Last December, five people in Monterey Park, a suburb east of Los Angeles, decided they didn't want a data center in their neighborhood. The facility was already backed by an Australian investment firm that had dropped $39 million on the land. Six weeks later, those five people had won. Their campaign budget was basically zero. A local copy shop printed flyers in English, Chinese, and Spanish. Those flyers moved through dim sum lunches, WeChat threads, PTA pickup lines. No PR firm. No budget to speak of. Five thousand people signed the petition before city council even put a hearing on the calendar. That hearing, when it came, ran six hours. Three hundred residents packed the room and almost nobody left before midnight.
The Monterey Park story is satisfying as local drama. But zoom out and the picture gets uncomfortable for anyone betting on the AI infrastructure buildout. Across the United States, communities are not just complaining about data centers. They are defeating them. Systematically, and with growing sophistication. Between April and June last year, local opposition blocked or delayed $98 billion worth of data center projects in 11 states, according to Data Center Watch. Two-thirds of the projects the group tracked were halted.
That number should alarm anyone who assumes the AI boom's physical requirements will sort themselves out. They won't. Not when the bottleneck is a zoning board in a farming town.
The choke point nobody modeled
Between the four companies racing to dominate AI, Microsoft, Google, Amazon, and Meta, capital spending on data centers now runs into the hundreds of billions per year, a build-cycle so aggressive that Nvidia's valuation prices in decades of exponential demand and Wall Street power-consumption models keep doubling their own forecasts. The money is moving faster than the concrete can set.
The Breakdown
• Local opposition blocked or delayed $98 billion in data center projects across 11 states in Q2 2025 alone, halting two-thirds of tracked proposals.
• Communities now share organizing tactics across state lines, with 50+ opposition groups active in 17 states.
• Zoning, not power or chips, has become the binding constraint on AI infrastructure expansion.
• Microsoft listed grassroots opposition as an operational risk in its SEC filing.
None of those models account for a retired vegetable farmer in Duluth blocking a development several times larger than the Mall of America.
The mismatch runs deep. One facility alone can drink millions of gallons of water per month. The grid connection runs into the hundreds of megawatts. Diesel backup generators rumble at all hours. Somebody has to sign off on each of those line items, and that somebody is almost always a five-member planning board in a suburb or a farming county. Those boards, it turns out, are wildly responsive to 300 angry residents in a meeting room.
You can throw $39 million at a parcel in suburban Los Angeles, as HMC Capital did when it acquired Monterey Park's Saturn Park site in late 2024. You can have your financing lined up, your architects hired, your applications filed. And five people with a petition and a teach-in can make all of it irrelevant. The capital doesn't buy the permission. That's the choke point.
Why the industry's playbook is failing
Data center developers, for years, operated with a simple formula. Acquire land quietly. Secure power. File permits. Promise jobs and tax revenue. Get approvals before anyone notices.
That formula assumed obscurity. It worked when most voters had never heard of a data center, when planning boards saw only the economic upside, and when the handful of affected neighbors couldn't organize faster than the permitting process moved. The developer showed up with a tax revenue estimate and a rendering. The board said yes. Nobody in the neighborhood found out until the construction trucks arrived.
Every one of those conditions has reversed. Communities now know what a data center is. They know what it costs them in electricity, water, noise, and property values. And they talk to each other.
In Monterey Park, StratCap Data Centers promised community outreach sessions after the city council asked for higher environmental review. They never held them. Mayor Elizabeth Yang publicly expressed disappointment. The city attorney called the developer's delays a pattern. StratCap's lawyers sent what one council staffer called a "nasty" letter threatening legal action over the moratorium. It backfired. The council dug in harder.
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This pattern repeats nationally. In Matthews, North Carolina, a Charlotte suburb, the developer didn't even make it to a vote. The mayor called to warn them: pull the proposal or lose unanimously. The funding package would have covered half the city's budget. Didn't matter. Opposition ran "999 to one against," the mayor told the Associated Press. In Hermantown, Minnesota, residents discovered through a public records request that state, county, and city officials had known about a massive data center proposal for a full year before telling anyone. "The secrecy just drives people crazy," one resident told the AP.
Communities are not merely reactive anymore. They study each other's campaigns. Monterey Park organizers explicitly cited Virginia and Pennsylvania protests as models. Indiana activists trained by the Citizens Action Coalition share canvassing techniques with groups in Michigan. SGV Progressive Action hosted its own informational sessions, drawing 200 people, when the developer failed to show.
Andy Cvengros, who leads data center deals at commercial real estate firm JLL, counted seven or eight recent transactions where opponents went door-to-door, distributed yard signs, and organized before the first public hearing. "It's becoming a huge problem," he told the AP. The industry trade group Data Center Coalition has started urging developers to engage earlier. But earlier engagement assumes communities will be reassured by information. In practice, more information often makes the opposition sharper. Nobody in Monterey Park opposed the project out of ignorance. Residents had read the environmental filing. They'd seen the 14 diesel generators in the plans. They could do the math on what nonstop operations would do to local air quality. When they showed up at city hall, they came with specifics, not feelings.
The political math is changing
Data center opposition used to be something you could safely ignore. A cranky homeowner here, a NIMBY letter to the editor there. Background noise. Then mid-2025 happened, and the background noise turned into a roar.
A Morning Consult poll from last fall put a number on it: most American voters now support banning data center construction near their homes. Most also blame AI data centers for rising electricity prices. Americans agree on practically nothing these days. They agree on this.
Politicians can smell it. Virginia's new governor, Abigail Spanberger, won partly by hammering AI companies on electricity costs. Sanders and Tlaib want a federal moratorium. DeSantis and Hawley filed bills from the right. Strange coalition, but everyone in it can read a utility bill, and everyone wants credit for doing something about it before the midterms.
And the rate hikes keep feeding it. Utility companies across the country filed for $31 billion in increases last year, a record that roughly doubled the prior year's ask. Now imagine you're retired in rural Indiana. Your January electric bill is up 22%. Then you read in the local paper that a server warehouse the size of a Walmart is going up behind your house. You don't call your congressman. You order a yard sign. Microsoft itself acknowledged "community opposition, local moratoriums, and hyper-local dissent" as an operational risk in an October securities filing. When a company puts grassroots protests in its 10-K, the problem has reached boardroom altitude.
What happens when you can't build
Every major AI lab's roadmap assumes abundant compute. More training runs, bigger models, longer inference chains, agentic workflows that burn GPU cycles by the hour. All of it requires physical infrastructure that does not yet exist, and the industry needs to roughly double its data center capacity within five years according to most credible estimates. That means hundreds of new facilities, each requiring the one thing no amount of capital has been able to secure quickly: permission from the people who live nearby.
But more than 50 organized opposition groups now operate across 17 states, up from a handful two years ago. In Indiana alone, a dozen projects lost rezoning bids last year. Monterey Park's council is now exploring a permanent ban through a ballot measure. New York legislators have proposed statewide moratoriums. Ohio, Michigan, and Pennsylvania have active fights.
The zoning choke point does not just slow projects. It reprices them. Maxx Kossof, a vice president at developer The Missner Group, told the AP that developers with power commitments are now considering selling properties rather than risking a zoning loss. "You might as well take chips off the table," he said. "You could have power to a site and it's futile because you might not get the zoning."
That is a remarkable admission. Power was supposed to be the constraint. Developers spent years and billions locking down energy contracts, courting utilities, even floating their own nuclear reactors. All that work assumed power was the hard part. Wrong. No engineering fix exists for this. The constraint is political, local, and human.
The suburb as bottleneck
Steven Kung grew up eating char siu bao on Garvey Avenue and grabbing tacos near Atlantic Boulevard. He co-founded the opposition group No Data Center Monterey Park because he knew something the developer didn't: in a city of 60,000, word travels through WeChat threads, temple parking lots, and PTA gossip long before any PR campaign can get its bearings. The annual city budget? Smaller than what most tech companies blow on catered lunches. A 250,000-square-foot data center would have been, by far, the biggest private development Monterey Park had ever seen.
And the community killed it in six weeks. Not through litigation, not through lobbying. Five organizers linked up with a grassroots racial justice group. They printed flyers in three languages and walked people through what diesel exhaust and water depletion actually look like on a city spec sheet. On the night of the hearing, the meeting ran past six hours. Over 100 residents got up to speak. Not a single council member dissented on the moratorium vote. Fourteen days after that, the same council directed city staff to begin drafting language for a permanent ban.
City Attorney Karl Berger warned that moving too fast could invite lawsuits from StratCap. The council moved anyway. Councilmember Jose Sanchez said the message from residents was clear: "Data centers in our communities is not the path."
If you run an AI company or invest in one, the Monterey Park story is not heartwarming local democracy at work. It's a signal that the physical infrastructure your business depends on faces a distributed, networked, increasingly effective political resistance. No single community controls enough capacity to matter. But when dozens of communities across 17 states simultaneously reject projects, and when they are actively teaching each other how to win, the aggregate effect is a ceiling on how fast the industry can build.
The AI boom has a supply chain problem that no amount of capital can fix. It runs through the zoning board of every suburb and farming town in America, and those boards are listening to their residents. The $98 billion in stalled projects is not a speed bump. It's the beginning of a constraint that will shape the industry for years.
Next time someone pitches you on a trillion-dollar AI buildout, ask the question that never shows up in the investor deck: where, exactly, do they plan to put it? Because the towns and suburbs that would host those servers have learned how to fight back. They swap tactics on Facebook groups. They cite each other's victories at council hearings. Chips were never the real bottleneck, and neither was power. Permits were. Still are.
Frequently Asked Questions
Q: How much data center investment has been blocked by local opposition?
A: Between April and June 2025, communities blocked or delayed $98 billion worth of data center projects across 11 states, according to Data Center Watch. Two-thirds of tracked projects were halted. In Indiana alone, a dozen projects lost rezoning bids last year.
Q: Why are communities opposing data centers?
A: Residents cite water consumption (millions of gallons monthly per facility), electricity demand driving rate hikes, noise from diesel backup generators, air quality concerns, and property value impacts. Utility companies filed a record $31 billion in rate increases last year, and many residents blame data centers.
Q: What happened with the Monterey Park data center proposal?
A: HMC Capital acquired a site for $39 million, and StratCap Data Centers planned a 250,000-square-foot facility. Residents organized in six weeks, gathered 5,000 petition signatures, and packed a six-hour city council hearing. The council voted unanimously for a moratorium and is now exploring a permanent ban via ballot measure.
Q: Why can't data center companies just build in remote areas?
A: Data centers need proximity to fiber networks, power grid connections, and workforce access. Remote locations often lack the electrical capacity these facilities require, which runs into hundreds of megawatts per site. Even rural and farming communities are now organizing against proposals.
Q: Is data center opposition a bipartisan issue?
A: Yes. A Morning Consult poll found most American voters support banning data center construction near their homes. Politicians from both parties have responded: Sanders and Tlaib proposed a federal moratorium from the left, while DeSantis and Hawley filed bills from the right. Virginia Governor Spanberger won partly on the issue.
