‘You’re a liar.’ Why the world’s biggest building boom has run into a wall in California

Bryan Marsh was booed by the crowd as he approached the podium at Monterey Park City Hall. Things weren’t going as planned.

In front of a wall full of people holding “No Data Center” signs, he described how his company, Australia’s HMC StratCap, invested tens of millions of dollars and became the city’s largest landowner after years of negotiations, permits and hearings.

He said city officials had previously welcomed plans to build a sprawling, new data center and the jobs and tax revenue that would follow, but then things suddenly changed.

Until late last year, people in the room were saying, “You’re a liar!” “There was no widespread opposition,” he said as he shouted. “Now, over the last few months the city has faced intense public pressure.”

California’s infamous NIMBYs have a new purpose. They worry that data centers running AI will lead to pollution, higher electricity bills, and worse. It’s a movement that’s gaining momentum across the country, and it’s particularly poignant in California, the birthplace of the AI ​​boom.

This is also one of the reasons why many of the blue-collar jobs tied to the unprecedented build-up of data centers are leaving for other states.

Medhi Paryavi advises governments and companies on data center projects across the country. When he recently recommended California to a European executive looking to invest hundreds of millions of dollars, he was immediately dismissed.

“Absolutely not!” Paryavi, president of the International Data Center Authority, a Washington DC-based think tank, said the executive had backtracked.

Hatred of California is pretty standard in the industry. Land is expensive, electricity prices are high, and there are too many regulations. Meanwhile, new roadblocks pop up regularly as the state’s outspoken citizens change the rules and protest.

Investors who have a choice usually choose somewhere else.

Protest signs in pepper gardens in a Monterey Park neighborhood on Wednesday.

(Robert Gauthier / Los Angeles Times)

“They are looking for cost, time and availability of energy,” Paryavi said. “California is not on the map.”

Companies in California may be leading the AI ​​revolution, but most of the facilities housing the chips and the jobs that come with building and maintaining them are in other states.

Tech companies, led by Microsoft, Google, Amazon and Meta, are estimated to spend $710 billion on data center construction this year alone, according to real estate investment firm JLL.

Despite grand plans, seemingly insatiable demand and low vacancy rates, the total capacity of data centers under construction decreased last year for the first time in five years, according to CBRE. While construction boomed in some places like Chicago and the Dallas area, those gains were offset by declines in Silicon Valley, Northern Virginia and elsewhere, according to CBRE data.

A technician works at the Amazon Web Services AI data center in New Carlisle, Ind., on Oct. 2.

(Noah Berger / Associated Press)

Texas is expected to become the nation’s leading data center market within the next three years, while legacy markets such as California and Oregon are expected to lose more than half of their relative market share, according to a report from Bloom Energy, an energy company.

Data Center Watch, an organization that tracks opposition to data centers across the U.S., said an estimated $98 billion of projects have been blocked or delayed in the second half of 2025, more than all the cancellations since 2023.

Some counties, such as Vernon in California, have welcomed data center investment, but a growing number of locals are trying to stop data centers in Imperial County and elsewhere.

Progressive lawmakers Bernie Sanders and Alexandria Ocasio-Cortez recently introduced a bill. pause all new data center construction until federal guardrails and protections are in place for workers, communities, and the environment.

In Monterey Park, the proposed data center (the size of four football fields) is near homes. It is expected to consume three times the energy the city as a whole uses, and residents say it will increase electricity bills as well as increase noise and air pollution.

The vacant property on Saturn Boulevard was planned to be converted into a data center in Monterey Park, California.

(Robert Gauthier / Los Angeles Times)

The crowd of more than 200 people gathered at City Hall was overwhelmingly opposed to the data center. Supporters of the project were only a small minority. For hours, everyone stepped up to the microphone to voice their concerns. The center will destroy property values, AI will take over jobs, big AI is a threat to democracy, it is a “class injustice”.

“The tech bros are definitely the Epstein class,” one said. “They are not working class.”

“Let’s make this town a place where people want to live, where people want to do real things, where they don’t rely on a robot, program or app to get by,” said another.

There were only a few people from HMC StratCap, who supported the data center and tried to avoid a vote on its existence, and some union representatives wearing orange worker vests.

They noted that the huge investment has already been accepted, it will create jobs, and that it is hypocritical for the city’s citizens to want the fruits of technology while at the same time being unwilling to accept its infrastructure.

“Everybody likes juice, but they don’t like it squeezed,” said a member of the area’s sheet metal workers union. “I will fight for my members to have a job.”

Of course, it’s much more than NIMBYism that makes building construction difficult in California. Regulations aimed at protecting consumers and the environment make it difficult to access the power needed by data centers. Regulations also contribute to high rent and construction costs.

“There’s a lot of legislation and a lot of red tape you have to go through in the state of California to get data centers approved,” said JLL real estate broker Darren Eades.

NTT, Vantage Data Center and downtown San José on Tuesday, July 30, 2024 in Santa Clara, California. Dozens of data centers built for artificial intelligence consume Calfifornia’s electricity.

(Paul Kuroda / For the Times)

One of the examples he points out is small power plant exemption It stipulates that construction over 50 megawatts requires additional paperwork and a longer lead time for approvals. Larger data centers these days require 20 times that power.

All of this makes investors more likely to avoid California. This will lead to jobs in other states and countries as hundreds of billions of dollars are spent building data centers.

“While it is the cradle of innovation, Silicon Valley is not the cradle of delivering AI outputs and delivering economic outcomes,” Paryavi said.

After a seven-hour hearing, council members gave the green light to a June election that would allow residents to vote on the ban.

This was a victory for a new activist group. No Data Center Monterey Park, led rapid grassroots mobilization and worked with San Gabriel Valley Progressive Action to sign petitions and raise awareness. Activists set up a mahjong parlor to pack out City Hall meetings and a traditional Chinese lion dance performance to engage the Chinese community at large.

For HMC StratCap, the council’s decision was a significant blow. The Australian firm has invested $40 million to purchase 200,000 square meters of property for data centres, as well as a larger adjacent parcel of land for an undisclosed development.

Despite assurances that the data center would generate $5 million in annual revenue to support park maintenance, libraries and repairs without increasing housing taxes, things went south.

He must win the vote in June or abandon the project. If he has to do this, he will have to sue the city.

“Our preferred path is not to litigate,” HMC’s Marsh said at the hearing. “But we also need to protect our legal rights,” he said.

Now it looks like HMC StratCap has given up on the project.

In a letter from its Australian parent company dated March 31 and published on Monterey Park’s official website, it was stated that the company had withdrawn its application to build a data center.

The letter cited new restrictions on data center development in the city and a ban vote in June.

“These regulations are not conducive to data center development,” he said.