Smart Cities Dive Trendline on Energy Codes and Building Performance Standards

Climate Mayors CEO Kate Wright began to notice data centers popping up in conversations among mayors last summer, as AI’s rapid growth accelerated their size and the scale of their expansion. They were a hot topic during New York Climate Week and again when mayors congregated in Brazil for the United Nations Climate Change Conference, Wright said.

By this fall, the growth of hyperscalers — large-scale data centers that deliver massive amounts of storage and computing power — was changing the tenor of those conversations from concern to alarm. “We started to see a different level of impact in communities, and a lot of our cities had land-use regulations and a regulatory environment that was anticipating the data centers of the past,” Wright said. “The pace of change within the industry is really quite shocking and staggering in terms of how large these facilities are getting.”

Climate Mayors is responding to mayors’ concerns with a new report, “Data Centers and the Climate Landscape: An Actionable Resource for US Mayors,” developed with Bloomberg Associates. Intended to catalyze peer learning, support regional cooperation and advance strategies that support community sustainability and affordability, the report “focuses on how cities can influence data center development outcomes, even when authority is limited or shared with states, utilities, or regional bodies,” its executive summary states. 

“Mayors often have a lot more formal and informal levers that they can use to shape development,” said Adam Freed, a principal with Bloomberg Associates. “They’re not necessarily passive actors watching this change happen in their communities. If they’re proactive, they can really help shape what this looks like and what those impacts are within their communities.”

The report focuses on four areas where cities can negotiate data center development to reinforce climate, energy and community priorities.

1. Where and how data centers are built

Cities can guide siting, design and mitigation measures and ensure projects align with housing plans, industrial strategies and land-use goals through zoning, permitting, site plan review and conditional approvals, according to the report. 

“The primary tool that cities have is their land-use authority,” Wright said. “They can decide where data centers are developed if they’re being proposed within a municipality, and they can dictate the design approach as well.”

Mayors can take measures such as mandating that data center developers plant trees or include murals on their properties, Wright said, so “they end up looking like a resource or an asset for the community.” They can also prohibit them near schools to reduce children’s exposure to noise and pollution.

Wright points to Atlanta as a model for creating zoning and overlay districts that prioritize where it makes sense to allow data centers. Atlanta prohibits data centers within the city’s Beltline district to conserve trails and green space as well as land for housing, she said.

2. Electricity costs and grid reliability

Mayors’ ability to influence data centers’ energy use and impact on rates and infrastructure is determined by whether they have municipal or investor-owned utilities, Wright said. But in both cases, there are “creative ways” cities can partner with data centers “to ensure you’re not seeing that oversized impact to your utility and to prices.”

Cities requiring data centers to use clean energy is one example, she said. Microsoft recently signed a power purchase agreement to build 475 megawatts of new utility-scale solar in Michigan, Missouri and Illinois, for example. Wright said this is “a great example of how we do this in a way that is aligned with climate goals and not as impactful to our resources.”

3. Water use, air quality and noise

To mitigate data centers’ impact on water supply and the effects of backup generation and cooling equipment on local air quality and sound levels, cities can regulate water use, mandate monitoring and reporting, and adopt enforceable standards to limit cumulative impacts and protect public health, the report states. 

Cities can pursue levers such as energy and water-use disclosures and noise decibel limits, Wright said. The report also recommends prohibiting on-site fossil fuel generation for routine operations, restricting the use of diesel generators for backup power and updating zoning codes to increase fines for noise violations. 

4. Local economic value

“One of the things that mayors are grappling with is the potential economic benefits of data centers, and we want to make sure they’re understanding how real this is in terms of jobs created and also feel empowered to enter into community benefits agreements that can ensure that … they’re getting benefits that make it worthwhile for them,” Wright said.

Labor agreements and tax-increment financing on revenue generated by data centers can also be useful, Wright said. She pointed again to Atlanta, which is capturing revenue generated from data centers in designated districts to fund infrastructure improvements, park and street upgrades, and housing. Henrico County, Virginia, is funneling a 550% tax increase on data center equipment (from 40 cents to $2.60 per $100 of assessed value) into housing, she said.

Data centers create “an enormous amount of value,” and provide services for industries like banking and health care in addition to powering AI, Freed said. Banning or putting moratoriums on them is not the right move, he added. “Figuring out how you can shape their development in a way that meets local priorities is a very important thing to do.”