Proposed data center in Salem stalled

The Civic's Education Initiative, a statewide program sponsored by the Oregon State Capital Foundation. They help Oregonians learn how our government and democracy work and how you can get involved and make a difference. Grant applications to help nonprofit and educational organizations support civics education programs throughout Oregon are open now through September 30th at Oregoncapitalfoundation.org. OPB is proud to be 100% community funded. Your support is more important than ever. Help build the future of OPB. Go to opb.org and join as a sustainer with your ongoing monthly contribution now. Thank you. From the Gert Boyle studio at OPB, this is Think Out Loud. I'm Jeff Norcross. The company that wants to build a $5 billion data center is Salem is seeing a lot of pushback. First, Oregon's governor announced she intended to cancel the sale of 32 acres of state-owned land for the project. Earlier this month, the Salem City Council held a special meeting to consider a moratorium on data centers in the city. The testimony they heard was overwhelmingly in favor of that moratorium. The company that wants to build this data center is called Veris. And CEO Nelson Abramson joins us now in the studio. Nelson, welcome to think out loud. Well, thank you very much. Were you surprised by all this opposition? It's been very interesting to see how much data centers have become a topic of conversation. I've been in data centers for more than 25 years. And for most of my career, you know, it was just not something that anybody had interest to talk about. And so it's actually been exciting to see this come to the point where it's a public conversation. And people are asking the kinds of questions that drove us to found Veris as a different kind of data center company. We'll get into a different kind of data center in a moment. But it's not just conversation that's happening out there. It's active opposition. Axios reported out some polling on Oregonians attitudes about data centers. It was conducted by DHS research. It found that 71% of respondents had a negative view of these centers. 67% supported a temporary halt on data center construction across the state. What does that tell you? I mean, I think that people are asking a lot of questions and expressing a lot of concerns that are very valid. I think data centers are, they underpin an incredibly large fraction of our day-to-day life nowadays. They are the... Especially now with AI. Especially now with AI, but even ignoring AI, e-commerce... online banking, streaming, everything that we do, every time you pick up your phone, it hits the data center. And that's been true for decades. And I think this continues to grow. And data centers are a pretty significant industrial component of our economy. And it's important for people to be part of the conversation. How do we want to build that? And what kind of data centers do we want to have? In spite of it all, do you plan to move forward with a data center project of some kind in Salem? Yes, we are moving forward with the project in sale. You have an application in place already. It would not be subject to the moratorium. But given the community pushback...

Should you maybe push pause? Well, we are having the conversation with the local community and local community groups, and we're looking to even deepen that conversation. I think things have gotten quite heated quite quickly. And I think what we're looking for is for people to maintain an open mind and participate in the conversation with us about the kind of data center that we're going to build and the way in which we can bring. critical economic development to Salem while mitigating or avoiding the kinds of challenges that people are worried about, and I think rightly so. What is it about this site in Salem that makes it a good place to build a data center? It's a great question. So the kinds of things that we look for that brought us to Salem in general and that site in particular, so large existing industrialized union workforce. pre-existing industrially zoned land. So we're next to the municipal airport, next to a correctional facility and some other warehouses, and very forward-thinking utility in PGE. And it's in a good location in Pacific Northwest. Yeah. Will you still be able to build it, though, with that state land not on the table anymore? Yes, so we're looking forward to working with Governor Kotech's office and trying to find a path forward. But we have submitted a site plan for the first phase of the project, which does not include the state land. We asked people on Facebook what requirements they thought new data centers should have to meet before any kind of approval. Spencer Dahl reflected a lot of the feedback that we got. He wrote, any proposed new data center should use zero potable water and generate the majority of its own electricity. And I think I'm going to hear you say this is the direction that you're kind of headed in. Do you think data centers generating the majority or of their own juice is needed in the future? I think the water, frankly, we agree with. So we use an extremely low water solution. The full campus is worth about three sit-down restaurants worth of water per year. In terms of energy, I think the intent, the spirit of the comment I strongly agree with. I don't think you literally want energy generation wherever there is data center, because in this case, it would be... in Salem. I think the question is, what can data centers do? How can they be built? How can they operate to better unlock renewable energy and large-scale energy on the grid, which is something that actually is core to how we build data centers of various. What would be the problem of generating your own electricity in Salem? Oh, well, I mean, I think you would not want large-scale energy generation inside Salem. It's not what the land is zoned for, and in general, you don't want it nearer people. You don't want big solar panels. You don't want. Oh, so solar and wind would be great, but I think you don't have enough land area. The reality for solar and wind generation is you just need an incredibly large amount of land. I see. The Salem Reporter came out with a story about the water your facility would use for cooling if it was built. It says the center would use up to 3 million gallons of water on the hottest days with a projected annual total of 39 million gallons. That seems like a lot, is it? It's about three sit-down restaurants worth of water.

And so what we use is a primarily an air-cooled system, so similar to the air conditioning you have in most office buildings. And then on the hottest days to dramatically reduce energy use, we atomize small amount of water into the system to then further drop the temperature on the energy usage. Okay. We invited the city councilor and the mayor to be on. The city declined, saying we are respectfully declining an interview. On this topic of this time, work is still to be completed as there is now an application, and any statement may be perceived as bias or prejudgment on that application. If you're just tuning in, we are talking about the data center of the company, Varus, wants to build in Salem, despite strong opposition in the community. Nelson Abramson is the CEO. Nelson, Governor Kotech has put together a task force to develop statewide regulations for these facilities. Given that, are you not concerned about... regulations in Oregon on data centers being kind of an unknown thing right now. We actually have been engaged with the data center task force from the early days, as well as participated in the most recent utility filing from PGE that we actually signed on, which was a significant rate increase for data centers and a decrease for residential users. I think we see an opportunity here to create rules for responsible data center development here in Oregon and actually nationally as well. You also want to build a data center in the Detroit, Michigan area? Yes, that's correct. Why there? Actually, it has a lot of similar things going forward. It has a strong, long, industrialized union workforce. It has existing industrial land, also next to an airport and existing industrial users, and also strategically located in the Midwest. Something that I think a lot of people don't recognize about data centers is they actually are already all over the place. And in order to have... fast applications, in order to have things on your phone work quickly, you need a data center nearby. And so you can't put, for instance, all the data centers on the moon because then everything you did on your phone would be incredibly slowly. It's slow. And so you have to have data centers near the people who want to use the services so that it's quick. You have a speed of light problem. Yeah, you're right. Data centers are online right now all over the place. And that's part of what's fueling the opposition because when people think of data centers, they think of those huge facilities, especially like we have along the Columbia River in central and eastern Oregon and central and eastern Washington, for that matter. How is what you're proposing different than that? I think we focused from the beginning in terms of how the data center itself can be better integrated to the local environments, using berms and landscaping to frankly hide the facility, making something a little bit more architecturally pleasing. But in particular, being careful about resource usage and making the data center itself grid interactive. So it is actually an extension of and a responsive part of the grid so that we can. exert downward pressure on utility rates as opposed to being a challenge for utility and for the local stakeholders. Back to Michigan for a second, the governor there, Gretchen Whitmer, called for a pledge from data center companies like yours to develop a smarter, sustainable method of putting up their facilities. And I'm wondering how that might change your approach in Michigan.

might have trickle of effects down here in Oregon. Yeah, actually, we were one of the original signers of the pledge in Michigan that Governor Gretchen Whitmer came up with. And it's actually something we've suggested with Governor Kotech as well. And we would love to see a similar kind of pledge for responsible data center development. I think we're strong believers in the partnership here where we can get the economic development that we want. We can get the... the digital value and the current effective industrial revolution that we're experiencing while mitigating or avoiding these downsides. It is possible, and that's what we're doing, and we're looking to bring everybody along on that journey. Speaking of economic development, another objection that a lot of people have is it doesn't create a lot of jobs. It does create some employment, but not a ton. And I think I read that your center would, when it's all said and done and built and running, create 73 jobs in the community. A little more than 70 anyway. Is that a lot? Yeah, it's another really good question. I think the numbers that we're talking about are part of the, are the. base layer, so just literally us running the facility itself. And so we're projecting between 75 and 100 long-term jobs, as well as 1,000 construction jobs. And when we say construction jobs, I think people oftentimes think of that as very, very temporary, but the reality is these things take a number of years to build. And if you look in a facility like Prineville, just to quote one of the supporters that came out to talk about the facility that works in Prineville, they're a union carpenter or electrician, I'm sorry, and they say there's about 100 of them still working in Prineville, even though the facility has been completed for years. On top of that, you have the jobs that the tenant will bring in terms of actually running the servers themselves, and then you have a large fan-out effect of other jobs that get created and supported throughout the community through local small businesses. So I think the economic impact is actually quite much larger than it sounds. Do you foresee community benefits to your proposal? How will this help Salem? Yeah, so there's the standard impact, which is, hey, we're going to be paying a whole bunch of property taxes. We're going to be bringing a whole bunch of jobs. We pay franchise fees on the power that the facility uses. On top of that, which I think, so as far as I know, just the first time it has occurred in Oregon, we are proposing a binding community benefits agreement where we agree for direct community investment as part of the development of the project. And we are, one of the conversations that we're looking to have with local community groups and stakeholders is what are the kinds the developments that be the most impactful, most meaningful for Salem. Because on the one hand, you know, it's on us to have that conversation and to bring that investment. But we really need the community. Salem tells us where is that investment going to be best impactful? Again, on our Facebook page, we asked what requirements do you think new data centers should have to meet before they are approved? Glenn Strout said, pay your full taxes, no exemptions, no abatements, strict enforceable environmental regulations for both construction and operation of facilities. Limit on number of data centers in any area or town. Limit on electricity and water consumption every month after that threshold has been passed. You must pay a steep premium for the additional resources and some sort of tangible investment in the surrounding area of the data center, like roads or trees or sidewalks or sponsors some local T-ball or something to contribute to a local charity, perhaps. Are any of those workable for you?

Yeah, actually, I think that, you know, that whole list is, I find very interesting. And I think, you know, we could go through it if we had time or have time. But I think, you know, to think about a couple of specific items, we are actually talking to the water company about specific limitations on the water itself, binding commitments. On the power, we are as part of the most recent filing and the most recent legislative action. I think the Power Act is the name of it. We are required to pay 100% of the cost of delivering power and all the upgrades required for our facility. There's actually, on the state land, there is a grove of heritage oak trees that we are already in conversation and have agreed to a conservation easement. We've been talking to the city about connecting it to an existing walking trail. The state land that the governor says you're not going to get? Yes, that's true. But on there is, as I said, we're looking forward to working with the governor on that. But there is their oak trees that we're looking to conserve. And then, you know, we also have been actually investigating the sports question in particular. There's some local sports field opportunities that are actually quite interesting. Okay. Where are you in the process right now? So we have submitted our site plan. And Oregon and Salem in particular has a very... specific review process. And so expect over the next couple of months to work with the city and the planning department to go through that process and meet their, I would say, very high and exacting standards on existing ordinances and requirements for approving the site plan. Do you foresee any scenario where you would walk away and not build the center? Ooh. I mean, the future is hard to predict. I'm sure we can imagine scenarios that that would happen, but I don't think they're likely. I think we're here for the long haul. Has this experience taught you anything about communities where you might put these centers and what they value? Yeah, you know, that is actually something that we're talking a lot about, which is how can we have? a deeper and more serious conversation with the broader and the broadest possible group of people as early as possible while avoiding some of the, I think, sort of the heat that happens that can really drown out the actual conversation that we want to have. Okay. When do you anticipate this center actually going online? Probably over the next couple of years. These things, whenever you're talking about concrete and steel, it takes some time. Is there anywhere else in the country that you would like to build one? Oh, lots of places. I mean, I think... Has your experience in Salem informed how you approach those communities? It is definitely a continually evolving process. As I was saying at the top, like, this has just been something that... people have not been interested in having a conversation about for decades while I've been working on it. And now very much everybody wants to have the conversation. And honestly, I love to talk about it. I love to involve people on it. Why do you think that is? Why do you think people are so engaged with this now? I mean, I think we're living in a time of tremendous change. And AI is here, but it feels very abstract. And I think data centers, particularly data center in your community, is something very specific that you can point to and you can talk about.

Nelson, thank you so much and good luck to you. Well, thank you very much, Ethan. Thank you for having. Nelson Abranson is the CEO of Varys. So much of what we talk about on this show has to do with what's happening right now. But there's a lot of history behind these conversations. OPB's Salmon Wars podcast will give you insights into some of that history. It tells a story of one Yakima Nation family that's been fighting for salmon in the Columbia River across generations. Find Salmon Wars wherever you listen to podcasts.