support for training more than 1,700 electrical apprentices in Texas by 2030.

Not every project will look like that. But every community can ask whether a proposed project is contributing to long-term local value, not just short-term construction activity.

The Metrocrest takeaway

The economic impact of data centers is real, but it is not automatic.

The best projects can expand the tax base, support public revenue, create construction activity, strengthen supplier networks, grow skilled trades, support technology infrastructure, and help position North Texas for the next phase of the digital economy.

The weaker projects may deliver fewer permanent jobs than residents expect, rely too heavily on incentives, strain power or water infrastructure, create land-use conflict, or shift costs to ratepayers.

That is why Metrocrest should take a balanced, business-minded approach.

We can support responsible data center development while still asking hard questions. We can recognize the value of tax base while still insisting on transparency. We can welcome investment while protecting residents and small businesses. We can be pro-growth and pro-accountability at the same time.

That is what responsible economic development looks like.

What’s next

In the next post, we will take a closer look at jobs and workforce: what kinds of jobs data centers create, which jobs are temporary or permanent, and how communities can connect local workers and businesses to the broader digital infrastructure economy.