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

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

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

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

California’s notorious NIMBYs have a new cause. They are worried that the data centers that power artificial intelligence will lead to pollution, higher power bills and worse. It is a nationwide movement gaining momentum and particularly poignant in California, arguably the birthplace of the AI boom.

It’s also one of the reasons most blue-collar jobs tied to the unprecedented buildout of data centers are going to other states.

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

“Absolutely not!” the executive snapped back, said Paryavi, the chairman of the Washington D.C.-based think tank International Data Center Authority.

The aversion to California is pretty standard in the industry. Land is expensive, electricity rates 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 with a choice often choose elsewhere.

Signs of protest pepper frontyards in a neighborhood in Monterey Park on Wednesday.

(Robert Gauthier / Los Angeles Times)

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

The artificial intelligence revolution might be led by companies from California, 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 projected to spend $710 billion on data center buildouts this year alone, according to JLL, a real estate investment firm.

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

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

(Noah Berger / Associated Press)

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

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

In California, some areas such as Vernon have welcomed data center investment, but there is a growing list of locals trying to stop data centers in Imperial County and elsewhere.

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

The proposed data center in Monterey Park — the size of four football fields — is close to homes. It is expected to consume three times the energy used by the entire city, which residents say will raise their electricity bills and also increase noise and air pollution.

The empty property on Saturn Avenue had plans to be converted to a data center in Monterey Park, Calif.

(Robert Gauthier / Los Angeles Times)

The crowd of more than 200 people who gathered at its City Hall was overwhelmingly opposed to the data center. Supporters of the project were only a tiny minority. For hours, person after person stepped to the microphone to announce their anxiety. The center will hurt property values, AI takes jobs, big AI is a threat to democracy, it’s a “class injustice.”

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

“Let’s make this town a place where people want to come live, where people want to do real things, where they are not relying on a robot or a program or an app to run their lives,” said another.”

Supporting the data center, and trying to avoid a vote on its existence, were only a few people from HMC StratCap and some union representatives in orange worker vests.

They pointed out that the big investment had already been agreed to, would create jobs and that it was hypocritical for the city’s citizens to want the fruits of technology while, at the same time, being unwilling to accept its infrastructure.

“Everybody loves the juice, but they don’t like how it’s squeezed,” said a member of the sheet metal workers union from the area. “I am going to fight for my members to have a job to work at.”

To be sure, it is much more than just NIMBYism that makes it tough to build in California. Regulations aimed at protecting consumers and the environment make it harder to access the power that data centers need. The regulations also contribute to the high rents and building costs.

“There’s a lot of legislation, and a lot of red tape in the state of California you have to go through in order 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, Calif. Dozens of data centers being built for artificial intelligence are eating up Calfifornia’s electricity.

(Paul Kuroda / For The Times)

One example he pointed to is the small power plant exemption, which stipulates that construction over 50 megawatts requires additional paperwork and a longer lead time for approvals. Larger data centers these days need 20 times that amount of power.

All of this makes it more likely that investors will avoid California. As hundreds of billions of dollars are being spent building data centers, it will lead to jobs in other states and countries.

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

Following the seven-hour hearing, council members greenlit a June ballot measure allowing residents to vote on a ban.

It was a victory for a new activist group called No Data Center Monterey Park, which spearheaded the rapid grassroots mobilization and worked with San Gabriel Valley Progressive Action to sign petitions and raise awareness. To pack the City Hall meetings, activists set up a mahjong parlor and a traditional Chinese lion dance performance to engage the largely Chinese community.

For HMC StratCap the council’s decision marked a significant blow. The Australian firm invested $40 million to acquire a 200,000-square-foot property intended for data centers, along with a larger adjacent parcel of land for an undisclosed development.

Things turned sour despite reassurances that the data center would generate $5 million in annual revenue to support park maintenance, libraries and repairs without raising residential taxes.

HMC StratCap has to win the vote in June or give up on the project. If it has to do that, it will be forced to sue the city.

“Our preferred path is not to litigate,” HMC’s Marsh said at the hearing. “We must, however, protect our legal rights.”

Now it looks like HMC StratCap may be giving up on the project.

A letter from its parent company in Australia, dated March 31 and posted on Monterey Park’s official website, said the company has withdrawn its application to build the data center.

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

“These regulations are not conducive for data center development,” it said.