RENO, Nev. — On the western edge of Nevada, it’s hard not to think about water. The driest state in the country is often hit by droughts, but that hasn’t stopped developers from buying up ranches and farmland to build homes or businesses.
Today, Reno, “the Biggest Little City in the World,” is poised to become a new player in the nation’s data center construction boom. At least three data center projects have been approved since 2024, with more in a nearby industrial park.
The giant computing facilities are essential to the internet as we know it, providing the digital infrastructure for cloud storage and for emerging artificial intelligence systems. They also require massive amounts of energy to run and often need hundreds of thousands of gallons of water to stay cool.
Some community leaders, like Reno Vice Mayor Kathleen Taylor, have celebrated data centers, which can bring jobs and tax revenue. Earlier this year, officials projected a $25 million deficit in the upcoming budget year. But opponents argue that data centers can also bring consequences, if they raise electricity costs or cause water shortages down the road.
It’s part of a wider tension accompanying the infrastructure needed in the global artificial intelligence race. A Bloomberg investigation found that two-thirds of all new data centers are being built in water-stressed regions, like Nevada, where severe drought is a major concern.
Community members wary of the data center push have focused their attention on a vote this week that will decide whether developers of a new project on the outskirts of Reno can dramatically scale back its housing to allow more than half of its land to go to industrial uses — including data centers.
Originally pitched as a cozy enclave of 5,000 homes with a scenic view, the new proposal would include roughly 12 million square feet for industrial and commercial use (up from 1.2 million square feet in the original proposal) and 1,350 housing units.
“I’m not anti-data center,” said Olivia Tanager, director of the Toiyabe Chapter of the Sierra Club, who has spearheaded opposition to the revised proposal. “My organization is not anti-data center. But we are anti-huge amounts of potable water being gobbled up by data centers.”
In Southern Nevada, home to more than half of the state’s more than 60 data centers, evaporative cooling, a process that uses more water, is banned in new commercial buildings. Tanager says Reno, a growing hub for data center construction, is behind when it comes to regulating them.
Apart from concerns about water and electricity use and costs, critics say the city can’t afford to turn down new housing. By its own estimates, Reno needs an additional 15,000 housing units by 2035 to meet demand.
“I think when tech comes into small cities that are desperate for income, sometimes it looks like it’s the easy answer,” said Wendy Baroli, whose 100-acre farm on the California border is about 2 miles away from the proposed development. But “it’s really dangerous to rush through things, especially when you’re talking about finite resources.”
She remembers the days of parched ground cracking in previous droughts and worries that data centers would further strain resources.
At a July 24 hearing, Andy Durling, a representative for the developer, Heinz Ranch Land Co., defended the revised proposal, stating that it would use less water than the prior housing-heavy one.
Through a spokesperson, Heinz Ranch Land Co. declined to answer a question regarding that estimate or address the concerns raised in this article.
Thursday’s vote on the revised StoneGate project could finally decide the fate of the revised proposal. In April, the city’s planning commission rejected the plan, but a month later, Reno’s City Council approved it. Another planning body failed to advance the project in August, so the issue now goes before the Regional Planning Governing Board.
In a May City Council meeting, Durling said the shift by the Heinz Ranch Land Co. was driven by rising costs. The developers said the new plan could bring 8,800 jobs, almost triple that of the original plan. Durling described the new proposal as an opportunity for the city to compete economically with a nearby industrial park. The Tahoe–Reno Industrial Center is home to several companies now planning or building data centers, including Google.
Councilmember Meghan Ebert, who has voted against StoneGate’s proposal, called the reduced housing in the new plan “a huge loss,” given the area’s housing shortage, and worries about water as well.
“We have enough examples across the country to know that data centers are super-consumers of natural resources,” she said.
Brian Bonnenfant with the Center for Regional Studies at the University of Nevada, Reno said data centers might be attractive in locales facing a cash crunch. (The center has previously provided research to StoneGate’s developer.)
“Do I want the data center that’s going to shore up my budget?” he said, explaining that housing developments might bring increased costs. The original plan included a police station and fire station.
“On the flip side, we desperately need housing,” he said.
In the past, Bonnenfant said, there were conflicts over the city’s growing warehouse industry sprawling out and backing up against residential communities. More debates over the best use of the region’s land could lie ahead.
For Baroli, it doesn’t make sense to pivot from building thousands of housing units to warehouses storing computer servers. “I get that we need all of this processing space,” she said, “but the last place you should put a data center, frankly, is a place where water is finite.”
Aarne Heikkila and Steve Patterson reported from Reno and Bracey Harris from Jackson, Mississippi.
