[#item_full_content] [[{“value”:”☕️MORNING BUZZ
Vol. VI, No. 1,300
—A decade ago, cash-strapped California cities discovered a new miracle cure for budget woes: cannabis dispensaries.
Communities that once fiercely opposed legal marijuana suddenly found themselves entertaining permit applications and dreaming of financial windfalls.
Campaign contributions flowed, consultants arrived, and projections of massive tax revenues became irresistible. The reality, however, has often fallen short of the hype.
Today, a similar dynamic is emerging around AI data centers.
—Across the East Bay and the country, local governments facing persistent deficits are beginning to eye data centers as a new source of revenue.
The promise is seductive: increased property taxes, pledges of lavish community benefit packages, and new jobs from an industry tied to the hottest technology on the planet.
But as with cannabis, the hype deserves scrutiny.
Hayward approved a Stack Infrastructure data center only for some councilmembers to later complain that the project received little council attention. Councilmember George Syrop has criticized the relatively modest public benefits package the company offered to the city.
—Meanwhile, the issue is beginning to simmer in San Leandro, where the prospect of data centers could become part of a broader conversation with voters this fall.
Earlier this month, San Leandro Councilmember Xouhoa Bowen offered a council referral to ban AI data centers. She has already attracted a challenger who supports AI data centers. (See in Election 2026 section below.)
Unlike the cannabis debates of the 2010s, opposition to data centers is proving ideologically diverse. Environmentalists worry about energy consumption and water use. Residents question whether giant server warehouses create enough jobs to justify their footprint. Fiscal conservatives are skeptical that promised revenues will match the hype.
—Elected officials and candidates for local government this fall are likely to face competing pressures: The powerful building trades and local municipal labor unions may press hard for data centers, arguing they provide construction jobs and new employees once the massive warehouses open for business.
Meanwhile, local officials are certain to face upset residents who fear their utility bills will skyrocket and their quality of life will diminish.
Cities should welcome innovation, but they should also remember the lessons of cannabis. New industries often arrive with promises of fiscal salvation. Proponent of cannabis dispensaries deftly used the devastation brought on by the Great Recession to make their case. More often than not, the money turns out to be helpful, but hardly transformative.
—Case in point, while the current economy appears resilient from recessions, revenues in most cities in the East Bay really never recovered from the Great Recession and further strain brought forth by the Trump administration is likely to further strain local budgets.
That only means a large opening for AI to use their immense resources to flash the cash needed to entice local elected officials to grab the quick fix.
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**—EPISODE 135—**Few politicians have left a bigger mark on the East Bay than Don Perata. In a candid and often hilarious conversation, the former State Senate President Pro Tem, Assemblymember, Alameda County supervisor, and almost-Oakland mayor reflects on a career that helped shape California politics for more than four decades.
—Listen on Substack or download episodes at Apple Podcasts, Spotify, or wherever you get your podcasts.
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