Activists, city planners dissatisfied with Minneapolis City Council's vote on data center regulations

Less than 24 hours after the Minneapolis City Council narrowly passed new regulations for data centers within the city, activists and city planners alike expressed dissatisfaction with the outcome. The ordinance, which still requires Mayor Jacob Frey's approval, represents a compromise that leaves many feeling unheard, and its long-term impact remains uncertain. The regulations limit data centers to two downtown zones, restrict them to existing buildings, and mandate full council approval – measures intended to address concerns about environmental impact and community disruption. This debate highlights a broader tension within Minneapolis: the need for economic revitalization versus the desire to protect the city’s character and environment.

Activists like Kalani Matus of the Climate Justice Committee remain skeptical. He expressed concern that past regulatory failures could undermine the effectiveness of these new rules, highlighting a broader distrust in the city's ability to enforce environmental protections and a fatigue with promises of accountability. This sentiment is shared by many in the environmental justice community who have witnessed instances where polluters operated with impunity despite existing regulations, fostering a sense of cynicism about government oversight. The CJC’s past clashes with the MPCA, particularly concerning industrial pollution in North Minneapolis, have further fueled this distrust and underscore the challenges of holding powerful entities accountable.

The Data Center Debate: A Minneapolis Story

The current controversy surrounding data centers in Minneapolis isn’t new. The city has been grappling with the issue for months, fueled by the rapid growth of artificial intelligence and the increasing demand for data storage and processing. This surge in demand is driven by the rise of AI models requiring massive computing power, attracting significant investment from tech companies looking to establish a presence in the Midwest. The proposed regulations come after a six-month construction moratorium was implemented, intended to give the city time to develop standards for these facilities. This moratorium is set to expire on Nov. 21, creating a sense of urgency around the council’s decision and raising questions about whether the new regulations will be sufficient to address the potential influx of data center projects. The moratorium itself was a response to growing public concern and pressure from community groups worried about the potential environmental and social consequences of unchecked data center development.

What Happened

The ordinance, which was passed by a 7-6 vote, represents a compromise between those who sought a complete ban on data centers and those who believe they can contribute to the city’s economic revitalization. The tight margin of the vote underscores the deep divisions within the council and the community regarding this issue. The regulations themselves are detailed and restrictive, reflecting the concerns about their environmental and social impact. They include:

Key Regulations Explained

Specific Details

• Limited Zones: Data centers are restricted to two designated overlay districts downtown, aiming to concentrate their impact and allow for better monitoring. This strategic zoning is intended to minimize disruption to residential areas and other businesses, but also raises concerns about concentrating potential negative impacts in specific neighborhoods. The choice of zones – primarily near existing infrastructure – reflects a desire to minimize new infrastructure costs, but also raises questions about equitable distribution of potential burdens on those communities.
• Existing Buildings Only: The ordinance prohibits new construction for data centers, promoting adaptive reuse of existing buildings and addressing concerns about urban sprawl and resource consumption. Minneapolis currently has approximately 9 million square feet of vacant office space, presenting a potential opportunity for data centers to fill this void, but also potentially diverting investment from other redevelopment projects. This aspect of the ordinance is particularly attractive to developers seeking to capitalize on the city’s existing real estate stock, but it also raises questions about whether this approach will truly revitalize struggling areas or simply shift the character of those neighborhoods.
• Council Approval: Every data center project will require full approval from the Minneapolis City Council, ensuring greater public scrutiny and accountability. This process can be lengthy and complex, potentially deterring some developers while providing a platform for community concerns to be raised. The requirement for council approval also creates a new layer of political consideration for data center projects, potentially influencing their design and operation.
• Renewable Energy Requirements: Data centers exceeding 50,000 square feet must participate in a program with Xcel Energy, contributing to the development of renewable energy sources. This initiative aims to offset the significant energy consumption associated with these facilities and aligns with the city’s broader sustainability goals, but also places a financial burden on data center operators. The program with Xcel Energy is intended to ensure that data centers contribute to the city's clean energy transition, but its effectiveness will depend on the specifics of the agreement and the availability of renewable energy credits.
• Decommissioning Plans: Data centers are required to submit plans for decommissioning, ensuring responsible closure and minimizing environmental impact when they cease operations. This proactive measure addresses concerns about long-term liability and environmental remediation, but the effectiveness of these plans remains to be seen. The requirement for decommissioning plans reflects a growing awareness of the long-term environmental consequences of data center operations.
• Disclosure Requirements: Operators must publicly disclose their energy, water, and generator usage, promoting transparency and accountability. This increased scrutiny can help identify potential inefficiencies and environmental risks, but also exposes data centers to public criticism. Publicly available data on resource consumption could empower community groups to advocate for further improvements in data center efficiency.
• Sound Attenuation: A sound attenuation plan is mandated to mitigate noise pollution, a significant concern for nearby residents and businesses. Data centers' cooling systems can generate substantial noise, and this requirement aims to protect the quality of life for those living and working nearby. The effectiveness of sound attenuation measures will be crucial in maintaining positive relationships with neighboring communities.
• Floor Restrictions: Data centers are prohibited from occupying the first or second floors of buildings, addressing concerns about accessibility and potential disruptions to ground-level businesses. This restriction is intended to prevent data centers from hindering pedestrian traffic and impacting the vibrancy of street-level retail.

  The debate isn’t just about environmental concerns; it's also intertwined with Minneapolis's economic challenges. The city has struggled with vacancy rates in its downtown core and a need for increased tax revenue. Proponents argue that data centers can provide a much-needed boost, creating jobs and stimulating investment.

  “We’ve got a city that’s got 9 million vacant square feet of office space, right? We're looking at adaptive reuse as probably the only way out of that,” said Dan McConell, of the Minneapolis Building and Construction Trades Council. “I’m a taxpayer in the city of Minneapolis. I think that we're looking at a double-digit tax increase. And we've seen that for a couple of years. And unless we're involved for investment in our city and create an environment where people want to invest in our city.”

  Community Reaction

  While some residents and businesses in Minneapolis are relieved to see any regulations on data centers, others remain skeptical. Council member Aurin Chowdhury defended the ordinance, saying, 'The regulations include a mandatory disclosure of energy, water and generator use. A sound attenuation plan is also required. The City Council also added a requirement to submit a plan for decommissioning data centers if they no longer function or go out of business.'

  Council member Jamal Osman expressed disappointment. He said, “If a full ban fails again tomorrow, we will bring back a proposal that includes overlay zoning again as well,” which he explained would allow City Council members and the Planning Commission to hold public hearings when evaluating a proposed data center development on a case-by-case basis. The push for overlay zoning would allow for more localized control and public input on individual data center developments, reflecting a desire for greater community agency in shaping the city’s future. This ongoing advocacy highlights the persistent concerns about the potential negative impacts of data centers and the desire for more robust community oversight.

  What's Next

  The ordinance now goes to Minneapolis Mayor Jacob Frey for approval or veto. Given his past support for economic development initiatives, Frey’s decision will be closely watched. The City of Minneapolis currently has a moratorium on data centers, but it expires on Nov. 21. The city says downtown has eight data centers serving tech companies right now. Many more data centers serving onsite computing needs of existing businesses exist around the city, according to city staff. Council members said they heard from Xcel Energy that there is interest in up to eight more data center projects downtown. The potential for a surge in applications after the moratorium expires underscores the urgency of Frey’s decision and the need for ongoing monitoring of data center development.