New York State Issues Data Center Community Investment Framework Policy Outline

A key element of New York’s data center moratorium¹ was a direction to Empire State Development (“ESD”) to craft a Community Investment Framework (“CIF”) under which data center host communities would be compensated. Public feedback on the Framework can be submitted to ESD by Thursday, August 13, 2026.

Background on Data Center Development

Data centers – facilities that house data storage and processing capabilities for services such as artificial intelligence (“AI”), cloud computing, streaming, and more – have experienced rapid growth over the past few years. As more data centers have been developed, community concerns have grown louder over their environmental, energy, and infrastructure impacts. Many of these concerns have been shared by residents and local governments alike, with several of the latter passing moratoria in recent months to pause development while codes, rules, and regulations are updated.

Governor Hochul’s Executive Order

In response, Governor Hochul signed Executive Order No. 62. The Order imposes a moratorium on discretionary Department of Environmental Conservation (“DEC”) approvals for data centers that consume 50 megawatts (“MW”) of energy or more. The permitting pause will expire once the Department of Public Service (“DPS”) publishes a final generic environmental impact statement (“GEIS”) on data center development. Both agencies, as well as the Public Service Commission (“PSC”), will also evaluate whether new or amended regulations, policies, reporting requirements, or guidance are necessary or appropriate to address the water and energy consumption concerns associated with these facilities.

The Community Investment Framework

Section 2 of the Governor’s Executive Order directs ESD, New York’s leading economic development agency, to finalize the CIF within 60 days of the Order (September 12, 2026). Once published, the Framework will assist localities in analyzing and attaining the economic benefits of serving as a data center host community, while mitigating any adverse impacts.

The final CIF document will include an example of a partnership agreement between a data center developer and host community, balancing economic development with community interests. According to ESD, it is “intended to serve as a standardized expectation for large-scale data center developments, providing local governments and developers with a consistent basis for negotiating community benefits while offering flexibility to tailor investments to local needs.”

Framework Features

ESD is currently preparing the CIF as a readily accessible tool for all localities across New York State. To meet this end, the Framework will include:

• Good Neighbor Commitments (e.g., landscaping, design, noise and light pollution mitigation).
• Labor Commitments (e.g., prevailing wage standards, labor agreements, local hiring, apprenticeships, workforce development).
• Transparency Standards (e.g., public reporting requirements for public benefits as well as for environmental, energy, and infrastructure impacts).
• Community Investment Fund, which can be used for:
  • public infrastructure improvements (e.g., parks, water, wastewater, sewer, roads, energy, transmission, transit, recycling),
  • community anchor institutions (e.g., libraries, hospitals, senior centers, food banks, museums),
  • housing initiatives (e.g., workforce housing, affordable housing, senior housing, weatherization, and energy efficiency improvements),
  • workforce development and training programs (e.g., community colleges, BOCES, apprenticeship programs, STEM education),
  • childcare facilities (e.g., new or expanded centers, safety upgrades, childcare scholarships, tuition assistance),
  • broadband expansion (e.g., fiber-optic networks, wireless infrastructure, network resiliency, speed upgrades, digital literacy training),
  • public safety initiatives (e.g., fire and police stations, emergency medical services, safety cameras and lights, cybersecurity enhancements),
  • school facility and educational enhancements (e.g., school expansions, K-12 programming, library and athletic improvements, curricula enhancement),
  • blight remediation (e.g., building rehabilitation, adaptive reuse, historic building restoration, streetscape improvements),
  • and other locally identified environmental, energy, infrastructure, and community priorities.
• Guidance on Contribution Levels, with a recommended data center operator contribution of $1 million per 1 MW of anticipated utility demand per project.

Public Feedback

ESD is accepting public feedback on the CIF outline until August 13, 2026 (30 days from the date of its release). Interested parties, including local governments and data center developers, can submit comments by emailing DataCenterCIF@esd.ny.gov.

Key Takeaways

In conjunction with New York State’s ongoing discretionary permitting moratorium, ESD’s proposed Community Investment Framework signals a more structured approach to data center development. But it is not clear whether the resulting CIF will be incorporated into state regulations – as it is only state permits affected by the Executive Order – or simply serve as a resource for local communities. For local governments, the Framework offers a standardized tool to evaluate projects, negotiate community benefits, and address environmental, energy, and infrastructure concerns. For data center developers, it provides insight into New York State’s expectations regarding community benefits, labor practices, transparency, and good neighbor commitments, including a recommended contribution of $1 million per MW of anticipated utility demand. The dollar amounts in ESD’s outline are significantly higher than typically seen in host community agreements. With public comments due by August 13, 2026, municipalities and developers should review the proposal closely and consider providing feedback before the final CIF is published in September.

How We Can Help

The Hodgson Russ Data Center & Digital Infrastructure team is actively advising clients on the development of the Framework, including its potential implications for project planning, community benefits negotiations, and local approvals. Please contact Tom Berkman, Charles Malcomb, Dan Spitzer, or another member of the team to discuss how the Framework may impact your projects and operations.

(Harrison Bench assisted in the drafting of this Alert.)

¹ Executive Order No. 62, Click here to see our July 16, 2026, client alert to learn more about the Executive Order and its impacts to data center development.