A halt on the construction of data centers in Minneapolis took effect in July after the Minneapolis City Council discussed the need for more time to understand the facilities’ potential environmental impacts.

The Council approved the halt through November by an 8-5 vote in May. Members said the halt allows time to study the environmental impacts of data centers and plan their development more conscientiously. 

However, Council members not in favor of the halt said it will result in reduced tax revenue and may drive away businesses willing to invest in downtown Minneapolis.

Data centers are not new to the Minneapolis area, but community concerns have grown in recent months, President of Minnesota Building and Construction Trades Council Dan McConnell said.

“Data centers have been around for decades,” McConnell said. “They’re not new. There just seems to all of a sudden be this hysteria around data centers.”

Celeste Robinson, policy aide to Minneapolis Council member Robin Wonsley, said the city should not rush the process because of the potential environmental trade-offs compared with the promised economic benefits. She said the halt could be extended to allow a full 12 months of analysis. 

Robinson said the Council’s halt on data centers allows for a more thorough evaluation of their impacts.

“I think that there’s a misconception that the City Council being deliberative and taking the time to do it right. I think that there’s been a portrayal that that’s somehow a bad thing,” Robinson said.

Robinson said, although data centers are often seen as an investment, there is no evidence the developments generate the economic benefits for communities that supporters claim they do. She said the Council wants to determine what resources they would potentially take from the city. 

“It is corporations who see land, fresh clean water, and electric grids that they can use for their profit, and that those profits get moved out of state to shareholders,” Robinson said. “They are not reinvested in our community, and so a lot of the rhetoric around data centers has really been about unverified claims around them being a source of investment.”

The American Federation of Labor and Congress of Industrial Organizations’ website claims that data centers are a staple for the modern job market and help to create more jobs, but labor protections for workers and regulations to protect surrounding communities are needed.

Resolution 7, a plan created by the AFL and CIO, outlines labor protections for data center employees and regulations aimed to protect surrounding communities. The plan calls for legislation that would require data centers to conserve water and energy. It seeks transparency from data center operators, union labor agreements and policies requiring data center operators to pay their share of energy and water costs. 

In recent years, a lack of development in Minneapolis has seen a decline in commercial property value, leaving a shortfall of about $50 million in expected commercial property tax to fall onto the shoulders of residents, according to the Minneapolis Times. To help offset that shortfall and alleviate the burden that was placed on residents, Minneapolis must find new sources of revenue, Council member Elizabeth Shaffer said. 

Some believe data centers, often being large-scale commercial developments, can relieve these financial pressures. Shaffer said the data center located in the Sleep Number headquarters in downtown Minneapolis has had a positive financial impact on the city.

“The Sleep Number building increased its valuation to eight times what it was a year ago because of a data center,” Shaffer said. “That helps relieve the property tax burden that residents and apartment owners have been feeling.”

When property values increase, property tax revenue also increases, helping Minneapolis generate revenue and address its estimated $50 million deficit, Shaffer said. 

Robinson said data centers are not the only way for Minneapolis to generate revenue within the city. 

“Council member Wonsley has been looking at how do we tax the rich, how do we put fees on real estate transfers for extremely high-value real estate,” Robinson said. “There are so many things that the city council can be doing to bring in new revenue to shift the property tax burden off of working-class people, that is not related to letting big tech corporations build data centers.”