Subscribe to The Y’all — a weekly dispatch about the people, places, and policies defining Texas, produced by Texas Tribune journalists living in communities across the state.
In the heart of rural Texas, a transformation is underway as data center companies invest heavily in local communities. For example, a new water tower in Turkey, Texas, costs $3 million, while upgrades for a museum in Stamford come in at $400,000. Even a first responders appreciation barbecue in Medina County has received $10,000 in support. These figures represent just a fraction of the substantial public investments made by data center firms across the state in the past year.
According to an analysis by the Texas Tribune, data center companies have contributed over $343 million to Texas communities for essential needs like school programs, infrastructure repairs, and emergency services. Notably, much of this funding has found its way to communities that have historically opposed data center developments, indicating a strategic effort to win public favor through financial support.
The Texas Tribune’s investigation involved reviewing public meeting agendas, news releases, and interviews with local officials, underscoring the complexity of tracking these contributions. The estimated total of $343 million is likely an undercount, as not all donations are publicly disclosed.
Prominent players in the industry, such as Google, have also made significant donations to local initiatives. In the Haskell area, Google provided millions to support the local hospital and pregnancy center, while Rowan Digital Infrastructure announced a $38 million investment in Temple for water infrastructure improvements, along with additional funding for STEM programs in surrounding towns.
Community action grants from data centers are creating avenues for recurring investments, with initiatives like Google’s Texas Water Impact Fund aimed at restoring critical resources for Texans. As data centers proliferate in Texas, rural communities are facing economic challenges from property tax reductions and inflation, making these investments increasingly vital.
“These data centers present an opportunity for rural communities living on the edge,” said Suzanne Bellsnyder, an editor and publisher of two Panhandle newspapers focused on rural issues. “With limited tax revenue, such resources are crucial.”
Corporate philanthropy is not new; industries like oil and gas have historically engaged in community investment to foster goodwill. However, the rapid growth of the data center sector is unique, particularly given the substantial tax incentives available. A recent analysis by the Texas Tribune highlighted that Texas might forgo at least $3 billion in sales tax revenue over two years due to exemptions for the booming data center industry.
Despite the financial influx, public sentiment remains mixed. A recent poll from The Texas Politics Project found that 57% of respondents opposed data center construction in their communities, illustrating the challenges these companies face in gaining widespread acceptance. “I hope their intentions are genuine and not merely an attempt to buy communities off,” Bellsnyder added.
Community Engagement and Investment
Two years ago, a tornado devastated the city of Temple, Texas, with recovery costs estimated at $7.7 million. The Rowan Digital Infrastructure company, which is developing a $4.2 billion data center campus in East Temple, stepped in to help with a $38 million investment for public infrastructure, including a $25 million contribution to the South Temple Water Infrastructure Capital Program.
In addition to infrastructure support, Rowan pledged $3 million to help rebuild the Sammons Community Center, a critical hub for local senior citizens. Temple’s mayor, Tim Davis, noted the company’s proactive approach to community engagement has been commendable, especially considering they have not yet begun to generate revenue from the area.
Public support is vital for data center companies, especially as communities express concerns over rising utility bills and water shortages. Some cities have halted projects due to public backlash, while others have implemented moratoriums on new developments. Nathaniel Brown, Rowan’s public relations director, acknowledged that establishing community ties has been challenging. The company has hosted monthly neighborhood dinners, public hearings, and created dedicated Facebook pages for project updates.
Google has pursued a similar strategy, holding community meetings and dinners to announce investments, such as a recent $6 million commitment for nonprofits in Haskell, Stamford, and Rule. Suzie Shin, manager of data center sustainability programs at Google, emphasized the importance of modernizing local water infrastructure as part of their broader commitment to the community.
Bellsnyder believes that while data center executives are sincere in their intentions, caution is warranted given the volatile nature of industrial cycles in rural Texas. “Our community should not solely rely on what one company can provide,” she stated. “Taxpayers need to be engaged in the community’s future as well.”
Navigating Challenges and Opportunities
In the small town of Turkey, Texas, residents recently faced a water crisis when the local water tower failed. With a limited budget of $500,000, the town could not afford repairs, but QTS Data Centers offered to replace the tower at a cost of $3 million to $5 million. City manager Lynette Findley reflected on the timing of the offer as fortuitous, considering the impending discussions about how the company could assist in addressing local infrastructure needs.
As rural communities grapple with budget constraints, the support of data centers becomes harder to refuse, especially as state legislation continues to limit resources. Kevin Hodges, city manager of Childress, Texas, highlighted the ongoing challenges of providing essential services amid a drought that has strained local water supplies. However, he also noted the positive contributions from data center companies, which are stepping up to assist with water distribution and infrastructure improvements.
Hodges indicated that while data centers do not draw water from local lakes, companies like Lancium are committed to providing resources from their own wells to support the community’s needs. “They’re providing, not taking,” he emphasized, showcasing a collaborative spirit that is crucial for the sustainability of small towns.
As Texas lawmakers consider further property tax cuts that could impact local municipalities, the financial contributions from data centers could help bridge the gap. Mayor Davis of Temple expressed that without alternative revenue sources, communities would struggle to maintain essential services. “If the ability to raise funds is restricted, those resources must come from somewhere, or services will decrease,” he stated.
Despite the challenges, community leaders like Findley recognize the dual nature of data centers’ public image. “They receive a lot of negative publicity,” she remarked. “Yet, without their assistance, I honestly don’t know how we would have managed.”
Alejandra Martinez contributed to this reporting.
Disclosure: Google has been
