Data Center Siting Just Got Harder and More Expensive

The biggest constraint on America's data center boom used to be land and electricity. After Tuesday, developers also have to win permission to build, and that's getting harder to come by.

Voters in 10 states sent a striking message in the midterm elections. Of 41 local ballot measures involving data center development, 40 produced outcomes favoring restrictions, according to Ballotpedia results reported by Reuters. The lone exception was in Harwood, N.D., where voters rejected added review requirements for large industrial projects.

Meanwhile, governor's races in Texas, Ohio and Georgia went to candidates who campaigned on pausing or tightening approvals for large-scale data center development.

For site selectors, developers and economic development organizations, the results add a new layer of risk to an already challenging market. Projects with available land, access to power and deep capital backing may still struggle to win approval, and that uncertainty can be expensive.

Texas is the market with the most at stake. Investment bank Jefferies estimates the state accounts for about 26% of the planned U.S. data center pipeline, according to Reuters.

Gov.-elect Gina Hinojosa has pledged a moratorium on new approvals until the state Legislature establishes stronger protections for communities, utility customers and water supplies.

"When I am governor I will issue a moratorium — a ban — on all data center approvals until laws can be passed by the Legislature to protect Texans," Hinojosa said in an Oct. 22 campaign video, as reported by The Texas Tribune.

Her position extends a regulatory shift already underway under Republican Gov. Greg Abbott, whom she defeated. Abbott paused data center approvals at the state's grid operator and environmental permitting agency, and he demanded that developers pay for the electrical infrastructure their facilities require. The growing scrutiny of data centers has come from both parties.

Hinojosa has also called for ending tax subsidies for the industry, stronger water protections, greater transparency and union labor requirements.

In a September interview with Politico, she offered a formulation economic developers may hear more often. "We can have economic development and we can have protections for Texans. These things are not mutually exclusive."

Her administration takes office Jan. 19.

Ohio had more data center ballot measures than any other state, with 21 on Tuesday's ballot, according to Ballotpedia. None went the industry's way.

The measures varied considerably. Some sought outright bans, while others addressed zoning, financial guarantees, local approval requirements or advisory positions.

For developers, the distinction matters. A zoning change that requires additional hearings presents a different risk than a prohibition on facilities above a set electrical load.

Gov.-elect Amy Acton has called for a conditional moratorium on new data centers unless developers agree to cover their utility costs, use union labor and meet environmental standards, according to Fortune.

The combination of state-level policy uncertainty and local ballot restrictions could complicate site selection in a market already important to hyperscale development.

Georgia Gov.-elect Keisha Lance Bottoms has promised a temporary statewide pause on new data center construction to assess the industry's effects on electricity bills, communities and the environment, Fortune reported.

The potential implications extend beyond the Atlanta market. Georgia has drawn data center investment with its fiber infrastructure, access to major population centers, available land and business climate.

A pause could affect how developers evaluate projects that have not yet secured approvals, although its scope, duration and treatment of existing projects remain uncertain. For site selectors, the key line will fall between projects already entitled to proceed and those still seeking permission.

The midterms showed that local opposition isn't confined to a handful of high-profile fights.

Ballotpedia is covering 50 data center-related local measures in 13 states in 2026, including six voters decided before Election Day and three scheduled afterward. All six of the earlier votes went toward more limits.

The measures include outright prohibitions, moratoriums, zoning restrictions, public approval requirements and financial obligations.

In Grove City, Ohio, voters considered requiring voter approval for data center projects above land, water and power use thresholds. In Perry, Ohio, a measure sought financial guarantees to the community from data center developers receiving tax incentives.

These examples point toward a regulatory environment in which winning a permit may increasingly depend on showing financial and infrastructure commitments before construction begins.

The election results don't establish that data center construction costs have risen by a measurable national percentage. But they create conditions that can make projects more expensive to develop and finance.

Developers may face added carrying costs on land, longer waits for approvals, more spending on community engagement and new obligations to pay for utility infrastructure.

The greatest exposure may fall on projects that have already committed capital. A developer still comparing prospective sites can reconsider its options. A company that has bought land, ordered equipment, negotiated utility upgrades and promised a customer a delivery date has far less flexibility.

Mona Dajani, a partner at law firm Cooley, told Reuters the election could extend existing permitting pauses and change the conditions for restarting development, leaving developers carrying equipment commitments, financing costs and customer deadlines while they wait.

That could favor large hyperscalers with diversified development pipelines and the balance sheets to absorb delays. Smaller developers pursuing a single campus may face a tougher financing environment.

For EDOs, the election is a warning about the limits of the traditional recruitment model. A project can promise billions in capital investment, construction jobs and property tax revenue and still run into voters worried about utility bills, water use and local control.

The political environment is also changing what communities may expect in return for approval. Developers could increasingly be asked to show how their projects will pay for grid upgrades, protect water resources, contribute to local employment and provide enforceable community benefits.

Those requirements could add to project costs. They could also make projects more predictable where communities set clear standards and developers meet them early, and that will matter as states and localities compete for the next generation of digital infrastructure.

Demand for artificial intelligence infrastructure hasn't gone away, and neither has the need for large sites, big power supplies and fiber access. But the 2026 midterms showed that delivering those assets is no longer enough on its own.

Developers will increasingly have to weigh the political durability of an approval, their financial exposure to delays and the likelihood of new infrastructure obligations. For communities willing to host data centers, a transparent and predictable development framework could become a competitive asset. For communities looking to restrict them, Tuesday's results showed how much local voters can shape where projects go.

The next premium in data center site selection may be paid for certainty that a project can actually get built, on top of the price of available megawatts.