Port CEO says local data center impacts differ from national concerns

WENATCHEE — Water consumption, electricity demand, tax incentives and limited employment have fueled opposition to data center development across the country and increasingly in North Central Washington.

Chelan-Douglas Regional Port Authority CEO Jim Kuntz isn't arguing those concerns are unfounded everywhere.

He's arguing that the numbers show a different story here.

Kuntz presented what he called the “value proposition” of data centers during an Aug. 11 Tri-Commission meeting of the Port, Chelan County and Chelan PUD, outlining how local policies governing power, water and development differ from communities where rapid data center growth has created significant problems.

“We really need to say that a lot of complaints the public has had about data centers are true in places,” Kuntz said. “I think it's important, and the way this was raised is, we're different,”

One of the sharpest contrasts involved water.

Kuntz compared projected consumption at Microsoft's Malaga campus with the agricultural land it is replacing. Using maps and historical data, Kuntz demonstrated that orchards previously occupying the property consumed an estimated 129 million gallons of water annually.

The projected data center consumption is approximately 19 million gallons per year, a difference of about 110 million gallons.

Microsoft's first three buildings on each side of the Columbia River use evaporative cooling systems, Kuntz said, but rely primarily on outside air to cool servers during eight or nine months of the year. Later buildings are expected to use closed-loop cooling systems with substantially different water requirements.

The development is also financing more than $50 million in improvements to the Malaga Water District system, including new reservoirs, wells, pipelines and monitoring equipment.

Power has generated similar concerns as electricity demand from data centers increases nationally.

Kuntz pointed to Chelan PUD policies intended to prevent large loads from shifting their costs to existing customers. Data centers are subject to separate rates and requirements designed around the infrastructure and power needed to serve them.

“You have rates, you have policies, you have structures, and you're protecting the ratepayers,” Kuntz told PUD officials. “This PUD is well advanced in how to do it the right way, in a responsible way.”

Officials at the meeting acknowledged that the broader national picture is not uniformly positive.

“There are some communities that have been just tremendously hit,” Kuntz said.

But he argued that local governments and utilities anticipated many of those potential impacts and structured development accordingly.

“Our utility has a very different strategy on doing this,” Kuntz said. “We've been very different with the water use questions, the property tax, the subsidies that are in there.”

Employment was another part of the calculation.

Kuntz said data centers are expected to employ approximately 75 full-time workers per building. With 15 facilities either permitted or moving through permitting in Chelan and Douglas counties, that would represent approximately 1,120 permanent jobs if all are completed, not including outside vendors supporting the facilities.

Data centers also represent substantial additions to the local property tax base.

During discussion of Microsoft's Malaga campus, officials said the first building is online, the second is under construction and a contractor has been selected for the third. Local officials hope the campus ultimately reaches six buildings.

Officials estimated Microsoft development could eventually add approximately $2 billion in assessed value on each side of the Columbia River. The effect is particularly significant in Douglas County, where officials said total assessed value currently stands at roughly $8 billion to $9 billion.

The discussion also addressed another source of increasing public concern: artificial intelligence. Data centers, however, long predate the recent growth of generative AI and provide infrastructure for a much broader range of everyday digital services, including cloud storage, online meetings and services used by businesses, schools, hospitals and governments.

Kuntz emphasized that data centers are not synonymous with AI and distinguished the facilities currently permitted or in the permitting process in Chelan and Douglas counties from AI-focused facilities driving some of the industry's rapidly increasing power demands.

“There's legitimate questions for the AI, but that's not what these data centers are for,” Kuntz said.

Kuntz said that distinction could change with future development, and that AI-focused facilities would bring a different set of questions about electricity demand and infrastructure.

And he did acknowledge that development still carries impacts. More construction and employment mean additional traffic and housing pressure, among other effects.

His argument was not that data centers have no costs, but that local governments and utilities have structured development so those costs do not resemble some of the consequences driving opposition elsewhere.

“We've done it differently,” Kuntz said. “We've done it carefully, and I think the governments here have actually done the right things.”

In fact, the Port has also created an online FAQ with information from local data center operators on water and energy use, jobs, taxes and other community impacts, available at cdrpa.org/ncw-data-centers. 

For Kuntz, the remaining impacts have to be weighed against the investment, tax base and employment the facilities bring to the region.

“The impacts are way, way less than they have been other places,” he said. “The positives, I think, offset whatever impacts are left.”

Andrew Simpson: 509-433-7626 or andrew@ward.media