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

The Minneapolis City Council’s recent vote on data center regulations, a compromise struck after failed attempts at a full ban, has left stakeholders on both sides feeling unsatisfied – a stark reminder of the complex challenges facing the city as it navigates the demands of technological advancement and community concerns. The ordinance, which still requires approval from Minneapolis Mayor Jacob Frey, limits data centers to two downtown zones, mandates their existence within existing buildings, and necessitates full council approval for each project.

What Happened

The Minneapolis City Council narrowly passed the new data center ordinance Thursday in a 7-6 vote. The vote came after a six-month moratorium on data center construction, set to expire November 21, was implemented to allow the city time to develop new standards. Initial attempts to enact a full ban on data centers failed, leading to the compromise ordinance now facing Mayor Frey’s consideration. The regulations stipulate that any new data center must be located in one of two designated downtown overlay districts, be capped at 150,000 square feet when utilizing renewable energy sources (or 50,000 square feet otherwise), and operate within an existing office space – not serving as the building’s primary function. Council members who voted in favor included Elliott Payne (Ward 1), Aisha Chughtai (Ward 10), Robin Wonsley (Ward 2), Soren Stevenson (Ward 8), Jason Chavez (Ward 9), Jamison Whiting (Ward 11) and Aurin Chowdhury (Ward 12). Those voting against were Jamal Osman (Ward 6), Michael Rainville (Ward 3), LaTrisha Vetaw (Ward 4), Pearll Warren (Ward 5), Elizabeth Shaffer (Ward 7) and Linea Palmisano (Ward 13). A recording of the council meeting is available here.

Further stipulations include a mandatory disclosure of energy, water, and generator usage. Data centers are also required to submit a decommissioning plan should they cease operation. Facilities exceeding 50,000 square feet must participate in a program with Xcel Energy to fund renewable energy development through the purchase of renewable energy credits. Additionally, data centers are prohibited from occupying the first or second floors of buildings.

The debate underscores a larger tension: the city’s need for economic investment and tax revenue versus concerns about environmental impact and community disruption. Minneapolis currently has eight data centers downtown serving tech companies, with many more existing to serve onsite computing needs around the city. City staff estimate there is interest in up to eight additional data center projects downtown, a potential boon for the city’s tax base, but also a source of considerable anxiety for some residents.

Community Reaction

Those advocating for stricter regulations, like Kalani Matus of the Climate Justice Committee, remain unconvinced that the ordinance goes far enough. “There’s a long history of rules and regulations not being followed up on,” Matus stated. “Certainly with the Minnesota Pollution Control Agency has found themselves at odds with the CJC over problem polluters that they've failed to regulate until enough people make a fuss about it.” He expressed skepticism regarding enforcement and accountability.

Conversely, supporters of data centers emphasize their potential to address the city's economic challenges. Dan McConell of the Minneapolis Building and Construction Trades Council argued, “We’ve got a city that's got 9 million vacant square feet of office space. We're looking at adaptive reuse as probably the only way out of that.” He added, “I’m a taxpayer in the city of Minneapolis. I think that we're looking at a double-digit tax increase. And unless we're involved in investment, we won't see that increase.” Council member Elizabeth Shaffer acknowledged the potential for revenue generation, saying, “Will small-scale data centers be a cure-all for revenue generation? I’ve already said no. Is it a step in the right direction for some revenue generation and property tax relief? Yes.”

Key Dates

Specific Dates

Moratorium Expiration: Nov. 21—The current moratorium on data center construction expires on this date.

Ordinance Review: Mayor Jacob Frey must now review the ordinance and decide whether to approve or veto it. The timeline for this decision remains unclear.

By the Numbers

• Vacant Office Space: 9 million square feet
• Data Centers Currently Operating: 8 downtown, plus additional centers throughout the city
• Potential New Data Center Projects: Up to 8 downtown

What's Next

The ordinance now awaits Mayor Frey’s approval. Should he veto it, the City Council could override the veto with a two-thirds vote. Council member Soren Stevenson indicated that if a full ban fails to pass again, further amendments, including overlay zoning for case-by-case evaluations, will be brought forward. Council Member Jamal Osman pledged to work toward preserving stricter size limits and renewable energy requirements in any final version of the ordinance.

Marcus's Take

This vote highlights a crucial tension facing Rochester and cities like Minneapolis: balancing economic development with responsible stewardship. While data centers offer potential for job creation and increased tax revenue, the environmental costs – particularly energy consumption and water usage – cannot be ignored. The compromise reached by the City Council, while perhaps politically expedient, leaves many feeling shortchanged. The requirement for renewable energy credits is a positive step but doesn't address the fundamental issue of increased demand on our power grid and water resources.

It’s particularly troubling to see families in Minneapolis struggling with rising taxes while powerful tech companies seek to establish operations that place an added strain on city services. Strong communities are built on stability – stable jobs, affordable housing, and a reliable infrastructure. This ordinance, while intended to address these needs, risks exacerbating the challenges faced by working families. The skepticism expressed by activists about enforcement is also warranted; regulations are only as effective as their implementation.

Moving forward, it’s imperative that city leaders prioritize transparency and public engagement in decisions regarding economic development. Rochester can learn from Minneapolis’s experience: a thoughtful, long-term approach to growth – one that prioritizes the well-being of families and the preservation of our natural resources – is far more valuable than short-term gains.

Resources

Residents interested in learning more about data centers and their impact can find information from the following sources:

• Minneapolis City Council Meetings
• Xcel Energy
• Minnesota Pollution Control Agency

Forward Look

The debate surrounding data centers in Minneapolis is far from over. With the moratorium set to expire and Mayor Frey’s decision pending, the city faces a critical juncture. Regardless of his choice, the underlying concerns about economic development, environmental sustainability, and community well-being will continue to shape the conversation. Rochester residents should pay close attention to how Minneapolis navigates these challenges, as similar issues are likely to arise in our own community as technology continues to reshape our world.

The future of data centers in Minneapolis, and the precedents they set for other cities, will depend on the city’s ability to balance economic opportunity with responsible governance. The choices made now will have a lasting impact on the community’s economic vitality and quality of life for years to come.