Moratoriums on Data Center Projects in Michigan: Top 5 Issues Facing Owners and Developers

Michigan communities are moving quickly to address data center development, often through moratoriums that halt or slow approvals while new zoning ordinances are drafted and imposed. If you own a potential data center site, or are evaluating a site for a new project, there are several issues you should be monitoring closely during the moratorium period.

1. Does the local government currently have a data center ordinance? If not, they will probably create one during the moratorium period. If they do, they will probably enhance it during the moratorium period. Either way, it’s important to monitor new ordinances or amendments to existing ordinances and to provide input throughout the process.
2. Will the new ordinance change the zoning districts that permit data centers? Many ordinances currently permit uses that sound like and / or look like data centers in agricultural and / or industrial zoning districts. Most of the new ordinances are limiting data centers to industrial districts. If you aren’t vigilant, your property could get down-zoned.
3. Will data centers be special land uses under the amended or new ordinance? Data centers have been in the news more than ever, but they are not a new type of use. In most communities, data centers have been treated as permitted uses in industrial and/or agricultural zoning districts. However, in order to more closely regulate data centers, many new ordinances change data centers from a permitted use to a special land use. As a special land use, the project will typically have to satisfy more onerous development, building and operating requirements.
4. Do you have a vision for a community benefits package? Many data center projects have impacts on surrounding properties. As part of obtaining approvals related to data center projects, owners and developers often propose a package of community benefits. These benefits are typically tailored to the specific project and are often “bundled” into a community benefits agreement, development agreement, as conditions to special land use approvals or as part of a conditional rezoning. The more enticing and inclusive the community benefits are, the higher the probability the project will obtain the local government approvals.
5. Are you being sensitive to the interests of project opponents? Many data center projects draw out passionate public opposition. The opposition is often well-intended but frequently misinformed or is operating based on false assumptions. Even if you disagree with project opponents, it is wise to take time to understand their specific issues, and to make good faith efforts to adjust the project to resolve or mitigate their concerns.

Data center development is no longer just about finding the right site. Success increasingly depends on understanding local politics, anticipating regulatory changes, and building support within the community. The projects that navigate these issues effectively are the ones that move from concept to construction. Honigman's data center team continues to work with clients across the state to navigate these challenges as they emerge.