Data center developer accuses Gibraltar city officials of unlawfully imposing 1-year moratorium

A data center developer is suing the city of Gibraltar, Michigan, alleging that officials unlawfully imposed a one-year moratorium on the project. The developer is now seeking a court order to approve the project at a former steel mill site.

Raeden Acquisitions, along with CAL Realty LLC, filed the lawsuit on Aug. 17 in the U.S. District Court for the Eastern District of Michigan. The lawsuit claims that the proposed data center at the former McLouth steel mill site was permitted under the city's zoning ordinance, despite officials' alleged refusal to consider the site plan.

CBS News Detroit reached out to the city of Gibraltar for comment and is awaiting a response.

According to the lawsuit, Raeden Acquisitions entered a purchasing agreement with CAL Realty LLC, which owns the property on West Jefferson Avenue. The companies claim that Raeden submitted an application to the city on Feb. 17, 2026, and that the city responded on March 2, seeking additional details, such as dimensions, landscaping, soil information and topographic and wetland mapping.

A week later, on March 9, the city council unanimously approved the moratorium at its regular meeting. Before the vote, some residents expressed concerns about the environmental impact, specifically on water quality.

The moratorium prohibited the establishment and use of data centers pending further study and enactment of city regulations. The moratorium must be terminated after 12 months unless the council adopts a resolution to extend it. Under the moratorium, a waiver can be granted to an applicant if the council determines the waiver would not impact the health, safety and welfare of Gibraltar and is consistent with the city's zoning ordinance.

In the meeting, Council member Kathy LaPointe said she wanted to give the city's planning commission "sufficient time to do their due diligence and not get pressured into making a fast-track decision to get this off and running."

However, the lawsuit claims that the "timing, text, and surrounding circumstances establish that the Moratorium was adopted specifically to suspend or defeat review of Plaintiffs' pending Application."

"The Moratorium purports to amend the zoning ordinance by prohibiting the 'establishment and use' of data centers within the City, thereby designating that no zoning district is appropriate for such use," read the lawsuit. "There is nothing in the City's Charter that requires or permits zoning ordinance amendment by resolution."

"The Moratorium's twelve-month delay on permitting and approval is in direct contravention of the City Ordinance," the lawsuit added.

Under the Michigan Zoning Enabling Act, local zoning ordinances "shall not have the effect of totally prohibiting the establishment of a land use within a local unit of government," unless the use is deemed unlawful.

According to the city, the site is currently zoned as M-2 (medium industrial). Under the Gibraltar Ordinance, an M-2 district "is designed to accommodate industrial uses engaged in the basic processing and manufacturing of materials or products predominantly from extracted or raw materials, or a use engaged in storage or manufacturing processes that potentially involve hazardous materials or commonly recognized offensive conditions."

The M-2 district can permit uses under M-1 (light industrial) zoning, which include "research and development facilities, technical centers and laboratories."

CAL Realty and Raeden Acquisitions argue that the data center is a technical center and is within the right to be constructed. The companies say they planned to reuse the existing buildings, according to the lawsuit.

"The Moratorium is not a neutral, administrative internal scheduling measure. By its terms and as applied, it is a blanket prohibition on consideration and approval of a data center land use, regardless of whether the Application complies with every existing objective standard," read the lawsuit.

According to the lawsuit, the companies submitted an updated site plan to the city on May 27, addressing the city's March 2 inquiries.

The lawsuit claims that Raeden received a letter from the city in July stating that it would not proceed with processing its February application until the moratorium ended.

The topic of data centers has been widely discussed in Southeast Michigan as many residents push back against them. 

In Saline Township, the developer of one of the most controversial data centers purchased a neighboring golf course. Meanwhile, the University of Michigan chose a 144-acre site in Ypsilanti Township to build a data center and research facility in collaboration with Los Alamos National Laboratory.