TL;DR · 30-second read

The Short Version

A suburb outside Philadelphia voted down five giant buildings meant to hold the computers that run artificial intelligence. Together they would have covered roughly 80 football fields of floor space.

The builder promised $55.4 million a year in local taxes, mostly for schools. Neighbors worried about noise, dirty air and home values, and more than 17,000 people signed a petition against it.

The twist: to avoid raising local electric bills, the site would have made its own power with gas-burning generators. That fix became part of the fight. The builder says an appeal is coming.

WHYY reported that Upper Merion Township’s Board of Supervisors on Thursday, August 13, 2026, rejected all five applications from developer Brian O’Neill for a hyperscale data center campus totaling more than 4.6 million square feet near King of Prussia, Pennsylvania. The campus would have been built at Discovery Labs, a health care and life sciences office property run by O’Neill’s company, and was designed to generate its own power using natural gas turbines with diesel backup generators.

The vote followed a July planning commission recommendation against three of the five projects, a developer lawsuit seeking more review time that a Montgomery County judge cleared on the afternoon of the vote, and a resident petition with more than 17,000 signatures. O’Neill told 6ABC an appeal is planned.

Executive Summary

A suburban Philadelphia township has turned down one of the largest data center proposals in the region, despite the developer’s estimate of $55.4 million a year in local tax revenue, nearly $38 million of it for the local school district. The board’s stated grounds were procedural and specific: Chair Tina Garzillo said the township never received landscape, traffic impact, emergency management or sanitary sewer plans, and called the projects “at best speculative and conceptual in nature.”

The case matters beyond Upper Merion because of how the campus was to be powered. Generating electricity on site is increasingly pitched as the responsible way to build AI-scale facilities without burdening the grid or ratepayers. Here, that design put gas turbines and diesel generators in front of a township board and its residents, and air pollution became a central objection. Self-generation did not remove the local approval gate; it added a power plant to what that gate had to judge.

For developers, investors and utilities trying to forecast where AI capacity will actually get built, the vote is a reminder that a proposed campus is not capacity until it clears local land-use approval, and that the power strategy is now part of that approval.

Self-Generation Swapped a Grid Question for a Local One

The campus was pitched as a good grid neighbor: it would generate its own electricity so it would not strain the regional power system or push up household bills. That is an increasingly common design for AI-scale facilities, often called on-site or behind-the-meter power because the electricity is produced on the property rather than drawn from the utility. But in Upper Merion, the power plant came with the building. The proposal included natural gas turbines and diesel backup generators, and air pollution became one of residents’ leading objections, alongside noise and water use.

That is the mechanism this vote exposes. A data center that buys power from the grid leaves most generation questions to utilities and grid planners. A data center that makes its own power brings combustion equipment, fuel supply and emissions controls onto a site that a township board must approve, in front of neighbors who will live beside it. O’Neill said scrubbers would control emissions and that discussions had been held with Bloom Energy about using fuel cells on site, but no deal had been finalized, which left the board and residents to evaluate the turbine-and-diesel version of the plan.

Upper Merion is not the only place where on-site power has drawn local enforcement. In Vineland, New Jersey, where a data center under construction plans to use Bloom fuel cells, the city issued a stop-work order on parts of the 300-megawatt facility (a megawatt is a measure of electrical capacity), alleging that a liquefied natural gas tank and fuel cell units were being installed before city approval. Generating power on site may answer concerns about grid strain and electricity bills, but it adds a power plant to the list of things local officials get to review.

The Board Ruled on Missing Plans, Not Just Public Anger

The emotional scenes at the meeting can obscure what the board actually said. Garzillo cited the absence of landscape, traffic impact, emergency management and sanitary sewer plans. Those are ordinary engineering submissions for any large industrial project, and their absence gave the board a procedural basis for denial that stands apart from residents’ objections.

The process had been heading this way for weeks. In July, the township planning commission voted not to recommend three of the five projects. The developer then sued, seeking an extension and arguing there had not been adequate time to address township concerns; a Montgomery County judge vacated the injunction on the afternoon of the vote, clearing the board to reject the extension. Vice chair William Jenaway said the developer had earlier opportunities to respond to review comments and did not do so in a timely fashion. The two sides’ accounts of the timeline differ, and an appeal would likely test them.

For the industry, the lesson is about entitlement risk, meaning the risk that a site never receives the land-use approvals it needs. As AI demand pushes developers to repurpose existing properties, here a life sciences office campus, into data center sites, applications that arrive without complete plans risk being denied on the paperwork alone, whatever their scale or revenue promise.

A $55.4 Million Tax Pitch Met a 17,000-Signature Petition

The developer’s economic case was large on its face: an estimated $55.4 million a year in local tax revenue, with nearly $38 million going to the Upper Merion Area School District. For a suburban township, that is the kind of figure that usually carries weight. It did not carry the vote. Residents weighed it against quality-of-life costs that do not appear in a revenue projection, and one resident nearing retirement said a loss of home equity “would destroy our savings.”

Both sides’ claims deserve the same scrutiny. The tax figure is the developer’s own estimate, and its value depends on assumptions about how much gets built and when. Residents’ fears about property values and health are sincere, but their magnitude depends on specifics that were never settled, such as how many turbines would run, how often, and with what controls. The water debate is similar: O’Neill said a closed-loop system would reuse cooling water, while hyperscale facilities in general can consume up to 5 million gallons of drinking water a day. Closed-loop designs reduce consumption substantially, but how much make-up water this campus would need was not specified.

The backdrop is shifting against developers who lead with revenue. A University of Pennsylvania Annenberg Public Policy Center survey found a 12-point jump in widespread resistance to new data center construction over four months. In that climate, detailed answers on emissions, water and noise are likely to matter more to approval than headline tax estimates.

What Comes Next for AI Capacity Around Philadelphia

The denial is not necessarily final. The developer can appeal or submit new or revised plans, and has said an appeal is planned. Residents have said they will oppose any appeal or new application. O’Neill is also seeking approval for a data center in nearby Plymouth Township, which becomes the next test of whether a more complete application, and possibly a different power plan such as the fuel cells under discussion, changes the outcome.

For operators, investors and utilities counting future AI capacity in the region, the practical point is that local land-use approval is a gate that neither scale, tax revenue nor a plan to stay off the grid can bypass. Capacity forecasts that treat proposed campuses as inevitable will miss decisions like this one, which are made parcel by parcel at township meetings.

Background

Upper Merion Township sits in Montgomery County, Pennsylvania, and includes much of the King of Prussia area, a major suburban commercial and office hub northwest of Philadelphia. Data centers, the buildings that house the servers behind internet services, have existed since the mid-20th century, but the rise of power-hungry artificial intelligence has pushed demand toward much larger hyperscale campuses that need substantial electricity and cooling.

That demand has driven developers to look at existing commercial properties, such as office and life sciences campuses, as potential data center sites, and to consider generating their own power rather than waiting on the grid. It has also produced growing local resistance in the Philadelphia region and beyond, where township boards, not state or federal agencies, hold the zoning and land-use approvals that decide whether a campus can be built.

Sources

Source: Upper Merion board denies hyperscale data center campus near King of Prussia, WHYY’s report on the township supervisors’ vote rejecting a five-building data center campus.