Data centers are rapidly being built all over the nation to provide computing power that tech companies need to train artificial intelligence.
But a public backlash has sprung up amid concerns over their electricity demands and water use, and there’s apprehension about supporting a technology that is likely to displace human workers.
Now, the Minneapolis City Council is making moves toward putting a moratorium on the establishment or expansion of data centers in the city.
On Thursday the council scheduled a vote on a moratorium for May 21, giving members time to see whether state lawmakers enact statewide regulations.
The council is largely split on the issue along its usual political divide, with more moderate Democrats worried that a moratorium would put the brakes on an emerging market that could help resuscitate downtown commercial property values, which have been hobbled by the rise of remote work.
They point to the Sleep Number building’s sale earlier this year for an eye-catching $235 million, more than eight times the building’s assessed value as of early 2025, while most downtown buildings have been selling at deep discounts. The Sleep Number building has a data center built for AI and cloud-computing companies.
Council Member Elizabeth Shaffer said putting the brakes on all data centers would be a “blunt tool” at a critical time for the city’s economy, with downtown property values falling for the fifth straight year in 2025, shifting more of the property tax burden on homeowners.
A ban would send mixed signals to the market and indicate the council doesn’t support the business community, she said. Just the prospect has already had a cooling effect on companies exploring smaller downtown buildings for data, Shaffer said.
Council Member Michael Rainville said he’s already received three phone calls from people concerned about the effect of such a ban.
“We have to bring our downtowns back, and data centers are gonna be part of it,” he said.
But the more progressive council members said Minneapolis needs to get ahead of this “huge issue” facing the nation, where cities are re-examining their codes and considering regulations.
Council Member Jason Chavez said the city needs to talk about the devastating impact on “environmental justice” and the amount of water data centers consume.
“I think this is a conversation that we need to have,” he said.
A pivotal council member in the debate will be Vice President Jamal Osman, who casts himself as pro-business but otherwise often votes with the council’s left wing on issues. Osman said Minneapolis needs to gather information about data centers in order to make the right decision.
More moderate council members said the kind of data centers that could be located downtown are different from the massive facilities being built in rural areas.
Council Member Robin Wonsley said there are other ways to replace downtown tax revenue that don’t involve “corporate players” that “suck up” the city’s resources. A consultant recently laid out several ways the city could generate new revenue, including an income tax on residents, a real estate transfer tax and a tax on empty homes and businesses.
Another key vote will be Council Member Jamison Whiting, who generally votes with the moderates but has sometimes crossed over to vote with progressives. He said he shares Shaffer and Rainville’s concerns about downtown, but he’s open to looking at a ban.
Council President Elliott Payne said those who see data centers as the savior of downtown seem to be “wishcasting.” He pointed to one proposed data center that some have argued could be the size of lower Manhattan.
The private market might be interested only in smaller-scale data centers that take up a couple of floors of a building, but currently there are no city or state regulations around them, Payne said.
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