Eagan council denies interim use permit for Iron Gate data center after residents cite noise and zoning concerns

The Eagan City Council on May 5 directed staff to prepare findings of fact for denial of a six‑month interim use permit (IUP) that would have allowed outdoor storage and operation of four trailer chillers at the former Unisys building, 3199 Pilot Knob Road, citing insufficient information about noise impacts and questions about whether the property’s use has shifted from accessory office functions to a primary data center.

City planner Mike Schultz told the council the property is guided and zoned RD (Research and Development) and that accessory uses are permitted only so long as they remain incidental to the principal office use. Schultz said staff received about a dozen noise complaints between late February and early April and that initial engineering modeling indicated the trailer chillers would exceed Minnesota Pollution Control Agency (MPCA) noise standards without mitigation. Staff required a noise study and recommended a temporary 20‑foot noise wall; follow‑up monitoring on April 25 sampled a constrained period and showed compliance at that point, Schultz said.

Michael Margulies, representing Eagan Capital (the owner) and Iron Gate operations, argued the building has historically operated as a data center and the temporary chillers were necessary to maintain cooling while permanent, closed‑loop chillers are procured. Margulies told the council the new permanent system would use a non‑water closed refrigerant system and said the replacement would eliminate roughly "2,400,000 gallons of water a year," a figure he cited from an engineer’s report provided to the city. He also said the applicant engaged noise engineers and installed a temporary sound wall prior to the most recent tests.

Mayor (speaker 1) and other councilmembers pressed the applicant on timelines, permitting and due diligence: when the purchase closed, whether the applicant knew it needed land‑use entitlements before operating chillers outdoors, whether the temporary units were operating before permits were issued, and how many chillers and at what operating level were running during the monitoring windows. City Attorney (speaker 11) advised that certificates of occupancy do not substitute for land‑use entitlements and that entitlements are determined by the comprehensive plan and underlying zoning.

Residents who live adjacent to the site delivered detailed public comment about night‑time noise, vibration and quality‑of‑life impacts. John Guston, who said he has lived nearby for 48 years, said: "They fired up their chillers in violation of the zoning ordinances. Now they beg forgiveness." Multiple neighbors described sleeping disruption, concern for children and skepticism about limited monitoring windows and model‑based studies. Several speakers asked the council to deny the IUP and to require any permanent mechanical yard to be considered in a separate public land‑use process.

Councilmembers said they were not persuaded the IUP satisfied the higher conditional‑use criteria that staff must apply when a temporary use could effectively change the character of a property. Councilmember Field moved to direct staff to prepare findings for denial of the six‑month IUP; Councilmember Hanson seconded and the motion carried on voice vote. The council also passed a motion directing staff not to approve building or mechanical permits for the proposed permanent mechanical yard (eight chillers) until such construction is part of a formal land‑use application.

What comes next: staff will draft findings of fact that document the council’s reasons for denial; the findings will be returned to the council for formal adoption and will inform any future application the applicant files. The council also left in place the city’s authority to require additional noise studies if future complaints or evidence show ongoing impacts.