Staff briefs committee on data-center zoning, warns hyperscale unlikely; council raises environmental-justice and climate concerns

City staff delivered a detailed briefing on data centers and proposed zoning approaches, emphasizing that Minneapolis' market is primarily downtown co-location and white-space facilities rather than large hyperscale campuses.

Dwight Miller (Legislative Research and Oversight) described components of data centers (servers, cooling, power infrastructure) and noted trade-offs between electricity and water use depending on cooling technology. "Data centers, I call them the digital backbone of the internet," Miller said, and cautioned that advancing AI and other compute-intensive uses are increasing demand for capacity. He described the city's existing market (eight known buildings with data centers concentrated downtown), the downtown advantage of nearby substations, and public-works estimates that current water-treatment capacity would not be strained by expected near-term demand.

Miller summarized CPED's draft zoning approach: create a standalone definition for data centers (not rely on a legacy "communication exchange" classification), restrict new principal-use data centers to appropriate downtown districts (DT1/DT2 and selected overlays), require disclosure of anticipated electricity and water consumption and utility notification, and set white-space/server-room size limits and design and noise standards. Staff flagged the importance of public engagement and said state and regional advocacy will be needed for certain regulatory levers (megawatt limits, water appropriation and environmental permitting).

Council members sought additional data and cautioned about siting. Council Member Chavez raised alarm about a draft overlay that could allow data-center overlay applications in areas including industrial parcels near the Roof Depot site and parts of the South Side Green Zone, saying "I do not want them in Ward 9." Council Member Chughtai and others pressed staff on greenhouse-gas impacts and asked for modeling of commercial-sector energy use under different regulatory scenarios; staff said data are limited and offered to research more detailed greenhouse-gas and fiscal impact analyses ahead of scheduled legislative-lab sessions. Several members requested further coordination with the Assessor and Public Works to clarify potential property-tax and water-treatment impacts and to ensure overlay boundaries do not include environmental-justice zones.

Staff also reviewed approaches taken by peer cities (Birmingham, Louisville, Nashville, Phoenix, St. Louis and Atlanta), noting that many jurisdictions use tiered rules based on size or megawatts; staff said Minneapolis' draft approach using white-space metrics and an overlay is less common nationally and will require careful public engagement. The committee accepted the report for filing and staff committed to deeper analysis and public engagement.