Courting the AI boom
San Jose has spent more than a year courting data center development, hoping the projects will deliver a steady stream of property and utility taxes. About 20 data centers already operate in the city of nearly one million people, and more than 100 are spread across Silicon Valley.
City officials estimate each new facility could generate between $3 million and $6 million a year in tax income for services such as police, fire protection, libraries, roads and parks.
Resistance builds
Residents and environmental groups are organizing against a wave of proposed projects. They say there has been little meaningful community engagement and not enough public information about how much electricity and water the buildings consume, or whether the promised revenue will offset the strain on the grid.
Similar fights are playing out elsewhere in the state. A proposed data center near Shasta drew tens of thousands of petition signatures and opposition from the Winnemem Wintu Tribe; the city estimated it would create about 15 long-term jobs.
Industry pushes back
The Data Center Coalition, an industry group whose members include Google, Meta, OpenAI and Anthropic, said it supports responsible growth but argued that state bills unfairly single out data centers rather than other large industrial and commercial electricity users. The group warned the measures could discourage investment and push jobs, tax revenue and projects to other states.
San Jose officials have begun drafting standards for data centers and other large power users, and held community forums that lead into the AI Infra Summit 2026 at the Santa Clara Convention Center. For now, the debate comes down to questions the city has not fully answered: how much power and water each project needs, and who pays for the upgrades.