As plans for a proposed Google data center near Palo continue to move forward, a divided Palo City Council voted Tuesday night, July 13 to approve the second reading of a data center ordinance for the city – but not before hearing feedback, often heated, from more than two dozen area residents.
The meeting, which spanned nearly three hours and drew about 120 attendees to the Palo Community Center, served several purposes – an outline of the city’s work on the ordinance, insight on the city’s discussions with Google and another opportunity for public input on the process.
In the end, the council voted 4-1 to approve the ordinance’s second reading, with council member Doug Hanover the lone vote in opposition. Mr. Hanover said he wanted more information about the Google proposal and its impact on the community.
The issue arose after Google began negotiations with Linn County to site a new data center on unincorporated land near the Duane Arnold Energy Center. But after the county’s new data center ordinance was approved Feb. 18, the tech company switched gears and began preliminary discussions with Palo officials about annexing the proposed data center site into the city – and under its proposed data center regulations.
Palo mayor Bryan Busch, who led Tuesday’s meeting but doesn’t cast a vote on policy matters, said Tuesday night’s meeting was not a vote on the data center project itself, but solely the second reading of the proposed ordinance, which would create a new exclusive zoning district for data centers.
After the first reading of the ordinance was approved June 1 – despite opposition voiced by dozens of commenters – the council paused to prepare a detailed presentation addressing eight themes gathered from public feedback: Water, energy, traffic, lighting/noise, farmland usage, taxation, infrastructure benefits, and general community input.
Mr. Busch repeatedly stressed the proposed ordinance is a “baseline protections” document, separate from any future development agreement, which would only come after a formal project application is filed. No application has been filed with the city, he said.
The city says it first learned of potential annexation of the proposed data center site the last week of January.
City officials say conversations in 2025 involving Palo were limited to Palo’s role as a municipal utility provider (water/sewer) to a project then still under discussion in unincorporated Linn County, and didn’t involve annexation talks at that time.
Mr. Busch was emphatic that no annexation discussions happened before that January meeting, an account that has been disputed by news outlets citing public records.
“It did not happen,” Mr. Busch said Tuesday. “Point blank period, it did not happen.”
The city then hosted a town hall meeting March 24, roughly six weeks after learning of the potential annexation, and continued gathering input via emails, phone calls, letters, social media, and one-on-one conversations with residents on an ongoing basis.
City staff and council members said Tuesday they had visited data center sites in other Iowa communities, including Altoona, West Des Moines and Waukee, to observe noise, lighting, and traffic firsthand, and to interview local officials and residents about lessons learned. They said they consulted with cities and counties that already have data centers operating, asking what they would do differently.
Council member Eric Van Kerckhove said he spoke with residents of Waukee regarding their Apple data center, who told him their perceptions of the project had changed over time.
“When talking to people about what they felt today versus what they thought five or 10 years ago, they said had we been there five or 10 years ago, the conversation would be totally different,” he said. “The public was not happy about it. But they said Apple fulfilled what they said they were going to do. They gave us the jobs we were hoping for. They bettered our community.”
The council reiterated that passing the ordinance only establishes baseline protections; it does not approve any project and does not guarantee one will happen.
“If you hate data centers and you don’t want that data center around, quite frankly, the best thing that can happen is you get an ordinance in place,” Mr. Busch said. “Having an ordinance in place does not automatically mean a data center comes, and not having an ordinance in place does not mean a data center can’t come.”
Still, several speakers expressed doubts about the council’s process and said they didn’t favor a data center in Palo.
“If you vote yes in the second reading tonight, you’re not securing Palo’s future,” said Melissa Duffield of Cedar Rapids. “You are opening the city up to costly and protracted litigation.”
Wally Taylor of rural Linn County, an attorney and environmental advocate, said he still considered Palo’s data center ordinance inadequate.
“I’m disappointed that after five weeks of research, you’re putting no effort into trying to change the ordinance or make a better ordinance,” Mr. Taylor said. “Your focus seemed to be on trying to convince us all that data centers are great things.”
State senator Charlie McClintock, whose district includes the Palo area, offered a different perspective on data center development, citing the pervasiveness of technology in modern society.
“I applaud you for what you’re doing here,” Mr. McClintock said. “It has to be dealt with, and Palo is going to benefit from that. If your only reason that you don’t want to do this is because you’re against technology, you’re holding on too tight (to the past).”
City officials say Palo is facing two primary options.
Under the first option, Palo would annex the 545-acre sites on which the data center would be built. Under that scenario, Palo would have a direct say in regulations and protections, via the city ordinance and a formal development Agreement.
Palo would also receive full property taxes from the site, as would Linn County and the Cedar Rapids school district.
“We just want to make it clear right now that a developer will pay full taxes,” Mr. Busch said. “Pretty straightforward. Palo is not offering any tax incentives. They will pay full taxes.”
That tax revenue, Mr. Busch said, could allow Palo to lower its own tax levy rate.
Palo receives infrastructure improvements – utility infrastructures, roads, parks, trails and the like – funded by the developer. And Palo would partner with Linn County on permits and inspections, as well as water usage and quality reporting.
Under the second scenario, Palo would choose not to annex the land, and the data center buildings are located in unincorporated Linn County, as first proposed. Palo’s infrastructure would still be used, but the city would not have the opportunity to recover costs for any needed improvements.
Linn County would control all regulation of the site, and Palo would have no say in the matter – similar to a scenario Fairfax is facing, with traffic and infrastructure concerns surrounding the Cedar Rapids data center projects, but no opportunity for input.
“Similar to the (Duane Arnold) solar development, we could have no real say,” Mr. Busch said. “We would receive limited to no financial benefit.”
A third and final reading of the proposed ordinance is set for the council’s meeting July 20 at 6:30 p.m.
