Skip to content
Share
Explore
Three-Pillar Proposal for Municipal AI Infrastructure Oversight
Addressing Governance Gaps for AI Data Center Adoption
Executive Summary
This three-pillar policy framework addresses governance gaps surrounding AI data center development when existing agreements lack specific protections for utility ratepayers, water resources, and tax incentive oversight. Based on real-world policy work developed for a November 2025 Common Council meeting in Port Washington, Wisconsin, where Vantage Data Centers is developing a new AI data center, the framework translates actual municipal challenges into a replicable template. Designed for municipal officials, Common Council members, and concerned residents, it establishes accountability mechanisms and provides actionable tools for communities navigating data center proposals. The approach proves particularly valuable given threatened federal preemption of state AI regulations, positioning municipal authority as the primary recourse for protecting constituent interests. Communities implementing this framework can influence VLC (Very Large Customer) tariff negotiations, establish precedent for proactive AI infrastructure governance, and create sustained oversight rather than one-time policy adoption.
The Three-Pillar Framework
Pillar 1: Fair Utility Rate Structures
Establishes cost-causation principles to prevent data center infrastructure costs from being socialized across residential ratepayers. Draws on Oregon's POWER Act (HB 3546) and documented cases where data center growth drives residential electricity bill increases of 13-16% in PJM states. Recommends PSC intervention for data center-specific rate classifications and transparent reporting of how VLC tariff costs are distributed.
Pillar 2: Water Accountability and Transparency
Creates binding oversight mechanisms for water usage, addressing the Lawrence Berkeley National Laboratory projection that U.S. data center water consumption could double or quadruple by 2028. Requires monthly public disclosure, maximum consumption limits with penalties, mandatory water replenishment investments, and third-party verification of closed-loop cooling systems—even when developers claim minimal usage.
Pillar 3: Tax Incentive Proportionality
Establishes performance-based accountability for TIF/TID incentives tied to actual job creation, community benefit, and environmental compliance. Challenges the typical data center employment model (often fewer than 100 full-time employees) against substantial public investment, requiring regular impact audits and clawback provisions for non-compliance.
Process: Facilitating Multi-Stakeholder Engagement
The framework requires rapid policy research and synthesis, translating technical utility regulation, water law, and TIF policy into accessible formats for non-expert stakeholders. Visual infographics prove essential—comparing projected water usage against typical data center consumption of 1-5 million gallons/day, and documenting residential bill increases in comparable municipalities helps make abstract policy concrete.
Effective implementation coordinates messaging across multiple stakeholder groups including environmental advocates, ratepayer coalitions, and concerned residents while maintaining productive relationships with municipal officials who may have already approved development agreements. Positioning recommendations as "building on" rather than "opposing" existing commitments creates political space for adoption.
Framing municipal action within the broader context of threatened federal preemption—specifically, the Trump administration's draft executive order to establish an "AI Litigation Task Force" that would challenge state AI laws and withhold federal infrastructure funding from non-compliant states—elevates local policy from NIMBY resistance to legitimate municipal authority defending constituent interests.
Outcomes: Policy Consideration and Ongoing Dialogue
This framework directly influences utility VLC tariff presentations and subsequent PSC negotiations, with Council members able to cite specific recommendations during utility rate discussions. It establishes precedent that municipalities retain authority to impose accountability measures even after development agreements are signed—a crucial governance principle given the 18-24 month lag between deal signing and operational impacts.
Implementation generates regional media coverage positioning adopting communities as models for proactive AI infrastructure governance. The three-pillar framework serves as a reference point for other municipalities evaluating data center proposals, creating informal networks for municipal AI policy knowledge-sharing.
Most significantly, the framework establishes ongoing dialogue between municipal officials, utility regulators, and community stakeholders around monitoring and enforcement mechanisms—moving beyond one-time policy adoption to sustained governance infrastructure.
One-Page Takeaway
The accompanying infographic condenses the three-pillar framework into a one-page resource that provides actionable guidance—the kind of communication essential for rolling out AI adoption.
Author: Josephine Dorado | Director of AI Strategy, Joyera | Director of Learning, AvaCon | Two-time Fulbright Scholar | josephine@funksoup.com |
Want to print your doc?
This is not the way.
This is not the way.
Try clicking the ··· in the right corner or using a keyboard shortcut (
CtrlP
) instead.