Proposed data center in Salem stalled

The Salem City Council has voted unanimously to begin the process of adopting a data center moratorium. Oregon Gov. Tina Kotek has formed a task force to develop statewide regulations for these facilities, and she recently canceled the sale of a piece of state-owned land that the Verrus company was slated to purchase as part of the process of building a data center on the property.

Kotek released a statement about the cancellation. “This decision is about my responsibility to make sure state actions reflect Oregon’s values and serve the public interest,” she said. “I believe in growing Oregon’s economy and welcoming new investment, including in the technology sector. But growth has to make sense for the community, for our infrastructure, and for our natural resources.”

Verrus CEO Nelson Abramson argues his company’s data centers are different than most — he makes the case that projects should benefit the community, support current infrastructure, and protect natural resources. He says the company’s facility would fulfill all those goals, unlike other similar facilities around the country.

Abramson joins us to tell us more about the project.

Note: The following transcript was transcribed using AI and validated for accuracy, readability and formatting by an OPB volunteer.

Geoff Norcross: From the Gert Boyle Studio at OPB, this is Think Out Loud. I’m Geoff Norcross. The company that wants to build a $5 billion data center in 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 Verrus, and CEO Nelson Abramson joins us now in the studio. Nelson, welcome to Think Out Loud.

Nelson Abramson: Well, thank you very much.

Norcross: Were you surprised by all this opposition?

Abramson: 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 it was just not something that anybody had an interest to talk about. So it’s actually been exciting to see this come to the point where it’s a public conversation. People are asking the kinds of questions that drove us to found Verrus as a different kind of data center company.

Norcross: 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 some polling on Oregonians’ attitudes about data centers. It was conducted by DHM 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?

Abramson: I think that people are asking a lot of questions and expressing a lot of concerns that are very valid. I think data centers underpin an incredibly large fraction of our day-to-day life nowadays.

Norcross: Especially now with AI.

Abramson: 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. That’s been true for decades. I think that this continues to grow, and data centers are a pretty significant industrial component of our economy. It’s important for people to be part of the conversation. How do we want to build that and what kind of data center do we wanna have?

Norcross: In spite of it all, do you plan to move forward with a data center project of some kind in Salem?

Abramson: Yes, we are moving forward with the project in Salem.

Norcross: 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?

Abramson: 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. 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 gonna 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.

Norcross: What is it about this site in Salem that makes it a good place to build a data center?

Abramson: Yeah, it’s a great question. So the kinds of things that we look for, that brought us to Salem in general and to that site in particular, [are] a large existing industrialized union workforce and pre-existing industrially zoned land. So we’re next to the municipal airport, next to a correctional facility and some other warehouses and a very forward-thinking utility in PGE, and it’s in a good location in the Pacific Northwest.

Norcross: Will you still be able to build it though with that state land not on the table anymore?

Abramson: Yes. So we’re looking forward to working with Governor Kotek’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.

Norcross: 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.”

I think I’m gonna hear you say this is the direction that you’re kind of headed in. Do you think data centers generating the majority of their own juice is needed in the future?

Abramson: 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’s a 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 Verrus.

Norcross: What would be the problem of generating your own electricity in Salem?

Abramson: Oh, well, 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 near people.

Norcross: You don’t want big solar panels?

Abramson: 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.

Norcross: 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?

Abramson: It’s about three sit-down restaurants’ worth of water. So what we use is 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 a small amount of water into the system to then further drop the temperature and the energy usage.

Norcross: We invited the city council and the mayor to be on. The city declined, saying, “We are respectfully declining an interview on this topic at 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.”

Governor Kotek 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?

Abramson: We actually have been engaged with a 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.

Norcross: You also want to build a data center in the Detroit, Michigan area?

Abramson: Yes, that’s correct.

Norcross: Why there?

Abramson: Actually, it has a lot of similar things going for it. It has a strong, long, industrialized union workforce. It has existing industrial land, also next to an airport, and existing industrial users. [It’s] 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. In order to have fast applications or in order to have things on your phone work quickly, you need a data center nearby. 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 slow. 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.

Norcross: 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 from that?

Abramson: We’ve 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 utilities and for the local stakeholders.

Norcross: 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. I’m wondering how that might change your approach in Michigan and might have trickle effects down here in Oregon?

Abramson: Yeah. Actually, we were one of the original signers of the pledge in Michigan that Governor Whitmer came up with. It’s actually something we’ve suggested with Governor Kotek as well. 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 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.

Norcross: 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. I think I read that your center, when it’s all said and done and built and running, [would] create 73 jobs in the community, a little more than 70 anyway. Is that a lot?

Abramson: It’s another really good question. The numbers that we’re talking about are base layer, so just literally us running the facility itself. So we’re projecting between 75 and 100 long-term jobs, as well as 1,000 construction jobs. 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.

If you look in a facility like Prineville, just to quote one of the supporters who came out to talk about the facility that it works in Prineville, they’re a union electrician. And they say there’s about 100 of them still working in Prineville, even though the facility’s 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. 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 much larger than it sounds.

Norcross: Do you foresee community benefits to your proposal? How will this help Salem?

Abramson: 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, as far as I know, it is 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.

One of the conversations that we’re looking to have with local community groups and stakeholders is what are the kinds of developments that would be the most impactful, most meaningful for Salem? Because on the one hand, it’s on us to have that conversation and to bring that investment, but we really need the community of Salem to tell us where that investment is gonna be best, impactful.

Norcross: Again, on our Facebook page, we asked what requirements new data centers should have to meet before they are approved? Glenn Stroud said, “Pay your full taxes (no exemptions, no abatements). Strict, enforceable environmental regulations for both the construction and operation of facilities. Limit on the 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, trees or sidewalks, or “sponsor some local T-ball or something, contribute to a local charity perhaps.”

Are any of those workable for you?

Abramson: Yeah, actually, that whole list I find very interesting and I think we could go through it if we have time. But 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.

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…

Norcross: The state land that the governor says you’re not gonna get?

Abramson: Yes, that’s true. But as I said, we’re looking forward to working with the governor on that. But there are oak trees that we’re looking to conserve. Then we’ve also been actually investigating the sports question in particular. There’s some local sports field opportunities that are actually quite interesting.

Norcross: OK, where are you in the process right now?

Abramson: We have submitted our site plan. And Oregon, and Salem in particular, have a very specific review process. So we 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.

Norcross: Do you foresee any scenario where you would walk away and not build the center?

Abramson: The future is hard to predict. I’m sure you can imagine scenarios that would happen. But I don’t think they’re likely. I think we’re here for the long haul.

Norcross: Has this experience taught you anything about communities where you might put these centers and what they value?

Abramson: It is actually something that we’re talking a lot about, which is how we can 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 heat that happens that can really drown out the actual conversation that we wanna have.

Norcross: When do you anticipate this center actually going online?

Abramson: Probably over the next couple of years. These things, whenever you’re talking about concrete and steel, it takes some time.

Norcross: Is there anywhere else in the country that you would like to build one?

Abramson: Oh, lots of places.

Norcross: Has your experience in Salem informed how you approach those communities?

Abramson: It is definitely a continually evolving process. As I was saying at the top, 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. Honestly, I love to talk about it. I love to involve people in it.

Norcross: Why do you think that is? Why do you think people are so engaged with this now?

Abramson: I think we’re living in a time of tremendous change. AI is here, but it feels very abstract. And I think data centers, particularly a data center in your community, is something very specific that you can point to and you can talk about.

Norcross: Nelson, thank you so much and good luck to you.

Abramson: Thank you very much, Geoff. Thank you for having me.

Norcross: Nelson Abramson is the CEO of Verrus.

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