As expected, the Palo City Council approved the third and final reading Monday night, July 20 of an ordinance establishing a new zoning classification for data centers – but local residents continued to push back, arguing that the new ordinance doesn’t do enough to protect the city’s interests and will be difficult to enforce.
The ordinance’s final reading, which was approved by the council on a 4-1 vote, amends Palo’s zoning code by creating a new exclusive use data center zoning district. It establishes baseline development standards for data center construction anywhere within Palo city limits.
Among other topics, it addresses topics such as setbacks from property lines, homes and public places; required application materials for potential data center developers; and impacts from noise and traffic. It also addresses data center water usage, though it defers regulation to the Iowa Department of Natural Resources and other authorities.
The new ordinance comes as Google continues to evaluate a proposed data center in the Palo area.
Google initially began negotiations with Linn County to site a proposed data center on unincorporated land near the Duane Arnold Energy Center, as regulators continue to evaluate the plant’s potential restart.
Linn County spent roughly seven months developing a data center ordinance in consultation with Google, which supervisors have called one of the most comprehensive in Iowa. Among its provisions, the ordinance, approved Feb, 18, would have required Google to fund a $500,000 regional water balance study.
On Feb. 26, county staff told Google the board was willing to formally accept Google’s economic terms — but that same day, Google informed the county it would instead pursue annexation of the proposed data center site into the Palo city limits. Google told the county it was “focusing on the annexation process with the City of Palo” because it believed that path “best prioritizes our long-term investment and the region’s economic benefits.”
Palo officials then began developing a data center ordinance, since none previously existed for the city.
Officials have repeatedly said the ordinance represents Palo’s opportunity to control the terms of any eventual project, rather than ceding that authority to Linn County.
“If the project were located in Linn County, Palo would not be in charge of the ordinance,” council member Eric Van Kerckhove said Monday night before the council’s vote. “We would not be in charge of the development agreement, and we would not be in charge of any economic development agreement. We would be a stakeholder, but not the final decision maker. Right now, we have an opportunity to be in the lead. Opportunities like this do not come along often for small communities like Palo, and they do not come twice.”
Public speakers at Monday night’s meeting were less supportive, with the exception of Barbra Solberg, senior vice president of public policy and partnerships for the Cedar Rapids Metro Economic Alliance, who said the CRMEA supports the ordinance because it provides a clear and predictable framework for responsible development, while allowing Palo to compete for transformational private investment.
She also tied the project directly to the proposed restart of the Duane Arnold Energy Center nuclear restart, which would bring hundreds of high-quality jobs and a strengthened regional energy future.
“Communities that plan for the future are the ones that attract opportunity,” Ms. Solberg said.
As they have at previous meetings, several other residents spoke strongly against the ordinance Monday night.
“What measures will be implemented should major corporations such as Google choose to not comply with your regulations?” asked Brenda Lane of rural Palo. “Such entities are often undeterred by financial penalties. What is your contingency plan in this scenario? … I implore you to strengthen the ordinance and ensure that any future developer is held accountable before the situation becomes irreversible.”
Shelly Jacobus of Palo urged the council to slow down and prioritize residents over the proposed project.
“I’m here to ask that you please put Palo and its residents in front of the almighty dollar,” Ms. Jacobus said. “We have one shot at this in one ordinance, and it needs to be solid. This ordinance needs more time and a lot more loopholes closed … there’s not an urgency. Google’s not going anywhere. They’ve invested too much money to bringing the Duane Arnold Energy Plant back online.”
Holding a sign asking that the council “put AI last and residents first,” Ms. Jacobus requested that the council consider a six-month moratorium on specific data center proposals.
“I respectfully plead that you tap the brakes and make the ordinance a strong one,” she said. “You can make that happen.”
Another Palo resident criticized the council for not incorporating public feedback on the ordinance between meetings.
“It’s obvious that you didn’t listen or take into account our interest or concerns,” she said. “You didn’t change that ordinance at all in between those meetings.”
And Erin Jacobson of Palo also said she felt residents haven’t been heard throughout the process, and said she planned to file a petition for judicial review following Monday’s vote.
While not specifically endorsing the proposed Google data center project, council member Taylor Burgin said residents’ comments “have not fallen on deaf ears.”
“I’ve been trying to shoot holes through this thing,” he said. “I’m not necessarily pro data center. If it was a vote as simple as maybe yes or no, it might be a different conversation. But I truly feel like, in the best interest of Palo, that’s who I’m trying to represent here … I feel like I’m not necessarily supporting the project 100%, but at the same time, I do support the ordinance, and I do support the nuclear and all the things that this project brings along with it.”
Council member Jen Welton agreed, saying that she felt that the concerns expressed by residents would be best addressed during negotiation of a formal development agreement, should a Google proposal be formally submitted.
Council member Doug Hanover cast the lone vote against the ordinance, but didn’t provide a specific reason for his opposition.
Mayor Bryan Busch, who doesn’t have a vote on the council, said he supported the nature of deliberations on the proposal, from both supporters and detractors.
“I very much respect the process and the input from everyone,” he said. “I hope that people are proud of Palo as a community, because good, bad, or otherwise, that’s what this is about.”
After the meeting, Mr. Busch provided an update to the CBJ regarding the status of discussions with Google.
He confirmed conversations with Google are “continuing” and “regular,” but said there’s “nothing set in stone” and no firm timeline for a decision has been communicated by Google.
He said he did not know whether Google was waiting on the ordinance’s outcome before proceeding, and that he has not personally spoken with Google about the vote’s result, though he “would assume” the company had been monitoring the process
On next steps, Mr. Busch confirmed that if Google decides to move forward, the company – not the city of Palo – would need to initiate the annexation and rezoning applications.
“At some point, if they decide to [proceed], their next step would be to file [a request for] annexation and rezoning.
The process would then proceed through the city’s Planning and Zoning Commission for consideration, followed by a required public meeting.
“It’s sort of up to them as far as if or when they decide to [proceed],” he said.
