Minneapolis data center development pause approved by city council

MINNEAPOLIS (FOX 9) - As Minnesota communities continue to debate the potential rules surrounding the development of data centers, the Minneapolis City Council has voted to place a pause — or moratorium — on potential construction until they can be studied further.

Minneapolis data centers

What we know:

A new ordinance approved by the city council on Thursday outlines that select city council members are "concerned about potentially unknown or adverse impacts that the increased siting, development, re-development or expansion of data center facilities might have on the city as a whole and the neighborhoods and zoning districts."

The ordinance directs that for a period of six months, "no data center facility shall be established, re-established, or expanded" within Minneapolis, while also blocking any potential zoning approval, building, construction or demolition permit related to their development from being granted. An exception in the ordinance allows for data centers consisting of less than 350,000-square-feet of new or expanded space located in the downtown area, as defined by Interstate 35W, Interstate 94, Plymouth Avenue, and the Mississippi River.

In the meantime, the Department of Community Planning and Economic Development is directed to "conduct a study to evaluate the impact of data centers on communities citywide."

The ordinance could again be revisited on Nov. 21, 2026, or upon the completion of the study.

"Residents across the city of Minneapolis and our state are closely watching the rapid expansion of data centers across the county, and asking what this could mean for our neighborhoods," said council member Aurin Chowdhury prior to the vote. "The data center industry has shown over and over again the negative impacts on communities of color and those impacted by environmental injustice… This is not a ban. It’s not anti-technology, it’s future-proofing our city and a temporary pause that gives Minneapolis what good government should do: gather information, engage the public and establish clear rules."

Dig deeper:

Council member Linea Palmisano said she would not support the ordinance due to it being unnecessary and anti-business.

"Data centers are not built quickly. They do not pop up overnight. By allowing this ban, even with a carve out for moderate-sized facilities, we send a message to the business community that business operations in Minneapolis aren’t important or supported by this council. We send the message that we don’t want their investment, and they should take their business elsewhere. Guess what? They will," Palmisano said on Thursday prior to a vote. "We’ve got to keep thinking outside the box for ways to revitalize downtown and use empty space. Reasonable data centers are a valid use."

Palmisano noted that the increased development of data centers could be one route toward relieving the tax burden on residents as post-pandemic property values decline.

"I’m troubled by this. This is policy by fear, not facts. It signals to investors that Minneapolis is not able, or willing, to regulate new industries," said council member Michael Rainville, who noted that neither him nor council member Elizabeth Shaffer, whose wards would most directly be affected, were consulted by the proposal’s authors.

The backstory:

Data centers store large amounts of information for tech companies, making services like artificial intelligence (AI) and cloud storage possible. They also facilitate websites and tech companies such as search engines like Google and Apple.

These facilities come in various sizes, from small office spaces to massive warehouse-style buildings, also known as hyperscale data centers.

President & CEO of MPLS Downtown Council, Adam Duininck, has previously said data centers have proven valuable and could be a part of the solution to bring in additional revenue to the city to offset increasing tax burdens on residents.

"I know that data centers are a quickly evolving issue in the city, but it’s also one where we’ve also seen some success. Just the investment in the Sleep Number building alone has yielded a value increase of over eight times what the building was used for before," said Duininck in a previous committee hearing.

What's next:

Minneapolis Council members will have until Nov. 21, 2026, to review the directed study, and decide whether to extend the moratorium, or vote on separate ordinances governing data center developments.