In communities like those in McLean County, a community benefits agreement may either be a tool to hold data centers accountable or a list of empty promises.
A community benefits agreement [CBA] is a document which can legally require data centers to commit to the investment of specific projects, programs or upgrades within a community. That can range from something like funding a new building in town to replacing aging water pipes.
They aren't exclusive to data centers; they can and have been used for other energy developments like solar and wind which a city council would also approve.
They look different in each community. One CBA in Cedar Rapids, Iowa, required a developer to invest in the city's Community Benefit Fund that can be used at the city council's discretion, Capitol News Illinois reported. They have been used since 2013 on data centers in Cleveland, Ohio, where a developer was required to specify hiring targets and meet low income employment goals.
In the City of Bloomington’s newly released draft regulations, CBAs approved by city council would be a requirement.
“A [CBA] and applying that to a data center development is not very different than any other developer, whether it would be a housing development that’s coming in or an industrial development that’s coming in,” said Sarah Ridgely, senior vice president of land development at Compass Data Centers.
Compass has one data center campus in Illinois, a 200-megawatt facility about 130 miles north of Bloomington-Normal in Hoffman Estates. Compass talks regularly about its high frequency of CBAs.
“I think there’s definitely a lot of variation in the structure in which communities would like to see those benefits negotiated and agreed to,” said Ridgely, adding those differences are determined by state and local regulation.
What a CBA has a hard time including, notably, is ongoing operations. Ridgely said it would be unlikely for a data center to fund something like an after school program.
“But if that after school program needs a new building, that’s a different story,” she said. “My take on it is to, as a community, come together, prioritize the benefits that you think provide the greatest bang for your buck, so to speak.”
Tools for accountability or ‘hoax’?
Some communities worry CBAs are deals that could be made behind closed doors, so a community may not be at all aware of what supposed benefits are coming.
Bloomington City Manager Jeff Jurgens and Mayor Dan Brady both told WGLT they would not sign any kind of nondisclosure agreement, or NDA. The draft regulations would forbid elected officials, including city council members, from entering NDAs related to hyperscale facilities.
Other leaders are still holding to their open processes, including Normal Mayor Chris Koos, who said he is not confident about what assurances that would make him vote yes on a data center.
“Not that I can think of right offhand. I mean, it’s the issues that people are looking at,” he said. “Land use in an agricultural area, cost of water, impact on water, cost of electricity and how it impacts the community, noise pollution, air pollution.”
Koos said data center development has the potential to bring temporary and permanent jobs to the town. But in terms of a CBA, Koos said the town has not looked deeply into what one would include.
Next door in Bloomington, Jurgens said the city is not looking to extend its data center moratorium for six more months as Normal did, but it would be considered if the city council wanted more time. For now, Bloomington is taking direction from communities like DeKalb and Aurora to make an ordinance that reflects what worked well in those respective communities.
Jurgens told WGLT before the release of the city’s draft regulations on the facilities the city is looking at water usage, vibration and noise, lighting and more.
“There’s just a long list of things that need to be addressed with these types of developments, and so [it's] making sure that we’ve got everything that we know addressed.” he said.
Speaking again after the draft regulations were released, Jurgens said city staff had not discussed any specifics about what may or may not be included in a CBA and it would be a case-by-case basis.
Jurgens said there are no specific projects or sites the city has imagined for the hypothetical new revenue that could come from such an agreement, but he thinks spending would probably be used on infrastructure rather than city services. He also said the regulations do not reflect any mission by the city to rush in a data center facility.
Ridgely said CBAs are still not well understood and utilized by communities. She said for communities that are wary of data centers, CBAs help demonstrate accountability and transparency.
“Trust really comes from actions and not promises, and that’s where having something documented. Something that has been negotiated between the municipality and Compass or the business in general, it really holds the company accountable, and it also increased trust on the community side,” she said.
Don Carlson is executive director of Illinois People’s Action, a grassroots advocacy organization rallying against data centers. The group would like an outright ban, if they could have it. He called CBAs a "hoax" and said they are not a reason to support a data center.
“There are no examples in the country where a CBA has lived up to the promises, and in fact, that’s the problem with CBAs is that they’re just promises with no real outcomes,” he said.
Carlson raised examples like in Frederick County, Maryland, where a county board rejected a CBA worth $110 million because it included the stipulation of no new zoning rules for data centers for eight years. Another he gave was in Prince William County, Virginia, where data center revenue was promised to lower property taxes in a revenue-sharing agreement but the county failed to deliver on lowering the rates. WGLT independently confirmed these examples.
Carlson said IPA considers CBAs to be “just hype,” and doubts the likely benefit of one as outlined in Bloomington’s regulations. He also takes issue with the wording.
“So, when you read the paragraph that’s been posted, everything in it is optional. It includes the phrase, ‘may include,’ and there are no minimum requirements that are set,” he said.
In the draft, a CBA is a requirement of a data center agreement, but the city does not specify any provisions.
"As a condition of approval of a Special Use Permit for a Hyperscale Data Center," it says, "the Applicant shall enter into a Community Benefit Agreement with the City, in a form approved by the City Council, addressing the anticipated community and infrastructure impacts of the development and providing measurable and enforceable community benefits. The Agreement may include provisions concerning public infrastructure, emergency services, workforce development, community investment, utility and water impacts, environmental mitigation, neighborhood impacts, decommissioning, financial contributions, reporting, and such other matters as the City Council determines are reasonably related to the impacts of the development."
Carlson said the wording in the draft as “a condition of approval” means a CBA could be agreed upon after a special use permit is granted as opposed to before.
Carlson said no benefit would come of a hyperscale facility in the community and the preferred draft ordinance from IPA would be an outright ban.
“There’s no benefit for it for the community and the only benefits are for big tech,” said Carlson. “We’ve identified at least 24 separate concerns within the city’s proposed draft ordinance, and that should be an indication to not proceed towards an ordinance until at least those questions are answered.”
Another area Carlson spoke to was the ban on the signing of NDAs in Bloomington’s draft regulations.
“A nondisclosure agreement is the bare minimum that would be necessary,” said Carlson. “It seems very obvious to not have a non-disclosure agreement ... but simply having a nondisclosure agreement to [a data center] agreement nobody wants and is not going to benefit the community is not a rationale to have a hyperscale data center.”
As NPR reported, communities have seen both the potential economic boosts of data and the secretive signing of deals hidden behind NDAs.
Ridgely from Compass Data Centers said her company does not allow NDAs.
Economic engine for communities
When a data center is built, it is important for “responsible” development to be a priority, and sometimes that can come about through a CBA, according to Doug Kelly, CEO of the American Edge Project [AEP], a pro-data center advocacy group.
AEP advocates for data centers as a key piece of making sure the United States is a leader in technology across the world.
He said communities have been justifiably upset when a data center is poorly sited and sits too close to residential areas. That is where the responsibility element he talks about comes into play.
“For us to be able to build the data centers that we need in the communities that we need … it can’t just be a, 'Yes, we’re going to build them,’ or, ‘No, we’re not going to build them at all,’” he said. “There’s a middle ground that says if you’re a community who is thinking about having a data center, and you’re talking with a data center developer, what are the guarantees that you can do to help your community?”
Guarantees look different in every community, and they are dependent on what is inside each and every agreement.
At the end of the day, Compass' Ridgely said, CBAs tend to involve capital projects and funding something to be built in the community. In DeKalb, that looks like the earlier opening of a planned elementary school.
“When you hear capital projects, think like the actual nuts and bolts, the roads, the pipes, the parks. That’s really where Compass hones in and is our pride and joy, and that’s where we look at workforce development,” Ridgely said. “And so of course these projects are increasing jobs on site, whether they’re construction jobs during the first phase of work or once the site is operational.”
Ridgely said Compass tends to have about 20 full-time jobs on site per building, so in a campus as large as 10 buildings, she would expect 300 permanent local jobs. They also work to set up workforce training programs in the community to train for jobs needed at their facilities.
Details like what and how many community projects are funded are what a CBA can negotiate, leading to direct and indirect investment down the line.
AEP is working towards the creation of its own kind of agreement with communities called the “American AI Infrastructure Compact,” but it is not the same as a CBA. The agreement between data centers and a community would make four guarantees of direct community benefit from the developer.
Kelly said an agreement such as AEP’s with a prospective community then leaves it up to residents to decide whether it is for them. He said it can result in a triple win not often seen.
“It can be a win for that local community because of the guaranteed benefits, it can be a win for the developer … and it can be a win for the country because we’ll be able to build the infrastructure that we need for the digital age,” he said.
WGLT's Eric Stock and Lizzie Seils contributed to this report.
