Ban Data Centers Today. Become the Warehouse Capital Tomorrow.

In my last article, “Riverside’s Next Big Economic Development Idea: Ban Economic Development,” I challenged the wisdom of a proposed blanket ban on data centers.

The response has been revealing.

Some residents raised legitimate concerns about electricity.

Others raised legitimate concerns about water.

Others questioned permanent employment.

And some essentially said: Good. I don’t want a data center anywhere near Riverside.

Those are reasonable subjects for debate.

But they continue to miss the fundamental point.

Data centers are going to be built.

The question isn’t whether America will build them.

The question is where they will be built, who will pay for the infrastructure, and which communities will capture the economic benefits.

And Riverside has a particularly interesting complication sitting almost in our backyard:

March Air Reserve Base

The federal government maintains a major military installation at March Air Reserve Base. The surrounding former March AFB property has a more complicated ownership and governance structure following the Base Realignment and Closure process, including substantial property transferred for civilian redevelopment. The March Joint Powers Authority itself includes Riverside, Moreno Valley, Perris and Riverside County. 

Why does that matter?

Because Washington is no longer merely talking about AI as an economic-development opportunity.

It is talking about AI as national-security infrastructure.

In June, the President issued a National Security Presidential Memorandum directing the national-security enterprise to accelerate AI adoption. Among other things, the memorandum calls for a roadmap ensuring access to advanced computing resources and specifically contemplates commissioning advanced AI computing facilities with high-security requirements for next-generation national-security systems. 

The federal AI Action Plan similarly calls for high-security data centers supporting military and intelligence workloads. 

That raises a question Riverside’s City Council should consider before putting up a NO DATA CENTERS ALLOWED sign:

What happens if Washington needs secure AI compute capacity in this region anyway?

Riverside doesn’t get to veto America’s national-security requirements.

The federal government can pursue federal infrastructure, partnerships with private industry and facilities outside Riverside’s jurisdiction.

And March already has significant federal infrastructure and a national-security mission.

I am not saying the federal government has announced a March data center. It has not.

I’m making a strategic point.

If Riverside prohibits commercial data centers while national-security and commercial demand for compute continues growing, the infrastructure doesn’t magically disappear.

It gets built somewhere else.

And so do the economic benefits.

Riverside Could Get the Impacts Without Getting the Benefits

This is the part of a municipal ban that deserves far more discussion.

Suppose significant computing infrastructure eventually develops around March, Moreno Valley, Perris, unincorporated Riverside County or another nearby jurisdiction.

Riverside could still participate in the regional consequences.

Regional electrical demand doesn’t stop at the city limits.

Transmission infrastructure doesn’t stop at the city limits.

Regional water issues don’t stop at the city limits.

Traffic doesn’t stop at the city limits.

Housing demand doesn’t stop at the city limits.

Neither does economic development.

But tax jurisdictions do.

If Riverside says no while neighboring jurisdictions negotiate intelligently, Riverside could watch private investment occur a few miles away while another government collects the revenue.

That’s not environmental policy.

That’s potentially outsourcing the benefit while regionalizing the impact.

What Does Negotiating From Strength Actually Look Like?

My critics seem to interpret opposition to a ban as support for unrestricted development.

It is precisely the opposite.

I want Riverside to establish extraordinarily demanding standards.

A developer wants 100 megawatts?

Fine.
Show us the power plan.

Need a new substation?

*Show us what you’re paying.

Need additional transmission?

Show us your contribution.

Want RPU customers to finance infrastructure primarily benefiting your project?

No.

Your cooling design consumes unacceptable amounts of potable water?

Redesign it.

Your project doesn’t provide enough tax revenue, utility revenue, jobs or infrastructure investment to compensate Riverside for its impacts?

No permit.

That is negotiating.

A ban requires none of that expertise.

You simply say no.

And then watch somebody else negotiate the deal.

Other Communities Have Already Demonstrated What’s Possible

Loudoun County, Virginia provides an extraordinary example—not because Riverside should replicate everything Loudoun has done, but because it demonstrates the enormous negotiating value these projects can represent.

According to Loudoun County itself, data centers occupy approximately 4% of the county’s commercial parcels.

Yet they generate approximately:

38% of its General Fund revenue.

The county says that revenue has helped finance schools and government services while allowing it to reduce homeowners’ real-property tax rate to the lowest among Northern Virginia counties. 

That’s not a promise from a data-center developer.

That’s a local government’s financial record.

And Loudoun has also learned about the problems accompanying extraordinary concentration of data centers.

So it has tightened its policies.

Again:

Regulation. Not capitulation.

Take the benefits.

Recognize the costs.

Change the standards.

Protect residents.

And retain the ability to reject individual projects.

Even Washington Now Recognizes the Ratepayer Issue

One of the biggest criticisms I’ve heard is:

“Riverside residents will have to pay for all the new electrical infrastructure.”

My response is:

Then don’t let them.

Earlier this year, the White House issued a Ratepayer Protection Pledge specifically addressing this problem. It states that large-scale data-center infrastructure is important to economic and national security while also saying American households must be protected from increasing energy costs associated with AI’s growing electrical demand. 

That’s remarkably similar to what I proposed for Riverside.

Build American AI infrastructure.

But don’t stick residential ratepayers with the bill.

Why is Riverside’s choice supposedly limited to either subsidizing data centers or banning them?

It isn’t.

And Then There’s Riverside’s Real Alternative: Warehouses

This is the part of this debate I find particularly frustrating.

What exactly is Riverside’s alternative economic-development vision?

More warehouses?

More logistics?

More trucks?

More freeway congestion?

More road deterioration?

More diesel emissions?

More industrial land devoted to moving somebody else’s goods from the ports to somewhere else?

This isn’t speculation either.

The California Air Resources Board reports that Riverside and San Bernardino Counties experienced high volumes of warehouse-related environmental reviews and approvals from 2020 through 2025.

CARB associates warehouse growth with increased truck activity, traffic congestion, diesel particulate matter, nitrogen oxides, PM2.5, noise, safety concerns and infrastructure impacts. 

Even Riverside’s mayor has acknowledged the burden.

In discussing Inland Empire air quality, Mayor Patricia Lock Dawson noted that 90% of the goods arriving through the Los Angeles/Long Beach port complex must pass through the Inland Empire by rail or freeway, leaving this region with the associated pollution burden. 

So let’s have an honest economic-development discussion.

Warehouse development has infrastructure demands too.

It requires roads.

It generates truck traffic.

It consumes industrial land.

It contributes to freeway congestion.

It produces environmental externalities that don’t appear on the developer’s balance sheet.

And unlike electrons moving through fiber, trucks physically move through our neighborhoods, arterials and freeways.

Yet apparently Riverside is prepared to categorically prohibit digital infrastructure while remaining part of Southern California’s enormous warehouse and logistics economy.

That deserves an explanation.

“City of Arts & Innovation” — Or City of Logistics and Warehouses?

Riverside likes branding itself the City of Arts & Innovation.

Then let’s decide whether that’s a slogan or an economic-development strategy.

Artificial intelligence is going to transform medicine, cybersecurity, manufacturing, logistics, finance, scientific research, defense and virtually every knowledge-based industry.

The infrastructure supporting that transformation will be built.

The White House’s AI Action Plan explicitly says America’s path to AI leadership requires data centers and substantially greater energy generation and notes that China has rapidly expanded its grid while U.S. energy capacity stagnated. 

So Riverside faces a choice.

We can participate intelligently.

Or we can congratulate ourselves for passing a ban while watching investment move across the city boundary.

Imagine Two Riversides

Riverside #1: Closed for Business

No data centers.

Private AI infrastructure investment goes elsewhere.

Neighboring jurisdictions negotiate the projects.

Other governments receive the tax revenue.

Other utilities receive the large commercial customers.

Other communities negotiate infrastructure improvements.

Riverside continues approving conventional industrial and warehouse development.

More trucks.

More congestion.

More logistics.

More pressure on roads.

And Riverside remains what the Inland Empire has increasingly become:

Southern California’s warehouse floor.

Now imagine another possibility.

Riverside #2: Negotiate From Strength

Riverside adopts one of California’s toughest Data Center Development Standards.

No residential ratepayer subsidy.

Strict water requirements.

Strict noise requirements.

Strict environmental standards.

Developer-funded incremental electrical infrastructure.

Minimum investment requirements.

Cybersecurity and foreign-supply-chain requirements.

Local workforce partnerships.

Community benefits.

Financial guarantees against stranded infrastructure.

And a requirement that major electrical users help strengthen—not weaken—Riverside’s grid.

Then tell the industry:

Here are Riverside’s rules. Who wants to make us an offer?

That’s a dramatically different negotiating position.

We Could Even Leverage This to Fix the Grid

Riverside already needs additional electrical capacity.

We already need the second transmission connection.

We already need greater resiliency.

And we’re already confronting the enormous cost of modernizing that infrastructure.

So why wouldn’t Riverside determine whether new private electrical demand can help finance it?

New substations.

Battery storage.

Generation.

Transmission upgrades.

Potential additional undergrounding.

Grid cybersecurity.

Resiliency.

The principle should be simple:

Growth pays for growth.

Don’t subsidize the data center.

Leverage it.

The March Question Should Be a Warning

Again, there is no announced federal AI data-center project at March Air Reserve Base that I have found.

But March illustrates why Riverside cannot pretend a municipal prohibition controls regional or national infrastructure policy.

The federal government retained substantial military property at March, and March continues serving significant military and federal missions. 

Meanwhile Washington is explicitly ordering the development of secure advanced-computing capacity for national security. 

If Washington determines Southern California requires additional secure computing capacity, Riverside’s City Council isn’t going to stop the United States government from pursuing its national-security mission.

What Council can determine is whether Riverside positions itself to participate in the economic opportunity surrounding the AI economy—or deliberately removes itself from consideration.

That’s why a ban is such an extraordinary surrender of leverage.

Before You Ban It, Find Out What It’s Worth

Invite the developers.

Invite RPU.

Invite UCR.

Invite RCC.

Invite cybersecurity experts.

Invite electrical engineers.

Invite water experts.

Invite environmental experts.

Invite SCE.

Invite neighboring jurisdictions.

And, given March’s importance, invite representatives familiar with federal and military infrastructure requirements.

Put everybody in the room publicly.

Then ask:

What would responsible data-center development look like in Riverside?

What would developers pay?

What infrastructure could they finance?

What tax revenue could Riverside receive?

Could residents receive rate relief?

Could new investment help underground additional electrical infrastructure?

Could we create AI, cybersecurity and engineering programs with UCR and RCC?

Could Riverside become an actual technology center instead of another logistics waypoint?

And if, after doing all of that analysis, the economics don’t work?

Say no.

But at least Riverside will know what it rejected.

If Council Passes the Ban, Let’s Call It What It Is

If Riverside’s City Council ultimately votes for a categorical data-center ban without first conducting that analysis, perhaps it’s time to update the City’s branding.

Not:

Riverside — City of Arts & Innovation.

Perhaps:

RIVERSIDE — CLOSED FOR BUSINESS

The City of Logistics and Warehouses.

Because you cannot continually tell residents that Riverside wants high-value industries, innovation and private investment while simultaneously prohibiting an industry at the center of America’s largest technological infrastructure buildout.

And you certainly shouldn’t do it while the federal government and neighboring jurisdictions remain perfectly capable of pursuing those investments outside Riverside’s boundaries.

The data centers will be built.

The AI infrastructure will be built.

The electrical infrastructure will be built.

The question is who negotiates intelligently enough to benefit from it.

Riverside can protect its residents and participate in the future.

Those goals are not mutually exclusive.

Set the standards.

Protect the water.

Protect the ratepayer.

Protect neighborhoods.

Make developers pay.

Demand infrastructure.

Demand jobs.

Demand community benefits.

Demand accountability.

And if the deal isn’t good enough:

Walk away.

But don’t close the door before anyone has even made us an offer.

Because once Riverside puts up the CLOSED FOR BUSINESS sign, we shouldn’t be surprised when the investment goes somewhere else—and the warehouses keep coming.

Sources worth linking in the published article

• Loudoun County Data Center FAQ⁠ — especially valuable for the 4% of commercial parcels / 38% of General Fund revenue comparison.
  
• Loudoun County FY2026 Budget Story⁠ — independently reinforces the revenue and tax comparison.
  
• White House National Security AI Memorandum⁠ — establishes the current federal push for high-security advanced AI computing facilities.
  
• America’s AI Action Plan⁠ — documents the federal position on domestic data centers, energy and secure military/intelligence compute.
  
• White House Ratepayer Protection Pledge⁠ — extremely useful because it validates your “build it, but don’t make residential ratepayers subsidize it” argument.
  
• California Air Resources Board warehouse-impact assessment — supports the warehouse/truck/congestion/pollution comparison.
  
• March Air Reserve Base property-transfer history⁠— establishes the retained military acreage versus former base property transferred for civilian reuse.
  
• March Joint Powers Commission⁠ — useful because Riverside itself has representation in the governance structure surrounding former March property.