Milwaukee Will Pursue Data Center Moratorium

Data center. (CC0)

Alderwoman Marina Dimitrijevic is pursuing a citywide moratorium on new data centers after a proposed regulatory framework was delayed until at least October.

Dimitrijevic said the temporary ban is needed to prevent developers from submitting proposals before the Common Council can establish rules governing where and how the energy-intensive facilities may be built.

“We’re trying to get ahead of a market that’s moving way faster than we can react and regulate,” Dimitrijevic said in an interview Friday with Urban Milwaukee. “AI is here, and I think it actually has some benefits, but we’ve got to regulate it.”

The Zoning, Neighborhoods & Development Committee will review the proposed regulations for the first time on July 28. But because the revised ordinance has not completed the required public notice process, Dimitrijevic does not expect the committee to take action.

Instead, she said the meeting will serve as an initial public discussion of both the permanent regulations and the proposed moratorium before the files proceed through the required zoning review process.

The alderwoman initially hoped to advance the zoning regulations through the City Plan Commission on July 20. But the proposal was removed from the commission’s agenda after the City Attorney’s Office determined that substantial changes to the ordinance required additional public notice.

The Common Council is now entering its annual August recess, and Dimitrijevic said she does not intend to ask the commission to consider the regulations during the break. The next anticipated commission hearing is Sept. 28.

Both the moratorium and the permanent zoning regulations could ultimately return to the zoning committee on Oct. 6 and advance to the full Common Council on Oct. 13.

Dimitrijevic said she originally sought to move directly to permanent regulations rather than impose a moratorium. But the complexity of changing the zoning code, combined with the possibility of further revisions, prompted her to develop the temporary ban as a backup.

“The regulation was even a lot harder than I imagined,” she said. “I can’t even tell you — I’ve spent hours and hours and hours on this.”

She has publicly pursued the idea since December.

In an email to her council colleagues, Dimitrijevic described the moratorium and zoning ordinance as “two complementary pieces of legislation.”

“It is my intention that the moratorium will end when the regulation is finally adopted, but I had no choice given legal feedback to pursue both in order to protect our neighbors,” she wrote.

The moratorium itself must also go through the city’s zoning review process, according to advice from the City Attorney’s Office. It is expected to be reviewed by the Zoning Code Technical Committee during the August recess, followed by the publication of legal notices Sept. 11 and Sept. 18, a City Plan Commission hearing Sept. 28, committee consideration Oct. 6 and a Common Council vote Oct. 13.

Dimitrijevic said the July 28 committee meeting will provide the first substantial public discussion of the proposals, even though she does not expect the committee to advance either one immediately.

“We just can’t keep not doing anything for months and the public wondering what’s going on,” she said. “We’re still going to do everything by the book and do it the right way, but I need to come out on Tuesday and let the public know.”

The permanent regulations have changed significantly since Dimitrijevic introduced the proposal this spring.

An earlier version would have allowed data centers in all industrial zoning districts, encompassing approximately 2,400 potential sites. The latest proposal, identified as Substitute B, would limit them to properties zoned Industrial Heavy, shrinking the pool to approximately 600 sites.

Dimitrijevic said the change followed conversations with council members and advocacy groups and a review of how industrial zoning is distributed throughout the city. Some aldermanic districts have far more industrial land than others, potentially exposing those neighborhoods to a disproportionate share of data center development.

She said even her Bay View-area district, which includes portions of the Harbor District and Port Milwaukee, ranked near the top of the list under the earlier framework.

The reduction from all industrial districts to only Industrial Heavy properties was substantial enough to trigger new public notice requirements, delaying the City Plan Commission hearing. Dimitrijevic estimated the revised ordinance is approximately “90% there,” but said it still requires additional work and City Attorney review.

The revised proposal would also require data center developments to comply with the city’s Small Business Enterprises and Residents Preference Program regulation, subject to final legal review.

The city’s SBE ordinance generally requires certified Small Business Enterprises to receive contracts representing at least 25% of a city-assisted project’s value. The RPP requirement generally mandates that unemployed or underemployed city residents perform at least 40% of construction work hours.

But the regulations currently only apply to developments receiving $1 million or more as a city subsidy. The data center regulations, if approved by the City Attorney, would apply to all data centers even if unsubsidized.

Data center developers would also be required to hold three community meetings in conjunction with the area’s Common Council member.

The proposed zoning ordinance would establish a tiered approval system based on a facility’s size.

Under the initial framework, data centers of 20,000 square feet or less could be permitted without a legislative hearing if they used closed-loop cooling systems and complied with city noise regulations.

Facilities between 20,001 and 60,000 square feet would require special-use approval from the Board of Zoning Appeals. Developers would need to submit an engineer’s report addressing energy consumption and noise, along with a statement describing how the development would benefit the community.

Facilities larger than 60,000 square feet would be prohibited unless the developer secured a site-specific zoning change, which would require public hearings and approval from the City Plan Commission and Common Council.

Data centers built as accessory uses for another permitted operation, such as a company constructing computing facilities inside its own office or industrial complex, would be treated differently.

Milwaukee’s zoning code does not currently define or specifically regulate data centers.

Dimitrijevic began developing the framework last year as massive artificial intelligence-related projects were being proposed in smaller Wisconsin communities. She has repeatedly said the legislation is not intended to block technology investment, but to create public oversight before a proposal arrives.

“I want to stress that my intention has never been to stifle innovation or economic development,” she wrote to her colleagues. “Rather, it is to strike a balance between these and the legitimate needs and concerns of all our residents.”

The proposal comes shortly after a contentious debate over the redevelopment of the vacant Walmart at Midtown Center. Opposition to the project centered heavily on a proposed 19,000-square-foot “computer research facility” that opponents characterized as a data center.

The developer ultimately removed the facility from the proposal. The proposed data center regulations would not have applied to it because the development application had already been submitted and the proposal was under 20,000 square feet.

The Midtown controversy nonetheless demonstrated how quickly data center concerns could become a Milwaukee issue. The debate included questions about energy use, environmental effects, noise, transparency and whether the facility would provide enough permanent jobs or other benefits to justify its inclusion in the larger redevelopment.

Dimitrijevic compared the effort to earlier city attempts to regulate vape shops, short-term rentals and shared scooters after those industries had already expanded.

“What’s the outlier in those examples is actually the data center stuff,” she said. “I’m trying to get ahead of it.”

The city imposed a simpler moratorium on new vape shops in 2023 while officials drafted permanent zoning regulations. Changes in case law make that approach vulnerable to a legal challenge, requiring the data center moratorium to be enacted through the more complicated zoning process.

She acknowledged that the moratorium could arrive at approximately the same time as the permanent regulations. But she said it remains necessary in case the council, commission or mayor seeks additional changes that further delay the final ordinance.

“My goal is to do the regulation,” she said. “But I had to have a backup plan.”

The regulation proposal is currently cosponsored by Alex Brower, Russell W. Stamper, II, DiAndre Jackson, Peter Burgelis, Robert Bauman, Mark Chambers, Jr. and Sharlen P. Moore

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