Anchor story: On Tuesday, November 3, 2026, 41 data-center-related ballot measures went before voters across 10 states — and 40 of the 41 broke against new data centers, per Ballotpedia and CNBC (Nov 4, 2026). The only exception was Harwood, North Dakota, a town under 1,000 people.
Why it matters now: The bottleneck has moved from chips to permits. In Texas, Georgia and Ohio — three of the largest planned build-out states — governorships flipped to candidates on platforms that include pausing new data-center permits. Analysts estimate these combined wins could trigger short-term moratoria affecting roughly 45% of planned U.S. data-center capacity — at the same time Fitch reports a record 6.3% trailing-twelve-month private-credit default rate and a 2027–2028 maturity wall ahead.
Practical lesson: You cannot buy a specific data-center project, and you probably should not try to pick which ballot measure wins next. What you can do is underwrite the theme deliberately — power, land, cooling, financing, or the operators — and decide, at what price, you exit if the political and credit signals turn together.
Charon: Welcome to Ad Valorem Syndicate Room, episode fifty four. I'm Charon. This week the story is not what AI builders are spending. It is what the public just voted to build, or not build.
Kore: That's right. In the November third midterm elections, forty one data center related ballot measures went before voters across ten states. According to Ballotpedia, all but one of them broke in the anti data center direction.
Charon: That's a 40 to 1 outcome. In Ohio alone, twenty one measures were on the ballot, and municipalities approved outright bans on facilities over 25 megawatts. The message was not about artificial intelligence itself. It was about the physical footprint, the power draw, and who pays for it.
Kore: And it's not just local votes. In Texas, Georgia, and Ohio, all three states with big planned capacity growth, Democrats flipped governorships on a platform of pausing new data center permits and tightening construction rules.
Charon: That's the number I want to hold onto. Analysts estimate these wins could trigger short term moratoria affecting roughly 45 percent of planned U.S. data center capacity expansion. That is not a niche zoning fight. That is a material part of the build out thesis.
Kore: Now here's where the credit side matters, and it connects to a second signal. Fitch Ratings reported in its third quarter U.S. private credit monitor that the trailing twelve month default rate hit a record 6.3 percent, up from 6.0, and now deteriorating for five straight quarters.
Charon: Fitch counted 27 default events in the quarter from 91 unique defaulters over the trailing year. But the composition is the part that changes how you read the headline. Roughly 88 percent of those defaults were soft restructurings. Interest deferrals and PIK conversions were about half, and stressed maturity extensions about 38 percent.
Kore: So the distress is not showing up as bankruptcies. It is showing up as amendments. Lenders are extending maturities and capitalizing interest to keep borrowers technically operating while the underlying cash flow problem stays unfixed. That is the classic extend and pretend signature.
Charon: Why do these two stories belong together? Because data centers are now being financed with exactly this kind of leverage. When local political power can pause the asset, and the debt behind it is mostly soft restructured, the risk stops living in the model and starts living in the power bill and the maturity wall.
Kore: Fitch is explicit that the worst of it hasn't landed yet. A large wave of private loans originated in the cheap money years of 2020 through 2022 needs to refinance in 2027 and 2028, into a higher rate environment. That maturity wall sits directly on top of a build out that voters just told you to slow down.
Charon: Here's the practical read for a smaller investor. You cannot buy a specific data center project, and you probably should not try to pick which ballot measure wins next. What you can do is underwrite the theme deliberately. The bottleneck has moved from chips to permits, from models to megawatts, from equity to the credit behind it.
Kore: The downside to hold against that thesis is simple. If the moratoria stick and the soft restructurings roll over into hard losses at the same time, the compute capex that looked like growth turns into a fixed cost on a slower top line. That is the risk in one sentence.
Charon: Our suggestion, and this is not advice, is one concrete step this week. Map which segments of the stack you actually own. Power, land, cooling, financing, or the operators themselves. Then decide, deliberately, whether the build out is in your portfolio, and at what price you would exit if the political and credit signals turn together.
Kore: Position before you predict. And remember, the data here is dated and reported. The ballot counts come from Ballotpedia, and the default figures from Fitch's third quarter monitor. We pair the upside with the downside, and we never treat this as a forecast.
Charon: For sources, the primary references are the Reuters and Ballotpedia ballot measure analysis from November fourth, and the Fitch U.S. private credit and middle market monitor for the third quarter of 2026. The full reference list is in the episode notes.
Kore: Thanks for listening. This content is AI generated, for informational purposes only. Book a thirty minute call to talk through whether the build out credit is in your allocation, or watch the full episode at GP dot Ad Valorem dot IO.