July 28, 2026
Client Alert: Financing the Data Center Boom: Public Finance Tools and Traps for Issuers
The rapid expansion of data centers is reshaping demand for public infrastructure. Hyperscale and AI-driven facilities require reliable power, along with water for cooling, upgraded roads and expanded fiber. States and localities competing to attract these projects are discovering that the electricity grid buildout accompanying them may rival the data centers themselves in cost. For public finance professionals, that means grappling with private business use limits on tax-exempt bonds and the public infrastructure needs these projects generate.