With the controversy surrounding hyperscale data centers growing more intense, the city of Madison and Dane County have imposed moratoriums on the consideration of new data centers while they craft new zoning code regulations to manage their potential effects.
The two moratoriums aren’t exactly alike, but both buy several months of time for the respective units of government to respond to how the data center industry is evolving. The break also gives the municipalities time to learn from other communities that approved large data centers.
While there could be hiccups in the process as 2026 unfolds, both the city and county expect to have updated land-use codes in 2027, with the city’s coming as soon as December 2026.
Madison moratorium
On June 3, the city of Madison held a virtual public information meeting on its data center moratorium, imposed in January. Christie Baumel, deputy mayor for housing and sustainability, and other city officials fielded questions from the public and indicated there would be more opportunities for public input.
At the moment, the city’s zoning code does not include specific standards for data centers, and its zoning for telecommunications centers is outdated for this purpose.
While the moratorium covers data centers of varying sizes, much of the attention focused on regulating the hyperscale facilities that can strain energy and water use and air quality.
“We realize our regulations don’t reflect current best practices and how this industry is evolving,” Baumel said. “We need time to update our code to make sure we’re managing the potential impacts the best we can.”
City staffers said most of the available land that would be suitable for hyperscale facilities is located on Madison’s eastern periphery.
They also said community benefit agreements negotiated with data center operators come outside the context of land-use planning.
The city moratorium only applies to data centers that are the principal or primary use of the property. It does not apply to data centers or telecommunications centers that serve a principal or primary use allowed on a property, such as a research lab.
City agencies, including the Office of the City Attorney and the Department of Planning, Community and Economic Development, are researching possible best practices and safeguards, including a definition of data centers.
Baumel cautioned that the city does not regulate energy or water usage, but in terms of land use, it can define a use, determine which uses are allowed, and establish the parameters of approval for that use. That could include building design, size and height and lot size.
Asked what areas of the city would be suitable for a hyperscale data center, Meagan Tuttle, city planning division director, said there are areas on the city’s periphery that are large enough, but she said they would need access to high-capacity utilities.
“Certainly, when we start talking about the potential scale of the hyperscale data centers, the land area we would expect to accommodate that becomes pretty limited because of our existing growth patterns or the ways that we have already planned for future growth and expansion,” Tuttle said.
In its research, Tuttle said the city sees places, particularly along the eastern periphery of the city, where somebody might be able to assemble a number of pieces of property to create a space big enough for a hyperscale data center. “As we’ve been doing our research, we know that we have more of that capacity service on the east side of the city,” Tuttle said.
Community benefits
City officials also were asked about negotiating community benefit agreements with data center operators, and they said the city can address jobs or economic benefits through incentive programs, but they are not a requirement the city can regulate around.
Tuttle said in other parts of Wisconsin, data center operators have worked with local municipalities in the creation of tax increment districts or TIDS, specific geographic areas created to fund economic development and infrastructure improvements.
“We also know that in some cases, in one case in particular — a data center that does not seem to be moving forward — some of those conversations have been linked to things like annexation agreements, so actual discussions around property coming into the city,” Tuttle said.
Proposed zoning code changes typically are reviewed by the city Plan Commission, which includes an opportunity for public comment once a change is formally drafted and introduced.
The process could include referrals to additional committees, providing additional opportunities for public input.
“We’re hoping to introduce it into our official legislative process in September or October, where it would be referred to committees for more consideration, discussion, public input opportunities and then back to the (City) Council for their final action, probably in December,” Baumel said.
Dane County’s proposal
The Dane County Board of Supervisors on June 4 passed a resolution to impose an 18-month data center moratorium and it was approved on June 8 by County Executive Melissa Agard.
The moratorium prevents the processing and issuance of zoning permits for new hyperscale data centers in order to allow the County Board’s Advisory Committee on Data Centers time to research the environmental, utility and land-use effects of large-scale facilities.
The moratorium applies only to hyperscale data centers with at least 5,000 servers and 10,000 square feet of space.
It would only apply to towns subject to county zoning, not to municipalities that have adopted their own codes.
The data center advisory committee is made up of 11 members, including County Board Chairman Patrick Miles, municipal representatives and environmental and energy experts.
In a May 27 interview with In Business Madison, Miles said the county needs more time to consider amendments to its zoning code based on the information gleaned from the advisory committee’s work.
Miles made it clear that the resolution acted on at the committee level applies to hyperscale data centers, not to an enterprise operation such Epic’s or another business that needs to develop a smaller data center for its own needs.
“The other thing is that where the county has jurisdiction in a moratorium like this, it would only be to those 26 towns that are subject to county zoning,” he said. “There are six towns that have opted out of county zoning and adopted their own zoning codes.
“For those communities, this moratorium wouldn’t apply to them, but it is my hope that they would see this as a model for them to follow,” he said.
Pointing to a Feb. 5 report from the Brookings Institution, Miles said there is some concern that companies that have proposed data centers have made exaggerated assertions about their long-term economic benefits.
“Promises of that haven’t always come to bear,” he said, “so we’ll be looking at that information as well.”
Miles said the county’s study will look at some of the mitigating steps, including community benefit agreements, communities could take to make large data centers a win-win proposition.
“We’re looking at the risks and barriers to such projects and whether or not there are tools, whether they be cooperative agreements of some sort that provide some measure of expectation for promises to be kept,” he said.
According to the Brookings Institution report, stiffer competition among data center developers for limited land and harder-to-win approvals are giving local regions more leverage in community benefit negotiations.
The report, titled “Turning the Data Center Boom Into Long-Term Local Prosperity,” said the standard model of data center siting — based in part on fraught battles over electricity and questionable long-term economic benefits — may be giving way to an alternative model of at least partially shared economic gains for host regions.
In doing so, cities are beginning to realize that their land, infrastructure, water and electricity are valuable and potentially part of grand bargains that deliver high-value economic development to the regions that provide them.
The report cited Microsoft’s data center in Mount Pleasant as a model for local cooperation in driving long-term development goals.
That community has been receptive to Microsoft’s data center campus, in part because of the company’s new Community First AI Development Initiative, which was borne out of the concerns and questions the community fielded.
