WEBVTT

METADATA
Video-Count: 1
Video-1: youtube.com/watch?v=y_pHFIJsOvA

Part: 1

1
00:00:00.920 --> 00:00:16.360
Hello. In this video, I'll talk about work the city Minneapolis is doing to update its zoning regulations to address the impacts of new or expanding data centers in our city. My name is Jason Wittenberg. I'm a planning manager with the city Minneapolis. I've been working with

2
00:00:16.360 --> 00:00:33.160
elected officials, city staff, and other stakeholders as the city develops recommendations for new zoning rules that will be considered by the city planning commission, city council, and the mayor later this year. Data centers are a big topic across the country right now. Large-scale private investment and AI is

3
00:00:33.160 --> 00:00:49.240
driving much of the growth in data center development. Many communities, including Minneapolis, are in the process of updating their zoning regulations to address the potential impacts of this use. I'll walk through information about data centers and cover the preliminary recommendations and proposed timeline

4
00:00:49.240 --> 00:01:07.000
for the city's consideration of new regulations. In March of this year, the city council enacted a moratorium on data centers. This pauses some data center proposals while the city studies the issue and develops stronger regulations. When adopting this 6-month pause, the

5
00:01:07.000 --> 00:01:21.520
city council allowed certain data centers to continue to apply for approval in the downtown area. Specifically, those with less than 350,000 square feet of total area. The pause on data centers in Minneapolis is scheduled to expire on November 21st

6
00:01:21.520 --> 00:01:36.720
of this year. In Minneapolis, like many other communities, the city's zoning ordinance doesn't actually use the term data center. Facilities that will soon define as data centers are classified in the Minneapolis ordinance as communication exchanges.

7
00:01:36.720 --> 00:01:52.600
This puts them in the same category as telecommunications facilities like telephone and internet switching stations. It's not a perfect fit, and these uses have been allowed quite broadly in 10 of the 15 zoning districts in the city. In other words, the use has been allowed

8
00:01:52.600 --> 00:02:09.479
in much of the city, and that's one reason the moratorium was enacted. When the moratorium was introduced in the city, the City Council also took the formal steps necessary for the development of new regulations affecting data centers, including introducing five chapters of

9
00:02:09.479 --> 00:02:25.959
the zoning code that we've anticipated would be affected by new data center rules. So, what is a data center? Data centers essentially make the internet function by collecting, processing, storing, and retrieving data. They have rooms where servers on racks

10
00:02:25.959 --> 00:02:41.840
are processing data, and they have spaces for things like power distribution and network equipment, cooling systems, and offices. Understandably, there's a lot of concern about the potential impacts of widespread deployment of AI, and concerns about the impacts of AI are

11
00:02:41.840 --> 00:02:58.640
certainly contributing to concerns about data centers, as well. There are legitimate worries about the amount of electricity and water being used to power and cool modern data centers. You've probably read about the massive data centers proposed in more suburban or rural areas of Minnesota and other

12
00:02:58.640 --> 00:03:14.160
states. Because Minneapolis doesn't have vast areas of open land to accommodate uses of that scale, data centers are a little bit different in Minneapolis compared to those places. Most of the private sector interest in new data centers in Minneapolis

13
00:03:14.160 --> 00:03:30.200
primarily consists of utilizing existing buildings. Some of the recent data center proposals in Minneapolis have been proposed within buildings that have historically been used for data processing needs. And the size and electricity needs of these facilities, while still

14
00:03:30.200 --> 00:03:45.760
significant, are relatively small in comparison to the hyperscale facilities being proposed and constructed in places that have a lot more open land. In 2025, the Minnesota State Legislature adopted some changes that affect data

15
00:03:45.760 --> 00:04:02.680
centers across Minnesota. Those include tax changes, environmental standards, coordination of state level permitting, some rate payer protection language intended to ensure that data centers pay the costs of electrical infrastructure that's necessary to serve

16
00:04:02.680 --> 00:04:18.760
them, and then some prevailing wage requirements for tradespeople who are building data centers. The city has identified eight existing data centers serving third-party customers in Minneapolis. All are located in the downtown area. Some have

17
00:04:18.760 --> 00:04:35.880
been established more recently while others have been in place for a very long time. Enterprise data centers, those that are serving just the on-site computing needs of existing businesses and institutions that are on the same property, are located more widely throughout the city.

18
00:04:35.880 --> 00:04:51.960
There are several factors that make downtown Minneapolis an attractive place for those developing data centers. The power grid has capacity in downtown Minneapolis, and there's also a lot of redundancy built into the downtown area power grid. There's excellent access to a high-speed

19
00:04:51.960 --> 00:05:07.800
fiber network. There's proximity to a large number of end users of information, and closer proximity means information is delivered more quickly. And there are some buildings that are adaptable for this use. It's important to note that there are many buildings

20
00:05:07.800 --> 00:05:25.720
that aren't suitable or easily adaptable for data center uses. Spaces that are easier to adapt tend to have high ceilings, a lot of structural capacity to support the heavy weight of the equipment, and they already have really substantial utility infrastructure in place.

21
00:05:25.840 --> 00:05:42.760
There are reasons that data centers might not be a great fit for downtown Minneapolis. Our preference is that buildings are full of residents as well as businesses that are providing large number of jobs. Downtown Minneapolis is the center of our region's transit system. That system is meant to move people, and

22
00:05:42.760 --> 00:05:57.920
spaces that are essentially warehousing equipment don't align well with the concept of a transit oriented place. However, in our post-pandemic environment, downtown still has an office vacancy rate of roughly 30% and much of that space isn't adaptable

23
00:05:57.920 --> 00:06:15.040
to other uses like housing. Data centers can help with the city's tax base, stemming the loss of value that we've experienced in downtown and shifting some of the burden from residential taxpayers. You might have read about the recent sale of a downtown building that houses

24
00:06:15.040 --> 00:06:31.160
an expanded data center. That building sold for roughly eight times its most recently assessed value, and that's good for the city's tax base. The existing built environment and infrastructure is designed to support large energy and water users in

25
00:06:31.160 --> 00:06:46.919
downtown. The construction of data centers requires high-paying skilled labor. Utility franchise fees bring millions of dollars annually to the city's general fund. Large electricity users are big

26
00:06:46.919 --> 00:07:03.600
contributors to this fund, and the city's practice has been to dedicate some of this revenue to climate initiatives. Revenue from large commercial water uses subsidizes the cost of water for residential users. And there are practical and regulatory

27
00:07:03.600 --> 00:07:19.400
limits that will result in a scale that minimizes the environmental and off-site impacts. What's an example of a practical limitation? Even if regulations allowed it for a 30-story building to be converted entirely to a data center, there would

28
00:07:19.400 --> 00:07:34.160
be tremendous challenges associated with converting a high-rise building entirely to a data center. So, as noted earlier, we're talking about data centers that are smaller in scale compared to many that we've been reading about, which means they're going to have a smaller

29
00:07:34.160 --> 00:07:53.800
environmental footprint in comparison. If Minneapolis is going to continue to data centers to be established and expanded in our city, there are real challenges and concerns that have to be addressed. The electricity demands for the use requires careful coordination with Xcel

30
00:07:53.800 --> 00:08:08.960
Energy to ensure that the electrical grid can continue to reliably serve everyone. There are concerns about whether the electrical demands will affect the ongoing transition to renewable energy. And related to water use, the city has

31
00:08:08.960 --> 00:08:25.560
to ensure that the needs of data centers don't affect the ability to continue to serve other customers now and into the future. Backup generators are common among many uses, but what's less common is the scale of the power that generators have to provide for data centers.

32
00:08:25.560 --> 00:08:41.560
These generators have to be routinely tested, which does result in intermittent noise and air pollution. Data centers often have a warehouse-like design that can conflict with city's goals related to our urban fabric. And the equipment within data centers,

33
00:08:41.560 --> 00:08:57.200
the servers themselves, create noise that has to be mitigated. We want to prevent violations of the city's noise ordinance before they occur. Expanding on the issue of water use, the city's water needs are sourced from the Mississippi River.

34
00:08:57.200 --> 00:09:13.520
The city has the capacity to distribute approximately 100 million gallons of water per day. Water consumption in the city has generally been trending downward for decades, partly due to increased efficiency. Typically, Minneapolis distributes about

35
00:09:13.520 --> 00:09:28.640
55 million gallons of water per day, with higher peaks during the summer. Among the 40 largest users of water in Minneapolis, the use ranges from about 800,000 gallons to 5.4 million gallons per month,

36
00:09:28.640 --> 00:09:46.000
with an average of about 1.7 million. Using one of the largest data centers in Minneapolis as an example, it has become one of the 40 largest water users in the city with the recent averages of around 3 million gallons per month, but also has seen use of up to about 5 million

37
00:09:46.000 --> 00:10:01.640
gallons per month. While the city promotes wise use of water, there is tremendous capacity to provide water into the future. Let's review the types of things that Minnesota cities can and cannot regulate.

38
00:10:01.640 --> 00:10:17.800
We can determine which zoning districts a use is allowed within. We can have certain discretionary review requirements like conditional use permits. We can limit the size and scale of a use in square feet. We can restrict noise

39
00:10:17.800 --> 00:10:33.840
and the location of generators and mechanical equipment. We can determine appropriate site design and compatibility with adjacent uses. Things that we cannot regulate, the size based on the amount of electricity used by a facility,

40
00:10:33.840 --> 00:10:48.880
air emissions, building systems like the type of cooling or type of backup power systems. We can't require compliance with a energy standard that exceeds what the state requires. And we can't levy fees that exceed the

41
00:10:48.880 --> 00:11:07.360
cost of administering and enforcing our rules around that use. Now, let's cover the city's preliminary recommendations. We recommend that data centers require a conditional use permit. This means that each one would be subject to a hearing of the city planning commission, which ensures

42
00:11:07.360 --> 00:11:23.000
public notice and an opportunity for people to provide their feedback and express support or opposition to a proposal. It's important to note, however, that conditional uses are generally allowed. Cities can attach reasonable conditions

43
00:11:23.000 --> 00:11:39.440
of approval that mitigate impacts, but denying a conditional use permit will face a lot of scrutiny from a court that will consider whether the city properly denied a permit. We're recommending that regulation of the size of the use focus specifically on what's called the white space, which

44
00:11:39.440 --> 00:11:56.440
is the area dedicated to IT equipment including server racks, networking gear, and power distribution units. This type of standard would regulate the size of the components of a data center that use a lot of electricity and that create noise. And it would ensure that we're not

45
00:11:56.440 --> 00:12:12.040
penalizing a data center for providing more office spaces, for example. Recall that when the city council adopted a moratorium on data centers, it provided an exemption for facilities in downtown that would have up to 350,000 square feet of total space, including

46
00:12:12.040 --> 00:12:29.520
things like offices. Given that white space within a data center is often roughly half the size of a facility, a 175,000 square foot limit on white space would align with the city council's earlier direction related to this use.

47
00:12:29.520 --> 00:12:45.560
Data centers would be allowed as a conditional use in the two downtown zoning districts shown on the map on the slide, the DT1 and DT2 districts. We're also considering the creation of an overlay district that would allow the city planning commission to consider data centers in some districts outside

48
00:12:45.560 --> 00:13:01.440
of downtown. Those data centers would be required to be smaller than those that would be allowed in downtown. A business or institution would apply to rezone their property to add the overlay district, and the city council would have a lot of discretion to approve or

49
00:13:01.440 --> 00:13:17.640
deny that rezoning request. Unlike a conditional use permit, the city would have pretty broad authority to approve or deny that kind of rezoning application. Recommended standards would require that newly established data centers must be

50
00:13:17.640 --> 00:13:34.720
located within an existing structure. Minor additions would be allowed such as to enclose equipment. We'd would disclosure of information related to expected use of water, electricity, and generators, and a sound attenuation plan. It would require submittal of evidence

51
00:13:34.720 --> 00:13:53.240
that the proposer of a data center has coordinated with Xcel Energy. And we'd provide clarification that where the city requires ground floor active functions, equipment within a data center doesn't comply with those requirements. To safeguard against impacts from noise,

52
00:13:53.240 --> 00:14:10.640
new rules would ensure that server rooms are located at the interior of a building at least 20 ft from an exterior building wall, and at least 100 ft from any residential unit on nearby properties. Data center equipment couldn't be located on the first or second floor.

53
00:14:10.640 --> 00:14:27.520
New data centers could not be the only use of a downtown building, preventing entire buildings from being converted to this use. All equipment would have to be located uh on the roof or enclosed within the building. And just to clarify, we're going to ensure that Minneapolis businesses and

54
00:14:27.520 --> 00:14:44.240
institutions can continue to provide their own data processing needs on their own site. If computers are just providing for the needs of the business on the same property, that won't be considered a data center for the purpose of these standards. To be clear, the city does have noise

55
00:14:44.240 --> 00:15:01.520
regulations in chapter 389 of the code of ordinances. Our goal is to ensure that if data centers are built, we're not creating situations that result in noise violations. The city's health department is currently developing regulations for stationary generators.

56
00:15:01.520 --> 00:15:17.280
The ordinance will likely be adopted at the same time as zoning regulations for data centers. Standards will regulate when generators can be used, such as when testing, during power outages, or during circumstances beyond the control of the operator.

57
00:15:17.280 --> 00:15:32.400
There will likely be supplemental zoning regulations that will govern proximity to adjacent residential dwellings. You might have heard about other communities where public officials have signed non-disclosure agreements that have prevented the public from learning

58
00:15:32.400 --> 00:15:48.200
about the details of proposals in their communities. We want to be clear that the city of Minneapolis will not sign non-disclosure agreements related to data centers or any other project that's subject to our regulatory process.

59
00:15:48.200 --> 00:16:03.840
So far, this project has focused on data centers. The city is also working on standards addressing electric substations, generators, which I mentioned earlier, utility boxes, and battery energy storage systems. Our intent is to draft rules for those

60
00:16:03.840 --> 00:16:20.000
uses that will be included in the same amendment that's addressing data centers. As standards for those other uses are being developed, we wanted to ensure that preliminary recommendations for data centers would be available for a 60-day comment period. Proposed standards for those other uses

61
00:16:20.000 --> 00:16:36.760
I mentioned will follow, and it will also be considered as part of the public hearing. Here's the proposed timeline for considering these new regulations. A public comment period is happening now. You have the ability to submit feedback through the project website.

62
00:16:36.760 --> 00:16:53.160
Recommendations are likely to evolve in response to feedback from the public, from elected officials, and other stakeholders. So, the draft recommendations I have covered in this video represent the current thinking as of mid-August 2026. Our intent is to have the city planning

63
00:16:53.160 --> 00:17:08.920
commission consider recommendations at a public hearing on October 13th. This will be the public's opportunity to provide feedback in a public hearing. And then the planning commission makes an advisory recommendation to the city council.

64
00:17:08.920 --> 00:17:24.520
The city staff's recommendations and the city planning commission's recommendations would then be considered by by city council through the Business, Housing, and Zoning Committee on November 5th. That meeting is open to the public, of course, but again, the public's

65
00:17:24.520 --> 00:17:41.160
opportunity to testify about the ordinance will have been at the City Planning Commission meeting. Then the full City Council would act on November 12th. The mayor will consider the City Council's action, and we expect the publication and effective date of the

66
00:17:41.160 --> 00:17:55.520
ordinance to be November 21st, and that is when the data center moratorium would expire. I hope you found this video to be informative. Thank you for your interest in the topic.