The City of San Jose is holding a community hearing tonight at City Hall to gather public comments regarding data center expansion within the city.
The "Community Meeting for Data Centers and Large Energy Project Uniform Standards" will take place from 6 p.m. to 8 p.m. in the City Council Chambers, located at 200 East Santa Clara Street. This session is expected to be the final large-format community meeting before the topic moves to Planning Commission and City Council hearings. The meeting will also be live-streamed for broader access.
Separately, federal lawmakers have expressed reservations about the use of a federal tax credit for data center construction.
Representatives Jimmy Panetta (CA-19) and Greg Steube (FL-17) co-led a bipartisan letter to Treasury Secretary Scott Bessent. The letter, also co-led by Representatives Mike Thompson (CA-04) and Suzan DelBene (WA-01), raised concerns about reports that Meta is seeking to apply the federal research tax credit to its data center buildout.
Lawmakers emphasized that any claims by Meta for this federal tax credit must meet the "clearly defined requirements for qualified research and experimentation." They stated that the purchase and deployment of commercially available equipment, such as servers, networking equipment, electrical infrastructure, and cooling systems, cannot be considered qualified research simply because they are installed at a large scale or in new configurations.
The research tax credit was established by Congress in 1981. Its original purpose was to address declining private-sector research investment and enhance U.S. technological competitiveness. By reducing the cost of qualifying research, the credit aims to encourage businesses to undertake projects involving technical uncertainty and experimentation, rather than merely purchasing and deploying proven technologies.
To qualify for the credit, research must satisfy a four-part test: it must be technological in nature, address technical uncertainty, seek to develop or improve a product or process, and involve a process of experimentation. The lawmakers noted that certain activities, like research conducted after commercial production begins or the duplication of an existing product or process, are excluded.
Lawmakers warned that allowing ordinary data center construction and deployment costs to qualify for the credit would significantly broaden its scope beyond its intended purpose. This could risk transforming an incentive for technological experimentation into a subsidy for capital expenditures that companies would typically undertake in their regular business operations.
The letter concluded that the research credit serves as an important tool for promoting American innovation. They stressed that protecting its integrity requires ensuring it rewards genuine research and experimentation, rather than subsidizing routine capital investment. An expansive interpretation of qualifying expenditures, they stated, risks undermining the credit's purpose by subsidizing ordinary capital investment instead of encouraging genuinely novel research.
