Summary as Introduced
Creates the Property Owner Protection from Data Center Impacts Act. Makes a property owner eligible for compensation for harm materially and proximately caused by the construction or operation of a data center if the affected property is located within 1,000 feet of the data center and if the data center has caused measurable reduction in fair market value, reduction in business revenue, or adverse environmental or operational impacts, such as noise, vibration, traffic, stormwater burden, or lighting. Creates an appraisal procedure to evaluate the data center's impact on the property owner. Provides a compensation formula to determine real property compensation and business loss compensation. Authorizes a property owner to bring a civil action seeking specified damages and attorney's fees and costs. Creates other remedies for enforcement of the Act. Makes legislative findings. Limits the concurrent exercise of home rule powers.
Staff Analysis
House Bill 4319 creates the Property Owner Protection from Data Center Impacts Act. This legislation aims to provide a legal remedy and compensation for property owners whose land or businesses are negatively impacted by the construction or operation of nearby data centers. The Act specifically targets properties located within 1,000 feet of a data center, establishing that owners are eligible for compensation if the facility causes a "measurable reduction" in fair market value, business revenue, or significant environmental and operational issues such as excessive noise, vibration, traffic, or lighting problems.
The bill outlines a structured process for determining compensation, starting with a certified appraisal procedure to measure the decline in property value. Notably, the legislation includes a compensation formula that mandates payment equal to 1.5 times the proven reduction in a property's fair market value, reflecting the substantial non-market losses families and businesses may suffer. It also provides for 100% reimbursement of demonstrated business losses supported by tax filings and financial records. While data center owners may propose mitigation efforts—such as sound walls or landscaping—in lieu of payment, the bill authorizes property owners to file civil actions to recover damages, attorney’s fees, and costs if compensation is not paid within 90 days of a determination. By limiting the concurrent exercise of home rule powers, the Act ensures a statewide standard for holding data center developers, rather than taxpayers, financially responsible for the local impacts of their siting and operational decisions.
One of the most significant concerns for counties is the potential for direct financial liability. The bill defines "Data center owner" broadly, and in instances where a county or a local government unit owns the land or is a partner in a public-private partnership for a data center, the county itself could be held responsible for paying the "1.5 times" market value reduction penalty. Even if the county is not the owner, the legislation could lead to a decrease in the local property tax base. If properties within 1,000 feet of a data center are legally recognized as having a "measurable reduction" in fair market value, their assessed values will likely be lowered. This would result in decreased property tax revenue for the county, school districts, and other local taxing bodies, potentially forcing a shift in the tax burden onto other residents or a reduction in county services.
Administratively, the bill imposes a new regulatory and legal burden on county offices. County assessors and their staffs may face an influx of complex assessment appeals and requests for certified appraisals specifically tied to data center impacts. Furthermore, because the bill creates a specific civil cause of action for property owners, counties may find themselves entangled in protracted litigation, either as named parties or as sources of evidence regarding zoning decisions and noise complaints. This could lead to increased costs for county legal departments and a strain on the local court system.