Minneapolis Mayor Jacob Frey says data centers should be regulated and not serve as sole use of a property

The data center debate is not new to the Land of 10,000 Lakes and Minneapolis has several buildings that house them already. 

Several months ago, Minneapolis City Council members approved a five-month pause on new data center development, giving city staff time to study regulations and examine concerns about environmental impacts, energy use and public safety.

The moratorium does not apply to smaller data centers located downtown that are less than 350,000 square feet.

As more developers look at investing, the burning question becomes: What should the rules look like? 

The old Star Tribune printing plant is a big part of that conversation. Legacy Investing, based in Arlington, Virginia, which also converted the Sleep Number building into a data center, agreed to purchase the 13-acre printing site.

"The thing I'm thinking about is the people in that neighborhood, and how do they most benefit from a potential development," said Minneapolis Mayor Jacob Frey. 

Frey says there is an opportunity if done right. The comments Friday come as the city deals with a multimillion-dollar budget shortfall, while its tax base isn't what it once was.

"I believe they need to be regulated. We need to make sure that we're ensuring livability and health and safety for our communities," he said. "Simultaneously, we should work to make sure that they can help drive down the taxes for everybody else."

Frey says one of the key goals is making sure data center buildings do not become the sole use of the property, but rather a space the community can enjoy, such as a restaurant or event space. 

"It generates tax revenue that helps drive down taxes for everybody else. But two, it enables the owner to do something awesome that helps the community," Frey stated. 

Under the plan presented Tuesday to a Minneapolis City Council committee, the proposed regulations include:

• Prohibiting the construction of new buildings solely for use as data centers. 
• Requiring a conditional use permit for data centers.
• Requiring data centers to report their projected energy and water use.
• Prohibiting data centers established this year from being the sole use on a property.

Simply put, the city wants data centers to be part of a larger multiuse property. 

"Filled buildings with a number of different uses, however. That's a recipe for success," Frey said. 

For residents near the printing plant, the debate is about more than what happens to a vacant building. After listening to the developers explain the project at a community meeting Wednesday, they walked away confused, fed up and not sold. 

Jason Wittenberg, the Minneapolis city planning manager, points to the high vacancy rates in office buildings and says they don't lend themselves to conversion, such as housing. 

"The City is trying to think broadly about ways that property owners can repurpose underutilized spaces," Wittenberg said in a written statement. "In addition to the potential for increased valuation and increased property tax collection noted above, electricity users pay a franchise fee that goes to the City's general fund."

The City Council is set to vote on data center regulations in November, with a public hearing earmarked for mid-October.