Economist says data centers are a ‘basic export industry’ for Chelan, Douglas counties

WENATCHEE — At the “Partners in Economic Development Fall 2025” breakfast, economist Jerry Johnson told Wenatchee Valley leaders that data centers represent a unique opportunity to leverage outside investment into local strength. He described them as a “basic export industry” that can deliver high tax revenues with limited strain on services, and said the region should find ways to turn those investments into broader industrial growth.

Before making that case, Johnson gave attendees a sweeping look at national, state, and regional economic trends. He noted that gross domestic product growth has slowed from earlier highs but avoided recession, and that inflation remains above the Federal Reserve’s target. Tariff uncertainty, he said, has fueled volatility in trade and markets. “The one thing we do know about tariffs is a lot of uncertainty,” Johnson explained, adding that global supply and labor challenges continue to complicate forecasts.

Washington State and the two-county region, he said, are seeing steady population growth but face persistent issues with housing costs, workforce supply, and seasonality in employment. Agriculture remains a dominant base, alongside government and healthcare, but Johnson cautioned that overreliance on tourism-related sectors can make the economy vulnerable. “Second-home ownership can actually be a challenge to you from an economic development perspective,” he said, pointing to Bend, Oregon, as an example where housing pressures crowded out industrial growth.

Johnson returned to the subject of data centers, which he described as export industries that bring new wealth into local communities. Far from being just about “cat videos,” he noted, the boom in artificial intelligence and streaming services has created demand for “hyperscale” and “exascale” facilities that function like small cities in terms of power use. These facilities, he explained, gravitate toward sites with robust electrical infrastructure, such as former aluminum plants, and require access to water for cooling.

Johnson emphasized that while data centers may not employ large numbers of people directly, their impact on local economies is significant. “They tend to provide a lot of fiscal and economic benefits without a lot of cost to the communities,” he said. High sales and property tax receipts, paired with limited demands on local services, make them an unusual but powerful driver.

His analysis suggested that leveraging data center revenues to build infrastructure could position the Wenatchee Valley for more traditional industrial growth. “Industrial developers don’t have the ability to support a lot of these offsite infrastructure costs,” Johnson said. “If you’re competing for these businesses, you’re looking for a competitive edge, and having readily available serviced sites is really important, ready to go.”

In his forecast, the region’s baseline growth rate sits at about 1.8 percent annually, but with infrastructure investment it could rise to 2.2 percent or higher. “If that’s your ‘aspirational,’ you’re not dreaming big enough, you can do much better than that,” he said.

During the question period of the day, Johnson and the other presenters at the breakfast, Chelan-Douglas Regional Port Authority CEO Jim Kuntz and consultant Nick Popenuk, fielded questions from attendees about the Port’s overall project.

In one exchange, they were asked about the relatively small proposed allocation ($5 million) for “industrial symbiosis” projects — ideas such as capturing waste heat from one business to benefit another. Popenuk explained that the category was included to leave the option open but that tax-increment financing statutes limit spending largely to traditional infrastructure. “We need to find out exactly what elements of that are eligible to be invested in,” he said, noting that the costs listed are preliminary and would evolve as projects advance.

Malachi Salcido, of local developer Salcido Enterprises, asked whether tax-increment financing can truly accelerate the timeline of infrastructure projects. Popenuk acknowledged that quantifying the effect is difficult but said timing is one of the tool’s most important advantages. “In order for it to be successful, you do need some known upfront projects,” he said. Without that early revenue, “it winds up being a chicken and egg scenario where nothing ever happens.”

A separate question touched on federal and state land ownership and whether governments might consider selling land back into private use. Johnson said the federal administration has recently shown some openness to sales tied to prioritizing sites for power generation, though historically those lands have remained off-limits.

Other questions explored how new development might affect existing businesses. Popenuk said the goal of infrastructure investment is to create conditions where all businesses benefit indirectly, even if they do not see a direct subsidy. “By having strong infrastructure, you allow outside businesses, but also local businesses, to flourish because you’ve just set the stage for stronger economic development,” he said. He emphasized that every additional percentage point of growth translates into jobs and disposable income that ripple throughout the economy.

Johnson closed his portion of the presentation by circling back to data centers, and how they represent a unique opportunity to leverage outside investment into broader economic strength. “One, they’re going to be there anyway, and you might as well find a way to leverage that into supporting the broader economy above and beyond them,” he said. “It’ll give you increased fiscal strength for everybody… and funding infrastructure is a really important element.”

Andrew Simpson: 509-433-7626 or andrew@ward.media