The Palo City Council advanced a new data center zoning ordinance Monday night, after facing pushback from residents with concerns over water usage, traffic impacts and pollution during the city’s first and only public hearing on the draft.
Monday night’s meeting was the first of three readings on the proposal, which the city developed after Google announced earlier this year it would build an approximately 545 acre data center on land annexed by the city, rather than in unincorporated Linn County.
Around 150 residents of Palo and surrounding communities attended the meeting at Palo’s Community Center. While residents criticized the city for not including stronger oversight over water usage, like Linn County’s ordinance, many residents also asked the city to place a moratorium on data centers. Several others asked the city to table the ordinance completely.
Palo’s ordinance applies to both large and small data centers, unlike Linn County’s recently developed ordinance, which is specific to large-scale data centers.
Water use and traffic among top concerns
Inside the packed gym, residents raised concerns over how data center water usage could affect Palo and surrounding communities. Many urged the city to adopt the same water study requirement as Linn County’s ordinance.
Public records show the proposed data center could draw 14 million gallons of water each day from the nearby Cedar River.
The county’s ordinance requires developers to submit a water study to demonstrate there’s sufficient water for the data center without causing “undue adverse impacts” on existing users and current water resources.
In negotiations with the county, Google had agreed to pay up to $500,000 for a water study.
“How do we prove that all of this water usage is the reason our wells go dry if we don't do any water surveys ahead of time?” said Jennifer Leaven, who lives outside of Palo city limits. “Being that you guys are probably on Palo water, you probably don't have to worry about your well going dry, but for those of us that are in unincorporated Linn County, it's a big concern for us.”
Palo’s ordinance also doesn’t require the developer to enter into a water use agreement with the county, which is aimed at addressing water use monitoring, reporting and compliance measures.
Instead, the city uses the Iowa Department of Natural Resource's (DNR) approval of water permits “as demonstration that there is a sufficient reliable water supply” to meet data center demands without having negative impacts on users and existing water resources.
Developers would have to submit water permit application materials to the city ahead of time so the city could review and comment during the DNR public comment period. Developers would also have to send the same monthly and annual reports they send to the DNR to the city.
But many residents expressed skepticism around whether the DNR would enforce usage limits on data centers during periods of drought.
“Why are we leaving everything up to somebody else?” Palo resident Larry Clinton said. “Why don't we decide what we want instead of [the] DNR or the state or anything else? We can tell them what we want.”
Mayor Bryan Busch told residents at the meeting that the city council omitted the water use study due to the ordinance encompassing both large and small data centers.
Speaking to IPR News, Busch said the city’s language in the ordinance acknowledges the Iowa DNR’s “exclusive” legal authority to regulate all water usage. Busch said a water study, among other project-specific regulations, could be incorporated into a general development agreement, which would be developed once the city receives a project application.
Jo Ann Beer, mayor of nearby Fairfax, which is near two data centers under construction, said her town has experienced major traffic issues with thousands of construction workers circulating in and out of the town. She urged council members to put in strong regulations around traffic and road use.
“I don't think I go a single hour anymore without receiving a resident complaint about traffic,” she said. “It is a huge, huge deal, and we're highly concerned about water, so I hope that you will consider those.”
Residents also raised concerns Monday night of how light and noise pollution could affect communities and wildlife around Palo. Palo resident Bill Zeller said he worries if the town’s infrastructure can handle the increased strain a data center and additional workers would bring.
“I go to every council meeting, and between the sewer problems we got and the water problems we got, and all the mowing and everything, I mean, we have a hard time handling that every month,” he said. “I just ... I don't know, if we can handle something this big.”
Supporters point to energy cost reductions, jobs and property tax revenue
Terry Sullivan, a representative from Corridor Energy Cooperative, spoke in favor of the ordinance. He said the data center will fall within the cooperative’s coverage territory, yielding higher revenue for the company and surrounding energy providers that could help lessen future rate increases for residents and keep energy bills low.
A city employee also read written public comments submitted by West Des Moines Mayor Russ Trimble and Altoona Mayor Dean O’Connor, who both have data centers in their communities. The mayors said the data centers have significantly expanded their property tax base, helping to fund infrastructure and school projects and reducing pressure on taxpayers. They also pointed to new jobs at the data centers as a benefit.
O’Connor stated that data center development has not burdened the Altoona water system.
“Microsoft is a great corporate citizen, who is has invested in the community, who cares about the city and the people who live here and who cares deeply about the environment,” Trimble stated.
Palo mayor open to working with Linn County
Busch said the city’s decision to work directly with Google stems from frustrations he heard from residents over the development over an approximately 1100 acre solar facility near the town. He believes the city can have more direct control over the project and reap greater financial benefits, like expanding their property tax base.
“By all indications we believe that the [data center] project would still move forward on that same land, so it would still sit directly outside of Palo city limits, and we would still be the direct, most directly impacted community in terms of all sort of the side effects you think about — traffic, and all those sorts of things,” he said. “We just wouldn't have any direct financial upside from it.”
The city’s draft also requires a developer to enter into an economic development agreement with the city if the developer requests incentives. However, the city could still have an economic development agreement with a developer even if incentives are not requested, Busch said.
Earlier this year, Linn County Planning and Development Director Charlie Nichols proposed a discussion framework to Google to have the project permitted in the county and then annexed into the city along an agreed-upon timeline. Nichols said no traction has been gained on that framework, but the county is open to it if the city is interested in pursuing that direction.
“It's their city, it's how they want to develop, but if they do want to have Linn County be part of discussions, a part of plans, yes, the door is open,” Nichols told IPR News. “We would like to support Palo however we can.”
Busch said he’d be open into bringing the county in on some negotiations.
“There's certain pieces that it might make sense to bring Linn County and have those conversations, and there's other ones that might not,” he said. “But ultimately, I always look at it, Palo's in Linn County, so it's not like two separate entities.”
The city’s second reading of the ordinance is scheduled for June 15 and the third reading is scheduled for June 22. The city will not hold a public hearing on the ordinances during the readings, but attendees will be able to speak during the public comment portion of the meeting, Busch said.
