Understanding Data Centers: Economic, Environmental, and Community Impacts
Residents across West Michigan have asked important questions about how data centers operate and how they may affect local infrastructure, natural resources, and their community’s future.
This page provides clear, factual information to help residents and local leaders understand how data centers work and how projects are reviewed at the local level.
FAQS
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A data center is a secure facility that houses computer systems and servers used to store, process, and distribute digital information. These facilities support services that people and organizations use every day, including websites, cloud computing, financial systems, healthcare records, and communications platforms.
There are different types of data centers:
Hyperscale Data Centers: Large facilities operated by major tech companies to support global-scale cloud services. Example: Data centers operated by Amazon Web Services, Microsoft, Meta, or Apple
Enterprise Data Centers: Facilities owned and operated by a single organization for its internal use. Example: a regional healthcare system’s private data center hosting patient records
Colocation (“Colo”) Data Centers: Facilities where multiple companies rent space, power, and cooling for their servers and equipment
Managed Services Data Centers: Third-party providers manage not only the physical facility but also IT operations. Example: when clients outsource IT while retaining control over data and applications
Cloud Data Centers: Operated by cloud service providers and accessed via the internet. Example: AWS, Google Cloud
Edge Data Centers: Smaller facilities located closer to end users to improve speed and performance
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Nearly every organization relies on data centers to operate. Businesses use data centers to run their operations, store data securely, and provide services to customers. This includes manufacturers, hospitals, banks, logistics companies, universities, and government agencies.
Public institutions, including schools, emergency services, and government agencies, depend on data centers to operate critical systems and protect sensitive information.
Consumers rely on data centers every day when using online banking, streaming video, accessing healthcare records, using mobile apps, or storing photos and files in the cloud.
Data centers also support emerging technologies such as artificial intelligence, which is increasingly used in healthcare diagnostics, manufacturing efficiency, weather forecasting, fraud prevention, and other tools that help organizations operate more safely and effectively.
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No, data centers will not drain local wells.
Modern data centers also use closed-loop cooling systems, which recirculate water instead of consuming it continuously. This significantly reduces overall water demand compared to older industrial cooling methods. Most daily water use is similar to that of a typical office building, such as restrooms and kitchen facilities.
Many facilities also capture rainwater and snowmelt on site for reuse, further reducing demand on municipal water systems.
To qualify for state programs and operate at scale, data centers must connect to regulated municipal water systems rather than private wells. These public systems are designed to manage water use safely and sustainably across entire communities.
All water use, infrastructure capacity, and environmental impacts are reviewed through the local approval process and must comply with local and state regulations.
Modern Data Center Water Use Comparisons:
Modern data centers using a closed-loop or hybrid cooling system use 50,000-75,000 gallons per day, equivalent to approximately:
One larger office building (Source: U.S. Energy Information Administration)
One large apartment complex (Source: EPA WaterSense multifamily water benchmarks)
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No. Data centers do not increase electricity rates.
Data centers require significant electrical infrastructure, and utility providers and state regulators review these projects carefully to ensure reliable service and protect existing customers.
Several safeguards are in place as part of this process:
Companies pay for grid upgrades: Under Michigan utility regulations, companies requesting large amounts of electricity are required to fund the infrastructure needed to serve their facilities. This may include new substations, transmission lines, and other grid upgrades. These improvements must be reviewed and approved by the utility and regulators before construction can begin.
Rate Protections: Electric utilities in Michigan are regulated by the Michigan Public Service Commission (MPSC). The MPSC reviews large electric service agreements to ensure that the costs of serving new large-scale users are appropriately allocated. This regulatory process helps ensure that residential and business customers are not responsible for covering the electric service costs of new facilities.
Clean Energy: Within three years after being placed in service, the facility will need to attain certification under one or more green building standards. Additionally, clean energy procurement and participation in a voluntary green pricing program are required.
Electric infrastructure planning, system reliability, and customer protections are reviewed through established utility and regulatory processes before projects can move forward.
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Environmental factors such as noise, lighting, and air quality are reviewed as part of the local planning, zoning, and permitting process. Projects must comply with local ordinances and applicable state and federal environmental regulations.
Several design features and regulatory standards help manage these impacts:
Noise:Data centers operate at noise levels comparable to typical commercial or office buildings. These facilities do not generate continuous industrial noise. Most equipment operates inside enclosed buildings designed to minimize sound. Backup generators are used only during emergencies or required testing and must comply with strict local, state, and federal noise regulations.
Light: Outdoor lighting is typically designed to meet “dark sky” standards, which help minimize light spillover onto neighboring properties. Lighting plans are reviewed to ensure compliance with local ordinances and community expectations. Local officials review site plans and may establish additional requirements as part of the approval process.
Zero Daily Emissions: During 24/7 operations, data centers do not produce ongoing smoke, exhaust, or chemical byproducts from their primary computing equipment. Environmental compliance requirements are reviewed as part of the environmental permitting process.
Clean Backup Power Systems: Backup generators are installed to provide power during outages or required testing. These generators must meet federal and state environmental standards, including emissions limits established by the U.S. Environmental Protection Agency (EPA). Many modern backup generators use Tier 4 clean diesel technology, the same emissions standard used by modern city buses, which is designed to significantly reduce emissions compared to older diesel systems.
Building Setbacks and Screening: Site plans may include increased setbacks, landscaping, berms, and other screening features designed to reduce visual, noise, and lighting impacts on nearby properties. These elements are reviewed during the local approval process and can help address priorities raised by neighboring residents. Local officials review site plans and may establish additional requirements as part of the approval process.
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Traffic impacts are evaluated as part of the local planning and approval process. This includes reviewing expected vehicle activity during both construction and ongoing operations.
Construction Phase: During construction, there is typically an increase in traffic from construction workers, equipment, and material deliveries. Local officials review these impacts and may require traffic management plans to help minimize disruption to surrounding roads and neighborhoods.
Ongoing Operations: Once operational, data centers generally have fewer daily vehicle trips than many other types of commercial or industrial facilities. Most traffic is associated with employees, routine maintenance, and occasional service visits.
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Local township and municipal officials are responsible for reviewing proposals, establishing requirements, and making zoning and development decisions. Residents are encouraged to share their questions, priorities, and feedback directly with their local officials, who have the authority to incorporate conditions and requirements into project approvals.
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Data center investments can provide significant and lasting economic benefits to local communities.
These benefits may include:
High-paying permanent jobs: Each building typically creates approximately hundreds of full-time jobs, with average salaries of $100,000+ per year.
Construction & skilled trades employment: Each facility supports approximately thousands of construction jobs, including electricians, engineers, HVAC specialists, and skilled trades professionals.
Support for local businesses: Data centers rely on local contractors and service providers for maintenance, operations, landscaping, and facility support. Each facility is expected to support an additional 100 independent contractors.
Significant local tax revenue: Data centers can generate substantial and long-term property tax revenue that supports essential community services.
Across multiple buildings, data center investments could contribute tens of millions annually in new property tax revenue across West Michigan. Each individual building can add approximately $1 billion in taxable value, generating about $30 million per year in local property taxes.
This increased taxable value expands the local tax base, which provides local governments with the opportunity to lower millage rates while continuing to fund essential services. In many communities, this has allowed local officials to reduce tax rates or avoid future increases while maintaining or improving public services. See the chart below for more information.
This revenue supports services and infrastructure that benefit the entire community, including:
Public schools
Roads and transportation infrastructure
Police and fire services
Libraries, parks, and public spaces
Water, sewer, and utility infrastructure
Expanding the local tax base can also help reduce the tax burden on residents and existing businesses over time. When large investments increase the overall tax base, communities may be able to maintain or improve services without increasing tax rates.
In many communities across the country, data center investments have strengthened municipal budgets, supported infrastructure improvements, and provided greater long-term financial stability.
Infrastructure investment: Developers fund electrical infrastructure and system upgrades required to support their facilities, strengthening local infrastructure.
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The townships of Gaines Charter, Lowell Charter, and Solon are awaiting formal rezoning and site plan applications from the companies. Once submitted, township staff, planning commissions, and elected officials will review the proposals through established public processes.
This review includes evaluating project details, infrastructure requirements, and alignment with local ordinances and priorities. Public meetings will be scheduled as part of this process, providing opportunities for residents to learn more, ask questions, and share input.
Residents are encouraged to stay informed by following township communications, attending public meetings, and reviewing materials as they become available.
You can find meeting updates through your township’s website: