AI data centers now pay a big slice of Santa Clara's bills. What that means for homeowners

First-time Bay Area homeowner series, part 4. The AI boom isn't only pushing up home prices. It's also changing who pays for local government. In Silicon Valley, the warehouses full of servers that train and run AI have become a major source of city money, while empty office towers are pulling the other way.

Santa Clara: the data center city

The City of Santa Clara has 55 data centers, with three more in the pipeline, The Silicon Valley Voice reports. Cheap power from the city-owned utility, Silicon Valley Power, and a fiber network made it one of the top data center cities in the country.

Only part of that is tax: data centers paid about $10.5 million in property, sales and use taxes, per an April 2025 council report. Much of the rest arrives through the city utility, which pays 5% of its gross revenue ($34.5 million) to the general fund, and data centers buy 60% of its power. Their electricity demand is projected to rise from 700 to 1,300 megawatts. Critics question whether the utility's $400 million-plus in new infrastructure, mostly for data centers, will pay off.

The other side: empty offices

Across Santa Clara County, the 2026-27 tax roll hit a record $760.1 billion, driven by home sales, the Mountain View Voice reports. But office vacancy has hovered near 20% for two years, and the number of properties getting temporary "decline in value" reductions under Prop 8 nearly tripled, to 24,727, with commercial reductions topping $5.6 billion.

Why homeowners should care

Your base tax rate doesn't go up when an office building's value drops. But local budgets feel it, and that matters in two ways:

• Pressure for new add-ons. When general revenue gets tight, cities, school districts and transit agencies often ask voters for new bonds and parcel taxes. Those land on homeowners' bills. San Francisco's November 3 Muni parcel tax is one example; part 5 covers it.
• Homes carry more of the roll. As home values climb and commercial values sag, a larger share of the county's assessed value comes from residential property.
• Power and infrastructure costs. Big data center growth means big grid spending. Who ultimately pays for it is a live debate worth watching in your city.

What it means for you

• Watch your local ballot. New taxes need voter approval, so your vote is your main lever.
• Read your city's budget summary once a year. Look for the top revenue sources. If one industry is a big share, ask what happens in a downturn.
• Track your own numbers. Your home is likely your biggest asset and your tax bill one of your biggest bills. Log both in the free net worth tracker below.

This is general information, not financial or tax advice.

Tags: San Francisco · Bay Area homeowners · Property tax · TFU (Train Until Forever), San Francisco · Martin Lee, business owner

Sources

• Data centers: Santa Clara's third-largest general fund revenue generator, The Silicon Valley Voice, Carolyn Schuk, Sep 15, 2025
• Los Altos, Palo Alto outpace county in assessed property value growth, Mountain View Voice, Linda Taaffe, Jul 9, 2026