Developers in the coming months could break ground on a western Massachusetts data center campus where investments could total $4 billion, a project buoyed by a new state tax incentive.
But as officials iron out regulatory frameworks, some advocates urged the state on Thursday to strengthen environmental protections surrounding the facilities.
A 2024 economic development law included a sales and use tax exemption for qualified data centers, which applies to equipment, software, electricity usage, and construction costs tied to the building, renovation or refurbishment of the facilities.
That financial relief was critical to advancing Servistar Realties' vision to establish a data center campus in Westfield, said Jeff Daley, CEO of Westmass Area Development Corporation. Servistar is currently courting hyperscale developers, companies like Microsoft and Google, interested in setting up shop on the campus.
The increasingly digital world -- in which people and businesses are constantly searching the Internet, turning to AI for help, or storing information in the cloud -- has led to a growing need for data centers to support online activity.
Daley, who estimates pre-development work could start in the "next six months or so," said the 2024 law "really put a new focus on the realization that a hyperscale center could come to Massachusetts, particularly the Westfield site." Daley said pre-development work involves "finishing permitting, putting together bids, power agreements etc."
"Once a tenant is identified then we start finishing pre development work which will position for construction to begin, likely in the next 12 months," Daley said.
Local officials approved the data center campus proposal in 2021. Project leaders were drawn to Westfield due to an Eversource transmission interconnect and a new substation improving reliability in the region, fiber infrastructure, airport location access and "very attractive" energy costs through ISO New England, according to minutes from a joint public hearing of the Westfield City Council and Planning Board.
"The final leg of the stool was to get this sales tax exemption passed, number one, to be competitive with the rest of the country, but also really to encourage these end-users and these developers to come in and take this development seriously," Daley said.
Thirty-two states offer subsidies for data centers, according to Pluribus News. Connecticut passed a law in 2021 to offer incentives for data centers, though the Middletown Press reported last year that only Cigna so far had taken advantage of the tax exemption.
Massachusetts is currently home to 44 data centers, according to The Boston Globe.
In Westfield, 10 to 14 buildings could be built on the roughly 120-acre property, which is expected to generate 400 full-time jobs with average salaries topping $100,000, Daley said. The project will also support 1,800 to 2,000 construction jobs over an eight- to 10-year period, he said.
Rep. Mike Finn, who sponsored the tax exemption in the economic development law, said the measure was designed to deliver a new opportunity for western Massachusetts. Invoking the loss of jobs from regional powerhouses like Smith & Wesson, Lego and MassMutual, Finn said his district is "economically challenged."
Finn said he worked with Daley to "think outside the box" and seize on the potential of emerging technology and AI. Battery storage companies are likely to follow the launch of data centers, the West Springfield Democrat said.
"We're doing our best to get this initial player to come to western Mass.," Finn said. "That would be a really big boon for our area."
The Executive Office of Economic Development held a public hearing Thursday on proposed regulations for data center owners and operators to apply for certification in order to secure the sales tax exemption.
Data centers must be at least 100,000 square feet; incur at least $50 million in costs for construction, refurbishment, renovation or improvement within a 10-year period from the certification taking effect; maintain a minimum of 100 jobs; and be "used to house computer information technology equipment, networking, data processing or data storage," including servers and routers, according to the regulations.
In certification applications, owners and operators may be asked to share estimates of peak electric demand, written confirmation from utilities that the existing grid infrastructure can accommodate the data center, and any commitments to use clean energy or offset greenhouse gas emissions. Certification would last 20 years.
The Westfield site involves a $2.5 billion to $4 billion investment, including $500 million to $750 million in computer costs, Daley said.
"With a sales tax of six and a quarter, that number gets pretty large every year, and these data centers refurbish this equipment every three to five years," Daley said. "This certainly helps offset that additional cost."
Building a data center is "cost-intensive," as Finn put it.
Only two advocates spoke at the hearing, warning the proposals lack sufficient environmental safeguards.
Dominique Agnew, an attorney at the Conservation Law Foundation, asked the state to consider additional provisions that "prioritize energy efficiency, public protection, decreased resource usage and workforce development."
"This proposed regulation makes no mention of efficiency measures or climate-related disclosures like energy and water usage. Regulations should require robust disclosures and reporting of these and other environmental protection metrics," Agnew said. "Regulations should also address how the executive office will monitor the data centers' environmental impacts, such as its water usage, air quality and natural habitat impacts, and electric grid system impacts, as data centers are known for intense energy usage from grid electricity, as well as back-up gas or diesel generators."
Tristan Thomas, director of policy for the nonprofit Alternatives for Community and Environment, said the proposed regulations should be rejected since they "lack basic safeguards for our environment, public health and our economy."
"Absent new provisions around renewable energy requirements, demand response, environmental assessments and reporting, water use, air pollution and more, our economic strategies will directly contradict our climate goals and harm public health," Thomas said.
Highlighting the health risks, Thomas pointed to a 2024 study from Caltech and UC Riverside that found air pollution from AI data centers could cause up to 1,300 premature deaths annually by 2030. Meanwhile, a Good Jobs First study released in April found that at least 10 states had lost more than $100 million annually in tax revenues from data centers.
Thomas urged a "transparent economic analysis" of the total cost of data centers.