What is a Data Center?

Data centers are secure facilities that often house large volumes of computer servers and data storage systems that enable the infrastructure behind internet connectivity, enterprise software platforms, and advanced technologies such as artificial intelligence. The role of data centers is fundamental to powering e-commerce, remote work, financial services, healthcare systems, and virtually every sector that relies on technology and related services. Data centers also have accessory uses such as utilities, external mechanical equipment, water towers, and security facilities that may be located on the same site.

This page is intended to provide local government officials with information and resources to assist them with planning for and regulating potential data centers in their communities. To ensure quality-of-life and economic benefits while mitigating concerns about negative impacts, local leaders should adopt a proactive approach to data center planning. Integrating sustainability standards, aligning zoning policies, and ensuring adequate infrastructure planning are strategies for mitigation. By responsibly shaping how these facilities are designed and operated, communities can position themselves to attract investment, support innovation, and advance long-term resilience in a manner that makes sense for their community. This requires proactive land-use planning and transparent public engagement to identify appropriate locations to site data centers and to determine the acceptable size, scale, and other performance standards that match the community’s vision and future land use goals.

Types of Data Centers

There are several types of data centers that serve various purposes and customers. The following definitions come from the Cumberland County (PA) Planning Department white paper, “Planning for Data Centers.”

  • Enterprise Data Centers are owned and operated by individual companies and used to support that company’s data and information technology needs.
  • Colocation Data Centers are facilities where data center operators rent space for servers and other computing hardware to multiple companies. These facilities may also offer a range of related technology services, such as maintenance, backup power systems, and multiple network connections.
  • Edge Data Centers are typically smaller data centers that are near the customers they serve to increase data processing speed and decrease data transmission delays.
  • Hyperscale Data Centers are massive facilities that contain critical computing and network infrastructure that provides scalability and high-speed data processing. Hyperscale data centers typically cover several hundred acres of land and anywhere from 10,000 square feet of building space up to several million square feet of building space. These facilities allow big companies like Amazon, Google, and Microsoft to provide services to their global customer base.

Other data centers may be an accessory use to commercial or industrial land uses.

Resources and Reports

The following resources provide a solid background on data centers and include an overview of considerations for local governments, potential community impacts, and example zoning and regulatory language that can help communities develop their own ordinances.

Sample Zoning Ordinances

The following resources provide links to sample zoning regulations from communities across the country, highlighting different approaches local governments can take when it comes to zoning for data centers. These approaches include permitting data centers by right, regulating them as special land uses, planned unit developments (PUDs), or through an overlay zoning district. Communities should examine the different approaches and develop regulations that align with the master plan and community vision. Additionally, communities should update their master plans to designate areas where data centers could be permitted or prohibited.

  • Henrietta Township, Michigan – Requires various detailed studies with application. Includes requirements for decommissioning and reclamation.
  • Dekalb County, Georgia – Detailed webpage with overview of the new zoning ordinance language and definitions for various sizes of data centers.
  • Monticello, Minnesota – Detailed webpage highlighting language added into master plan. Data center zoning handled as a planned unit development (PUD).
  • Prince William County, Virginia – Creates a data center overlay district; applies 24-hour noise limits, architectural screening, and buffer standards.
  • Chandler, Arizona – All new data centers must now go through a public hearing process and are restricted to specific districts.
  • York County, Virginia – Model zoning ordinance for data centers.
  • Fairfax County, Virginia – Webpage includes a detailed staff report explaining the regulations. Includes performance standards for cooling and noise.

Moratoriums:

Local units of government sometimes adopt moratoriums to prohibit a particular land use/activity until regulations pertaining to that land use/activity are developed and adopted. As noted in the MSU Extension article linked below, “A local government might adopt a moratorium to prevent development until rules are established, but this is not without legal risk. Do so with caution and make sure the municipal attorney is directly involved.” While there is no enabling legislation in Michigan for local governments to enact moratoriums, they have been held up and supported by case law. As the MSU Extension article also notes, “Moratoria are supposed to be short, tied to a direct threat to public health, safety and general welfare, given a specific start and end date, and then removed at the end of that date. A moratorium for more than one year will likely be viewed skeptically.“

Energy and Water Use

Energy Use:

Water Use:

Links to County Data Center Resource Pages

State Legislation Related to Data Centers

Qualified Data Center Sales and Use Tax Exemptions
The State of Michigan has offered a state-level sales-and-use tax exemption for “qualified” data centers since 2015. PA 251 of 2015 and PA 252 of 2015 added MCL 205.54ee and MCL 205.94cc to Michigan’s General Sales Tax Act and Use Tax Act to create sales and use tax exemptions through December 31, 2035, for the sale, use, or consumption of data center equipment for “qualified data centers.”

In this legislation, “Qualified data center” means “a facility composed of 1 or more buildings located in this state and the facility is owned or operated by an entity engaged at that facility in operating, managing, or maintaining a group of networked computers or networked facilities for the purpose of centralizing, or allowing 1 or more colocated businesses to centralize, the storage, processing, management, or dissemination of data of 1 or more other persons who is not an affiliate of the owner or operator of a qualified data center or of a colocated business and that entity receives 75% or more of its revenue from colocated businesses that are not an affiliate of the owner or operator of the qualified data center.“

As noted in the University of Michigan’s report, What Michigan Local Governments Should Know About Data Centers, “While smaller, non-hyperscale data centers may only meet the definition of a ‘qualified’ data center, many of the current larger data center development proposals may meet both definitions.“

Enterprise Data Center Sales & Use Tax Exemptions
The new Enterprise Data Center Sales & Use Tax Exemptions took effect in Michigan on April 2, 2025 (use tax), and April 17, 2025 (sales tax). For more detailed information about this legislation, including qualification requirements and additional environmental requirements, visit the Michigan Economic Development Corporation’s overview website. These tax exemptions were developed to attract hyperscale or enterprise data centers and are key factors leading to increased interest from data center companies to locate in the state.