$1.1B data center tax break near civil rights trail

In Lowndes County, Alabama, a nearly 70% Black county, commissioners voted 3-2 on Oct. 13 to give a Texas developer a 20-year, $1.1 billion tax abatement for Project Red Clay, an 800-acre data center planned about a half mile from a Selma-to-Montgomery civil rights trail campsite. The project would run on 1.5 gigawatts of power, according to reporting by Joseph Williams of Word In Black, and residents say they were given little information or chance to weigh in.

Abre’ Conner, the NAACP’s director of environmental and climate justice, said the deal reflects a national trend of forcing data centers into places already bearing environmental harm, “for the vague possibility of economic gain.” Residents also worry whether the county has the water, power and sewer capacity for the project, in a county where many homes still lack modern sewage systems.

The same questions are being asked in Minnesota, where a data center’s cost can show up in two places on a household budget: the property tax and electric bills.

About a dozen mega-scale data centers have been proposed across Minnesota, and only one, a Meta data center in Rosemount, is under construction, MPR News has reported. In Hermantown, the City Council tabled a vote in May on a property tax break that could reach $80 million for a nearly $2 billion Google complex. “We’re talking about a multi-trillion dollar company that wants a tax break. Period,” resident Jonathan Thornton told MPR News. City officials have argued that without incentives, other communities will win the projects.

At the state level, Minnesota is one of 38 states that offer data center tax incentives. Data centers still receive a sales tax exemption on equipment, but in 2025 lawmakers repealed the exemption on their electricity use, expected to raise about $140 million over four years, the Minnesota Reformer reported.

Electric bills are the other concern. Minnesota passed a law in 2025 requiring very large customers, including data centers, to pay all utility costs attributable to them. In May, the Public Utilities Commission approved Xcel Energy’s rules for these customers, including 15-year minimum contracts, an 80% demand charge if a large facility leaves a contract early and a separate rate class for data centers so their costs can be tracked in future rate cases.

Whether those protections hold is being tested. On Oct. 1, Attorney General Keith Ellison’s office filed comments on an agreement between Xcel and Google for a proposed data center in Pine Island, saying electric service to the facility could significantly affect Xcel’s other ratepayers, including households. The commission has not decided the issue.

How to take part

• Watch the commission. The Public Utilities Commission accepts public comments on utility agreements and tariffs, and the Attorney General’s Residential Utilities Division represents residential customers.
• Ask your city. Property tax abatements are decided by city councils and county boards in public meetings. Ask what a project will pay, what it will cost and what residents get in return.
• Follow the ratepayer watchdogs. The Citizens Utility Board of Minnesota tracks data center protections at cubminnesota.org.

Alabama reporting by Joseph Williams, Word In Black. Minnesota reporting by the Minnesota Spokesman-Recorder.