Applied Digital, a company that builds huge computer centers for artificial intelligence, has agreed to a $4 million deal to benefit the town of Boyce, Louisiana.
That is more than eleven times the $350,000 in grants it recently promised a rural North Dakota county that hosts another of its sites.
The takeaway: there is no going rate for what a town gets when one of these projects arrives. It comes down to each local deal, and those deals are now part of what it costs to build.
KALB reported that Applied Digital (Nasdaq: APLD) has agreed to a $4 million community benefit deal for Boyce, Louisiana. Applied Digital develops and operates large data centers built for artificial intelligence and other high-performance computing workloads.
The deal follows the company’s October 7 fiscal first-quarter earnings release, which disclosed $350,000 in grants across five organizations in Oliver County, North Dakota, home to its Polaris Forge 3 campus. The same release reported quarterly revenue of $341.9 million, up 322% year over year, and 250 MW of live capacity at its Polaris Forge 1 campus.
Executive Summary
Applied Digital’s $4 million commitment to Boyce is small next to the billions in leases and debt behind its AI campuses, but it is a concrete, priced obligation to a host community. Set beside the $350,000 the company committed to Oliver County organizations through its Applied Digital Cares program, it shows the same developer’s local commitments ranging by more than elevenfold, and taking different forms, from one site to the next.
For local officials, that means there is no fixed benchmark to anchor a negotiation. For investors and lenders, it means community commitments behave like land and power costs: site-specific, negotiated, and worth modeling explicitly rather than assuming away. The Louisiana commitment also points to Applied Digital activity beyond the North Dakota campuses that have defined the company so far.
$4 Million Versus $350,000: No Going Rate for Host Towns
Applied Digital’s two most recently disclosed community commitments differ by more than a factor of eleven. Alongside the $4 million Boyce deal, the company’s October 7 earnings release said that through Applied Digital Cares it committed $350,000 in grants across five organizations in Oliver County, North Dakota, supporting first responders, schools and community facilities.
The form differs as much as the amount. A community benefit agreement is generally a negotiated, contract-style commitment from a developer to a host community, often made alongside local approvals or incentives. Grants from a corporate giving program are discretionary. One developer using two different instruments, at two very different price points, within weeks of each other, is strong evidence that this cost is set place by place rather than by formula. The company also highlighted that Polaris Forge 1 was named Project of the Year by the Mid-America Economic Development Council, with community investment among the cited reasons, a sign that Applied Digital treats local standing as something to build and report.
The comparison is between headline commitments, not rates. Applied Digital has not disclosed the megawatt scale of its plans at Boyce, the payment period, or whether the Oliver County grants are the first of several, so a per-megawatt figure cannot be calculated. That is exactly the problem for anyone trying to budget: a cost that varies this widely cannot be extrapolated from one site to the next.
Why Paying for Local Certainty Pencils Out
Against the company’s capital stack, $4 million is small. In the quarter ended August 31, Applied Digital closed $1.59 billion of 7.000% senior secured notes to fund a 150 MW building at Polaris Forge 1; the Boyce commitment equals roughly 0.25% of that single raise.
The more useful comparison is the cost of delay. The 210 MW, 15-year Delta Forge 2 lease the company signed with its hyperscaler customer (one of the giant cloud and AI companies) represents about $5.2 billion of base-term revenue, an average of roughly $29 million a month. A one-month slip in a contract of that size would defer about seven times the entire Boyce commitment. When zoning, permits, road access and utility work all run through local bodies, a payment that smooths those steps is cheap insurance for a developer whose revenue starts only when capacity is delivered.
That does not make these costs trivial. Applied Digital reported a $221.0 million net loss attributable to common stockholders for the quarter (an adjusted net loss of $4.1 million) and is funding growth with 7% debt. Each community commitment is modest alone, but it recurs with every new campus, and the company is adding campuses.
A Footprint Spreading Beyond the Dakotas
North Dakota remains the center of the business. Polaris Forge 1 reached 250 MW of critical IT load (the power available to run computing equipment) on October 1, and the company expects Polaris Forge 2 in Harwood to bring its North Dakota total to 300 MW by the end of 2026. Management cites the state’s low-cost power, abundant energy, low population density and cool climate.
The Boyce deal, a Finland agreement for up to roughly 1 GW of potential power capacity, and a power purchase agreement with Base Electron tied to a planned 1,200 MW natural gas plant in North Dakota all extend the company’s reach into new jurisdictions and partnerships. Each new region brings new local counterparties, from parish and county governments to utilities, with their own expectations. The company says its near-term priorities remain centered on its U.S. portfolio; how it prices community commitments as that portfolio spreads will be worth watching.
Background
Applied Digital is a Dallas-based designer, developer, owner and operator of large data centers built for AI, machine learning and other accelerated computing, which it calls AI factories. Its core campuses are in North Dakota, including Polaris Forge 1, Polaris Forge 2 in Harwood and Polaris Forge 3 in Oliver County, and it leases capacity under long-term contracts to large cloud customers. Its majority-owned ChronoScale subsidiary, itself a public company, runs the historic cloud services business.
As AI campuses have grown to hundreds of megawatts, developers have increasingly dealt with host communities over land use, roads, water and power. Commitments such as community benefit agreements and local grants are one way developers address those concerns, and their size and structure are set locally rather than by any common standard.
Michigan lawmakers have proposed a set of rules for data centers, the giant warehouses of computers that run apps, cloud services and artificial intelligence.
The biggest of these buildings can use up to 5 million gallons of water a day, about seven Olympic swimming pools. One bill would limit the water a site can permanently use up to about three pools’ worth a day. Another would require cooling systems that reuse the same water over and over.
Developers would also need a signed deal with the local town before they could build or connect to the power grid.
Michigan Democrats introduced a package of bills in early July 2026 to regulate data centers’ energy use, water use, noise, labor standards and use of nondisclosure agreements, MultiState reported. The centerpiece would require operators to sign legally binding community benefit agreements with local governments before they receive site plan approvals, permits or utility interconnection. An interconnection is the approval to connect a facility to the power grid.
The package contains competing Senate and House versions on energy and water. Senate Bill 1047 would require 20-year utility contracts and 90% clean energy procurement. House Bill 6135 would create a new large-load rate class with 15-year contracts and no clean energy mandate. On water, Senate Bill 1046 would cap consumptive use at 2 million gallons per day. The House is considering a requirement for closed-loop cooling or municipal water only.
Executive Summary
Michigan’s package goes beyond one-off siting fights. It would write conditions on energy, water, labor and local benefits into state law. Most permitting disputes are settled project by project in township meetings. These bills would instead set a statewide floor that every large facility would have to clear. None of the bills has passed, and the Senate and House versions differ in important ways.
The water provisions matter most for how facilities are designed. Large data centers can use up to 5 million gallons a day. The Senate would cap consumptive use at 2 million gallons, and the House would require closed-loop cooling or municipal water. The two chambers take different routes, but both would steer developers toward cooling that evaporates less water. The community benefit agreement requirement would change the order of development. A signed local deal would come before the grid connection, not after it.
Michigan is not alone. Six other states have considered community benefit agreement mandates this year. Twelve have weighed closed-loop cooling requirements, and twelve have weighed decommissioning rules. What stands out in Michigan is how many of these ideas arrive together in a single package.
Two Competing Water Bills, One Direction
Senate Bill 1046 would create a new state permit for anyone using, or expecting to use, 550,000 gallons of water or more per day. Applicants would have to hold at least three public hearings before they apply. Permit holders would face a cap of 2 million gallons per day of consumptive use. Consumptive use means water that leaves the local supply and is not returned, mostly through evaporation in cooling towers. For comparison, large data centers can use up to 5 million gallons a day. At that scale, a design that depends on evaporating large volumes of water would struggle to fit under the cap.
The House approach is blunter. New data centers would have to use closed-loop cooling, which recirculates the same water instead of drawing and discharging fresh supply. The only alternative would be to take water solely from a municipal system. The mechanisms differ: the Senate sets a volume limit, while the House mandates a technology or a water source. The engineering result is similar. Developers planning large campuses in Michigan would be pushed toward low-evaporation cooling, whichever version prevails.
This follows a shift the industry has already started. Operators are actively adopting less water-intensive cooling. The effects spread beyond the building itself. Cooling equipment suppliers would gain a more predictable market. Municipal water utilities could become the default supplier under the House option. Closed-loop and dry cooling generally save water but use more electricity. That puts water policy in direct contact with the energy bills moving alongside it.
The Local Deal Would Come Before the Grid Connection
House Bill 6137 and Senate Bill 1050 would reorder the development process. No local site plan approval, no local permit and no Public Service Commission approval of an interconnection could be issued until the local government approves a community benefit plan. For developers, the negotiation with the host community would move onto the critical path, ahead of the utility process that usually sets project timelines.
The agreements would have to cover at least half of five listed topics, which in practice means three. The topics are local hiring, water use, cost allocation for electrical or water upgrades, community investment funding, and home efficiency improvements. A separate pair of bills, House Bill 6140 and Senate Bill 1049, would bar elected officials and operators from signing nondisclosure agreements about construction when a project receives a tax incentive. Intellectual property could still be redacted. Together, these bills would make the terms of the local negotiation largely public for subsidized projects.
Two Chambers, Two Ways to Price Power
The energy bills share one principle: data centers should pay for their own power, so that other ratepayers do not absorb the cost. Senate Bill 1047 would set firm terms. Contracts would run at least 20 years, customers would be billed for at least 90% of their contracted demand whether they use it or not, and applications would cost $100,000. That billing floor is aimed at the risk of a utility building for a large load that never fully arrives. The Senate bill would also require operators to procure clean energy equal to 90% of their annual usage and to join a demand response program, which pays or credits large users for cutting consumption when the grid is strained.
House Bill 6135 would create a large-load commercial rate class with contracts of at least 15 years. Its financial terms are less strict, and it has no clean energy requirement. On the House side, House Bill 6142 would require every Public Service Commission-approved data center contract to include a decommissioning plan. The plan would need financial assurance, meaning money set aside, sufficient to cover dismantling the facility, and it would be reviewed every three years. Developers comparing states would treat the choice between these two frameworks as a real cost difference, not a technicality.
Labor Standards, and No Moratorium
House Bill 6141 and Senate Bill 1048 would bar the Public Service Commission from approving data center contracts unless construction and maintenance work is done under a labor agreement or collective bargaining agreement. The International Brotherhood of Electrical Workers has urged members to oppose moratorium legislation. The union argues that data centers bring well-paid construction jobs and long-term union employment. That position helps explain the package’s shape: it regulates how data centers are built, not whether they can be built.
The package contains no moratorium and no tax incentive changes. Those questions are being handled in separate Michigan bills. They include proposals to repeal incentives, to exclude data centers from certain property tax exemptions, and to extend a brownfield-zone exemption. The package’s premise is that data centers will keep coming to Michigan and the state should set the terms, which is a middle position between welcoming them unconditionally and blocking them.
Background
Data centers house the servers behind cloud computing, streaming and artificial intelligence. The largest require power on the scale of a small city, and some draw millions of gallons of water a day for cooling. As construction has spread into new regions, state legislatures have moved from offering incentives to setting conditions. States considered hundreds of data center bills last year. This year, six states other than Michigan have weighed community benefit agreement mandates, twelve have weighed closed-loop cooling requirements, and twelve have considered decommissioning rules.
Michigan’s legislature has been active on the issue throughout 2026. Separate bills address data center tax incentives: some would repeal them, one would narrow property tax exemptions, and others would extend a brownfield-zone exemption. The July package is the state’s broadest attempt yet to set operating conditions for the industry. At the federal level, a proposal from Representative Robert Bresnahan would tie federal data center tax credits to community benefit agreements.
