Developers behind a proposed data center are suing the city of Gibraltar, arguing in federal court the downriver community's moratorium violates Michigan's zoning laws.
Going after a community's data center moratorium, as developers CAL Realty and Raeden do in a Monday, Aug. 17 filing in U.S. District Court for the Eastern District of Michigan, is notable because a moratorium is one of the few tools local governments have to block unwanted developments that qualify under a municipality's normal zoning rules.
In Michigan, data center proposals have become a flashpoint for several communities across the state. Developers and proponents say the facilities are needed to meet increased demand for computing and generative artificial intelligence. As
tech and software companies need more computing power for their services, those in favor of building data centers say Michigan will miss out on investment generated by new projects. They also point to job creation, mainly in the construction phase, that some new data center projects can generate.
But developments have been met with at times fearsome opposition in some Michigan communities. At town halls and other meetings held to discuss data center proposals, residents have packed auditoriums to voice concerns about energy and water usage at the facilities, noise pollution and other variables associated with data centers.
Due to Michigan zoning laws, local governments can’t actually prevent a data center project from moving forward, so long as developers can meet site planning standards and other requirements. Data center developers have mostly asked for permits under industrial zoning, a land use many communities in Michigan have already established for things like manufacturing and construction facilities. To counter this, some communities have adopted moratoria for new data center projects, blocking their approval for a period of time (normally a year) while local officials examine proposals.
Gibraltar put such a moratorium in place in March, about two months after Raeden came forward with plans to repurpose the former McLouth Steel industrial site into a 100-megawatt inference data center. The moratorium was designed to allow local officials more time to study the proposed data center's impact on the community, according to city documents.
But in a 30-page complaint filed Monday, attorneys for Raeden and fellow developer CAL Realty argue the moratorium is unenforceable because it was put in place after the company had submitted a site application for the data center. Additionally, attorneys argue local zoning ordinances permit industrial projects, the classification Raeden seeks for its data center.
"There is no state or federal law that requires or permits the City to amend a zoning ordinance by resolution," the complaint states, later adding, "the City exceeded its power as granted within its own charter and the resolution is invalid and unenforceable."
Plaintiffs are asking a federal judge to approve their site plan and allow the data center proposal to go forward. CAL Realty is represented by attorneys Michael Hindelang and Brian Hamilton of the Honigman law firm, while Raeden is represented by Nathan Dupes and Sarah Gabis of the Bodman law firm.
Gibraltar City Administrator Rachel Witherspoon didn't return a message seeking comment. Legal counsel for the city was not listed in online court records.
If successful, the lawsuit could spark challenges to data center moratoria in other parts of the state. Over 50 local governments in Michigan have adopted a data center moratorium, Michigan Public reported, including communities like Flint, Taylor, Big Rapids and others.
The case was assigned to U.S. District Judge Robert White in Detroit.
You can reach Arpan Lobo at alobo@freepress.com
This article originally appeared on Detroit Free Press: Developers challenge Gibraltar's data center moratorium in court
