(This week’s civic education and engagement column from Danville’s The Republican newspaper.)
Recent efforts to build data centers (including one just over the county line in Monrovia) have riled up property owners throughout the Hoosier State. Between noise, power usage, and massive volumes of cooling water, these facilities have become even more unwelcome than the huge hog farming and dairy operations that spread across Indiana over the past few decades.
One of the biggest sticking points about data centers is that the opponents typically have no idea of what companies are behind them. As the projects move through the approval process, their names are often replaced by code names. The local government officials involved in negotiating with the project owners are normally required to sign non-disclosure agreements (NDAs) that prohibit them from releasing any information.
That’s not a new development related specifically to data centers. Having been involved in creating communications materials for dozens of local and regional economic development efforts throughout the continental U.S., I can tell you that keeping company names and plans secret is a standard part of the process.
Nor is it unusual for companies and communities to use mysterious code names for proposed projects. I was involved with the rollout of a new subsidiary of a Fortune 500 company. In all our conversations and correspondence with the company and internally, we were not allowed to use the names of the parent company or its planned operation. Instead, we were to refer to them as “Red Storm” (clearly, the CEO was a Tom Clancy fan).
There are several reasons for the level of secrecy when it comes to major projects like data centers. The biggest is that the premature release of information about a company’s plans can affect its competitive posture. For publicly traded companies, it can have an immediate impact – good or bad – on the value of their stock. If you run a company and your proposed project represents some kind of major change in the way you do business, you don’t want investors or your competitors to find out about it until all the details have been sewn up.
Companies shopping around for a new location not only don’t want their competitors to know what they’re up to – they also don’t want landowners and other communities to find out they’re looking. Suppose you own a hundred acres that would provide an excellent site for whatever the company wants to build. If an unknown developer has expressed an interest, you’ll suggest a fair price. If you know that Google is the prospective buyer, I suspect your “fair price” is going to increase substantially.
Let word get out that the company you run is thinking about putting its next facility in Stilesville, and you can count on hearing from hundreds (if not thousands) of other communities and consultants who are convinced they have a much better location for your careful consideration. And if people suspect your new facility will lead to the shrinking or closure of an existing facility elsewhere, you don’t want that facility’s employees or the community that counts on their wages and its tax impact to publicly go to war with you.
The secrecy also allows towns and counties to negotiate with the company behind closed doors. If those conversations took place in public meetings, community members would likely react with anger over terms and financial incentives that have become standard. (If you believe those companies would choose your community without tax breaks and other incentives, you’re wrong. Money does talk.) Other communities would also know the details and attempt to steal the project by offering better deals.
Why are local elected officials so eager to attract new companies to their communities in the first place? There are two primary reasons. The first is that more companies mean more potential jobs for local residents, helping to strengthen the local economy. Second, something like a data center provides a big increase in taxable property, allowing the elected officials to maintain or even expand services while reducing everyone’s property tax rate. Even with all those incentives, most companies still end up paying hundreds of thousands in local property taxes. (Don’t believe me? Property tax payments are public information, so it’s easy to verify.)
At some point, the project will have to go through several regulatory steps – and the first is usually when everyone goes public about the project and (often) the name of the company. By then, all the details have been negotiated and everyone is ready to move forward. That doesn’t mean residents can’t share their opposition to the project. They’ll usually have opportunities in public hearings and other government meetings. Sometimes, those protests make the elected officials responsible for the final decision think twice and reject the project. But most of the time, they’ll conclude that the benefits of the project outweigh the objections. They’re ethically obligated to act in the taxpayer’s best interests, even if the taxpayer doesn’t agree.