PALO — Dozens of area residents crammed into standing-room-only council chambers Monday at Palo City Hall to hear the third and final reading of the city’s new data center ordinance.
City Council members ultimately approved the ordinance on a 4-1 vote with member Doug Hanover dissenting. The code broadly outlines where and how data centers can be built within city limits, although specific projects could face additional regulations on a case-by-case basis.
“This ordinance gives Palo the ability to set the terms, protect our community and ensure that any development, if it moves forward, does so under rules written by Palo for Palo,” council member Eric Van Kerckhove said.
The code largely mirrors the Linn County ordinance adopted earlier this year to regulate data center development but with several key differences, such as more deference on the city’s part to the Iowa Department of Natural Resources related to evaluation of potential water-use impacts.
At the same time the Palo council was meeting Monday, the Linn County Planning and Zoning Commission discussed a proposed option where a data center could be built in the county as long as it was connected to a nuclear power plant.
County Planning and Development Director Charlie Nichols noted it would apply only to a limited area given that Duane Arnold Energy Center, just outside of Palo, is the only nuclear generating site in the county.
In Palo, the ordinance, as approved, requires the submission of a major site plan with a description of the project and its layout, the timeline and an estimated number of jobs the project would create. Should the project require any upgrades to city infrastructure, the developer would cover all associated costs.
While there are no active applications on the table, tech giant Google has expressed interest in having land from nearby unincorporated Linn County annexed into Palo for data center development.
Both the project and related ordinance have received considerable public pushback related to residents’ concerns about impacts from hyperscale data center development on the local electric grid and water system.
Crowds of area residents have shown up to all three readings of the city’s ordinance with the majority opposed to data center development, contributing to hours of public comment on the matter.
“It appears to us that you’re prioritizing the acquisition of this project over addressing safety concerns,” Brenda Lane, of rural Palo, told council members Monday. “I implore you to strengthen this ordinance, as other towns have done, and ensure that any future developer is held accountable before the situation becomes irreversible.”
Multiple council members stress that they hear residents’ concerns but believe that project-specific questions can be better addressed later via a well-tailored development agreement, rather than by a broader ordinance.
Such an agreement remains strictly hypothetical, however, unless or until Google formally submits its request for annexation. On Monday, Palo Mayor Bryan Busch told The Gazette that Google has not provided the city with an anticipated timeline for that process.
Should Google not seek annexation but opt to move forward with the project, it would need to seek approval from Linn County — which this month implemented an 18-month moratorium for data center developments in unincorporated areas.
But it’s possible the project could move forward in the county under a proposed change that would allow data centers to be built so long as they are attached to a nuclear power generating site.
The data center moratorium applies to a portion of county zoning code that regulates data centers, but the change would allow data centers powered by nuclear projects to be constructed during the moratorium by adjusting the county nuclear zoning code.
The proposed Google site sits near the Duane Arnold Energy Center where nuclear plant owner NextEra Energy intends to restart operations by early 2029, pending regulatory approval.
Already Google has agreed to a 25-year contract with NextEra to purchase energy from the plant to assist in powering its growing fleet of data centers and the artificial intelligence tools they power.
The Linn County Planning and Zoning Commission discussed that option Monday.
The key question, said Nichols, the county planning and development director, was whether the county would be willing to consider letting a data center build during the moratorium if it would enable the construction or restart of a nuclear energy plant.
“Do data centers that are supporting nuclear deserve extra consideration? Is it important enough to bring those forward before the moratorium?” Nichols said.
Nichols said the discussion of the proposed change was intended to give the commission and the public some context and solicit feedback that county staff could use when bringing proposed changes to the commission and the Board of Supervisors in future meetings.
"So the goal tonight is to start taking public comment on this but not to have any draft ordinance language to discuss,” Nichols said. “It's still too early on in the process to do that."