Copyright hoodline
San José Mayor Matt Mahan wants the AI data‑center boom to pay local dividends, pitching utility bosses and developers on building big in the South Bay. The mayor argues that keeping more of the compute close to Silicon Valley means jobs and steady revenue for city services. As Bloomberg reported, Mahan says San José is “in an incredibly privileged position” to ride the AI wave, and he’s been pressing PG&E and property owners to fast‑track projects inside city limits while other regions chase the same clients and tax base. City cuts a first‑of‑its‑kind PG&E deal In late July, the city and PG&E signed an Implementation Agreement aimed at getting big‑energy customers connected faster and with more predictability — a move City Hall says could help San José lock down a larger slice of the AI build‑out. The City of San José says the pact includes performance milestones and timelines to deliver power to projects that might otherwise sit in limbo for years. PG&E touts new lines and major upgrades Officials say the agreement leans on two high‑voltage transmission lines expected by 2028 that could add about 2,000 megawatts of capacity to the region, with PG&E committing billions in infrastructure upgrades. KQED reports the utility is planning major investments and is already processing requests for nearly 2,000 megawatts from developers. Downtown ‘net‑zero’ concept gets floated Developers and PG&E have pitched a downtown “net‑zero” community pairing three data centers with up to 4,000 homes, using district energy to circulate excess server heat into nearby buildings. The idea surfaced in a PG&E press release, and Hoodline previously flagged a downtown site eyed for AI. The money — and the fine print City officials estimate a fully operational data center can generate roughly $3.4 million to $6.8 million annually in utility and property taxes — revenue Mahan says would fund services and jobs. Backers of the implementation deal also point to PG&E analysis suggesting that adding large new loads could lower some customer bills by spreading fixed costs, a claim highlighted by industry outlet Data Center Dynamics. Neighbors worry about air, water, and oversight Environmental and community groups warn the build‑out could strain the grid, increase water use, and rely on diesel backup generators that pollute when they kick on. Reporting co‑published by Sacramento News & Review/Capital & Main has documented how regulators have allowed large diesel backups and raised questions about health impacts and public notice. What’s next Developers still need rezoning and other approvals for most proposals, and the city says it will attach community benefits and conditions to any downtown build. The timeline hinges on permitting and transmission work — with the lines and upgrades tied to the PG&E deal slated for completion by 2028 — and local coverage will be key to tracking approvals and environmental reviews. Data Center Knowledge will be monitoring the grid impacts and project rollouts.
