Planning Commission - workshop

All right. Well, we will get going. I'll call our Tuesday, August 25th, 2026 City Planning Commission work session to order. As today is a work session, we will not be considering any petitions, nor will we be making any votes at this work session. We will open the work session with a public comment period. Then I'll introduce Dr. Mills, who will give us a presentation on data centers. Then we'll have some questions from the planning commission to Dr. Mills. And then we'll see what public questions exist. And so we're joined tonight by Michelle Bennett from the planning staff. And so with that, we now have an opportunity for persons to speak up to three minutes on any issue that's not listed as a public hearing, which I don't think anything on our agenda is a public hearing tonight. So you can raise your hand and Planner Bennett will. recognize you either by the last three digits of your phone number or by your name because you're connected to Zoom. And when you give your comments, please state your name and address at the beginning. So if you'd like to address us, you may for up to three minutes.

We have three attendees and I do not see any hands raised.

Julie put up her hand. Did you?

I didn't see that, but I ignored that. Thank you, Michelle, for ignoring that.

Okay. All right.

Just clicking around there.

There's Councilmember Dish. So we'll let Councilmember join. Great. Well, welcome everyone to our sort of continuing education here at the Ann Arbor City Planning Commission. Tonight's presentation is a request that I made to Dr. Mills about data centers and then discovered that she is one of the state experts on planning and data centers. So I am grateful. That we already have this right here at our table that we didn't actually have to reach out to find out. She actually leads a center, which she'll probably talk about data centers here in the state of Michigan. So again, tonight is a part of our continuing education. We started with Dr. Norton's presentation on planning today. We're continuing with data centers. We have two additional ones that we are scheduling, one on the development process as well as best practices after you implement your comprehensive land use plan. And we've asked the Michigan Association of Planners to send a rep to talk to us about best practices that they see across the state. So without any further ado, Dr. Mills, you have control of the meeting. So you have a presentation for us, and we're excited to hear what you have to share. Great.

And you, I didn't get the normal Zoom options that I got. You can see my slides in full screen version.

We can. Yep.

Okay. You know me. I am going to try to wear, though, tonight my hat as Sarah the... director of the Center for Empowering Communities. And I'll tell you when I take that off and put on my planning commissioner hat. And I have given for you this slide deck that I'm giving three times this week. Last night I was in Parchment, which is in Kalamazoo County. I'll be in Pawpaw on Thursday. But most of the time it's a 45 minute presentation to an hour and I kept it shorter. And so it means that it might be a little bit disjointed. So here's the deal. The Center for Empowering Communities doesn't usually do data centers. What we actually do is help local governments across the state of Michigan. effectively understand the pros and cons of renewable energy and set policies related to them to advance community goals and enhance quality of life. That's the mission. Most of our funding comes from the State Energy Office, which sits in EGLE, and they, for the last seven years, have paid my gas. to go across the state and talk about, mostly in rural communities, about large scale renewables. And I don't talk about this on planning commission. My PhD is in farmland preservation, and I studied renewable energy as a farmland preservation tool. So why am I talking about data centers? And it's because 11 months ago, the Washtenaw County Resiliency Office, who we work with through some of our urban programs in the Center for Empowering Communities, reached out to us to say can you tell us what we need to know about data centers and how it they may impact the county's climate goals and what they mean the pros and cons for communities and so we started to put together what now lives on their website as kind of their faqs they edited it but we i effectively was also hearing from some rural communities who we had talked to solar talked about solar or energy storage, asking about zoning because they're getting approached for data centers. And so we put those things together into this guidebook. It came out in February. I effectively taught myself. We extrapolated from our experiences with renewable energy because a lot of these things, as I said, want to go to the same places and And I have counterparts like me who do land use education for renewables in other states, including Virginia, who taught me a lot about data centers. And in the guidebook, you'll see a long list of reviewers trying to triangulate information about what is true and false. The typical long presentation includes much more on the possible impacts and policies. I have a very abbreviated version in here for you tonight. I'm really going to talk about what is a data center and then the considerations for local governments that I tend to give. So why are we talking about data centers? Again, Michigan has a bunch of data centers. This says a couple dozen because depending on the maps that you look at, it can be anywhere from 11 to the Michigan Economic Development Corporation, MEDC, says 70. But it... is definitely undercounting because it doesn't show the existing data centers that are on campus. I would say that we probably have hundreds. Or if you count the kind of computer room in an office building as a data center, which they can be, we have thousands. But the reason that it's catching attention right now is because of the surge in generative AI demand. And we're seeing larger, more resource intensive facilities and scale matters for a lot of land uses, including data centers. The reason that Michigan is on the map of data center developers is in part because at the beginning of 2025, the state expanded its sales and use tax incentives for data centers. We already had a sales and use tax incentive for data centers since 2015, but its application was minimal. I cut that slide from this presentation, but I have it in the reserves. So if you care about What the incentive looked like in 2015 and the newer one, happy to go into that. But just know we have sales and use tax incentives for data centers, and that is among the reasons that Michigan is on the map. Okay. What is a data center? It's a physical facility that houses IT infrastructure. So the servers... kind of the computer equipment, the brains, networking equipment to get the information to and from the Internet, power supply and backup generators. So this is not just the kind of generators that you would use if the power goes out, but also remember back in the day when we used to plug our desktop computers into effectively a bigger processor? unit, like a surge protector type unit, that kind of thing, so that the computer equipment is protected from ups and downs within the existing grid. Also, there's a lot of computers in data centers. And so just like your computer needs a fan to cool it, so does the data center. But when you're talking about a The cooling needs are much higher and also their security systems. So sometimes it can be a lock on the closet where it is, but sometimes it may be security fencing around the place. I mean, our driver's license information, our medical records, all of that data is in a data center somewhere or in multiple data centers, depending on how that facility is structured. I pulled out of order here the map that MEDC shows of the 70 commercial data centers in Michigan. Again, you zoom in, you'll see some on South State Street. This is an underestimate. And I think that Commissioner Weatherby and I had a nice chat walking home the other day after planning commission. And so she may be able to tell you more about like what to look for in a data center. They look very much, the ones that are among us now look like office buildings. Some with windows, some without. Particularly if there's no windows, may well be a data center. Most of what we see in Michigan is relatively small. And by small, I do in some ways, ways mean like square footage of the building, but even more so, and I'm going to get to this, I think on the next slide, is small in terms of energy use, and that is measured in megawatts. But down here on the bottom left, this is the rendering for the data center that is under construction right now in Saline Township. It can be big. This data center is sited on 250 acres is kind of effectively what you see here in a site that's 575 acres. And in terms of its electricity use, it's 1.4 gigawatts of electricity, which is effectively, oh, Enough for a small city, minimally. My normal slide deck includes more of this. I think the state of Michigan uses 32 gigawatts, 1.4 gigawatts for just one data center. The entire state of Michigan uses 32. So it can be a lot of energy. And one other thing, just the impacts, positive and negative, scale with the size of the facility. There's a bunch of different ways to classify data centers. And sometimes people use the language Not like there's not necessarily standardization. The way that I am going to say is that you can classify it by size. So hyperscales data centers are the big ones, the cloud factories run by big tech companies, usually to power apps and cloud services, maybe serving multiple external customers. or edge data centers, which are smaller sites that are placed where data is used. Again, cities, campuses, stadiums, so that kind of internet services are faster. That's size. But you can also classify, and our tax policy, our sales tax policy classifies by who they serve. So enterprise data centers are owned and operated by a single organization. So it could be a company, a hospital, a university, a government to serve its own IT infrastructure. or co-located data centers are effectively data center area for rent. So the building is owned by a data center operator, but the computers inside are actually, and the space that is given to them are leased more or less by different companies so that they don't have to have their own computer room. Instead, they can kind of consolidate their services and also pay that co-location data center for backup power in the case of power outages. and additional security systems and that kind of thing. What a data center, particularly a big data center, is looking for is electricity. This is why they're moving from Virginia and the places where they have been. They are in search of power. But they also need access to fiber. They need access to the internet. I've learned it's called backbone fiber. It's like the highway. system of the internet. There's not great maps of where it actually is, but this, you know, rendering from the merit network is a good indicator, I'm told, of kind of where that backbone fiber is. Ann Arbor, with the university, like, we have it here. Data center developers are also looking for contiguous land area. So this is in contrast to solar developers who can often work with parcels that are a little bit farther flung and kind of string wires together across them. Because of security needs, like generally data centers want to be on a single campus. They're looking for water if they're water cooled. And I have a couple slides about how data centers are cooled. but also they're looking for the kind of things that many developers are looking for, which is cleared land. This is why farmland is often a place that data centers are looking. They honestly, they've got to pay property taxes still. There's a sales and use tax incentive, but they need to pay property taxes on data centers. So they're looking for places that have low millage rates and they're looking for places with favorable zoning. Okay. I could editorialize then about Ann Arbor, but maybe we'll save that for discussion. Okay. This is the abbreviated version of like, what are the water and energy impacts and environmental impacts? A bunch of those impacts are not accrued only locally. I'm going to talk about the ones that would be unique to a community that hosts data centers. But impacts on water and electricity and carbon emissions and electricity prices are things that would accrue regionally. And what those impacts are, are really dependent upon not just what the data center developer does, but on state policy. So how clean of a power source a data center uses really depends on whether the state has a policy like we have that requires utilities to get a set amount of their power from cleaner sources. So currently, our policy is 15% renewables, but by 2030, that ramps up to 50% renewables. 2035, it's 60% renewables. And the utilities need to be 100 percent clean by 2040. There are some off ramps if it's not cost effective for that. So I like we could get into that. But this is not necessarily something in our purview. But I just want you to know, like a lot of the environmental impacts are going to depend on kind of what the state policies are. We also have some metrics for cleanliness of power in the newer tax incentives, state tax incentives. What impact might data centers have on electricity rates? Again, it's going to vary based on how the state requires the PUC, the Public Utility Commission. In Michigan, it's called the Public Service Commission, how they allocate rates to different customer classes. We have cost of service rate making in Michigan, which effectively says that data centers are going to have to pay their own way. There's also some cases that are specific to data centers in both DTE service territory and in consumers energy service territory that says that the MPSC wants to make sure that any upgrades are borne by the data centers that they are paying. They're guaranteeing that if new sources of power get brought on that they're paying. But a bigger question is like, what happens to everybody else's rates? Like, are my electricity rates going to go up? And honestly, what I've been telling communities, which is unsatisfactory to everybody, is nobody knows. We have mixed evidence nationwide. Some places have seen rate increases, some have not. And I think a lot of what this comes down to is whether the entire country has an aging electricity system. The question is whether data center additional demand for power is spreading those upgrade costs among more customers, or if the grid is already kind of at its max, if in addition to those upgrade costs, additional expansion is needed, in which case you're not likely to see kind of reduction in rates. We have capacity if we include our fossil fuel plants, but it is going to be a challenge in the state of Michigan to meet our clean energy goals. And so I really don't know about what would happen on electricity rates for you and I and other customers. Water and wastewater impacts, like water withdrawal regulations, especially for large quantities, tend to be set at the state level. In Michigan, this is something that EGLE is in charge of. And similarly, if you're discharging large quantities of water, that is also something that, while sometimes is under county control, is generally an EGLE function. One of the things that water is getting a lot of attention because we're the Great Lakes State and people care deeply about water and Data centers, some data centers are increasingly moving to closed loop or air-cooled systems, which use less water, but because they're not using water vapor to carry the heat away, instead they're using more electricity to suck the heat out of the facility. And so there's this energy water trade-off. Evaporative cooling that uses lots of water, up to 5 million gallons per day, has more direct water use, but also less electricity use. And for the time being, actually, the biggest user of water in the state of Michigan is our power plants. It's over 5 billion gallons of water a day. I said that right with a B, 5 billion gallons. And that is for our nuclear power plants, coal-fired power plants, and some of our natural gas plants. which are cooled with water. A lot of it's returned hot to the Great Lakes, but it's still using water. So even in a closed-loop air-cooled system where you can use less water locally, you may, until we have a cleaner grid, you may well be using more water regionally because of the indirect water impacts from the power plants. Another summary slide is on what are the economic impacts of a data center. So the reason that there is a sales and use tax exemption is because the state is interested in the economic activity associated with data centers, either directly through the construction jobs or indirectly through the other industries that it might facilitate. For a data center itself, most of those jobs, again, are in construction. There are, I've heard, in terms of long-term jobs at the data center, estimates between a handful and maybe a couple dozen, sometimes 100, but nobody can actually tell me what those folks are doing. So take that for what it's worth. But a lot of the jobs numbers include indirect jobs. So those that are effectively in the supply chain or induced jobs. Effectively, what happens when people or local governments who have money now from the data center are taking that money and spending it? Those can all be part of the multipliers that are there. mean that the estimates for job creation are not just wide, I would say wildly different. In terms of the property taxes, that is the key long-term economic benefit at the local level for for those entities that host data centers. The state of Michigan taxes, says that data centers should be taxed as commercial property. And that comes along with both the real property, the land and like the buildings and also the personal property, so the computer equipment. Now, it's computer equipment. The multiplier table that is used effectively says that You can tax 60% of the value in year one, and it goes down to 8% of the value, the new, the installed cost of those servers by year seven because it's outdated. What the result will be in terms of a revenue stream for local governments is a bunch of yo-yoing because a data center developer will start with new equipment. It'll go down a little bit, and then in a couple years, they'll buy new servers, and it'll go back up. I have tried and failed to get a good sense of how much of this investment is in the real property and how much of the investment is in the servers, in part because it is changing all the time. But this is a huge investment. And even though it's important to keep in mind that it is depreciating pretty quickly, on a kind of a per acre basis, it is a hefty taxpayer. Okay. I think a lot about kind of what are the impacts at the local level and particularly on quality of life. This is construction activity. It comes with all of the things that we don't like about construction. But also there's sound associated with it, both the level of sound itself, how constant it is or not. And some of that varies based on what is happening in the data center, but also whether there's backup generation on site, and also the frequency of sound, which I confess I'm not an expert in, but that is something that is increasingly in the public domain and that we're trying to figure out better answers for. Maybe less relevant in Ann Arbor, but in other places, I think a lot about greenfield impacts, the visual impacts, Actually, the change in nighttime character when you've got a cornfield that suddenly has security lights in it, like there's not even street lights, but now there's security lights. And these are all things, though, that can be addressed through zoning. Not relevant in Ann Arbor, but just for what it's worth, I think a lot about use of farmland. And I tell people, like, I care about farmland preservation. And I'm going to say data centers themselves will have a However, one, it's a death by a thousand cuts. There's lots of things that are gobbling away our farmland. And also the energy that will be required, the additional energy to power data centers is the thing that I think ought to be on our radar for the impact that that has on farmland. In terms of future land use impacts, you know, data centers that are put on steep slopes or in wetlands are going to have impacts just like any other kind of construction activity. And what I think about a lot is whether data centers will become brownfields. Like industry of the past has not always left no trace. And so I encourage communities to think about how do we put protections in place so that these don't become brownfields. That leads me to my zoning considerations. I don't feel like I need to tell you, but I included this for the public that may be able to join. I give this as a refresher to folks, the relevant zoning laws. The Michigan Zoning Enabling Act says that you cannot ban a lawful land use for which there is a demonstrated need. And many places, not ours, but many places are silent. And that ambiguity of silence towards a use in the zoning ordinance is not necessarily your friend. Our ordinance does talk about data centers, which has different implications that I'll get to on the next slide. The other thing, though, is just because you can't ban a lawful land use for which there is a demonstrated need, you can include reasonable regulations. I am not the lawyer. Commissioner Adams and Commissioner Norton are. They are not our lawyers, but they are more legally minded. I have said and what I because I have heard it from other lawyers that I have presented with on data centers is that those reasonable regulations are you're in a better place legally if there are solid, verifiable impacts that you are trying to mitigate and or if you are consistent with other land uses. So you're not just picking on data center sound. You are picking on sound from other industries as well. Zoning, we know, should be based on a plan. And oftentimes, I have a separate slide just about community benefits agreements, because data center developers may have the ability to provide significant benefits to communities. But I remind people that they need to be aware of exactions and the tricky enforceability of enforcing community benefits agreements outside of a court order, which is the case in Saline Township, or outside of the local government giving something of value, such as a local tax abatement in exchange for getting some other sorts of community benefits. The guidebook talks about these five things. I'm going to walk quickly through them. But first, I want to tell you the two changes that are coming in the next iteration of the guidebook because I think both of them are relevant potentially for us. The first one is actually a question that I got from a commissioner that I'm answering here rather than answering through the email. So I didn't I saw it, did not ignore it. And this is about moratoria. So land use law allows for moratoria. And particularly if you are silent or if you have data centers, but you didn't, it's not this kind of data center, maybe a good case for one. I always tell people though, talk to your attorney about how they feel about moratoria and entering into it appropriately. Also give people the caveat that generally speaking, what I've heard from multiple land use attorneys is that it needs to be time-limited and You need to be making progress towards the thing. The reason that you said you needed a moratoria to get more education or whatever it is, you need to be making progress. And you probably don't have time to put your ordinance on pause to do a full comprehensive plan review. The other thing that I think is relevant is that the guidebook right now focuses mostly on hyperscale facilities. And I... emceeing community say like there is no place for a hyperscale facility so we are going to say there is not a place for data centers which again you should think about um engaging your attorney about banning a lawful land use for which there's there may be a demonstrated need you might be able to argue against the demonstrated need i think though it's really important that we distinguish between scales because again we have data centers among us right now In distinguishing between scales, rather than doing it on a square footage basis, it makes the most sense in my mind, and I've vetted this with other people too, to distinguish based on the energy use. I know for us it's a weird thing to do, but the reason to do this is that power goes into a data center in the, or like energy goes into a data center in the form of electricity. It runs through the computer server and it comes out as heat. Most of the water use, fan, the backup generators, all of those are scaled to how much heat they're trying to dissipate or how much power they are trying to provide to that site. And so the impacts really scale to megawatts. And so that's why differentiating based on megawatts makes sense. Most of the data centers among us are less than 10 megawatts. These are the kind of data centers that could go on beefy, distribution lines. Anything above that is largely going to be on a transmission line and would be more kind of industrial scale. And so those large things may be most appropriate in industrial districts, where smaller ones that are on, you know, again, distribution lines are the kind that we've already seen and they may continue to be a good fit in commercial or office areas. Okay, so So again, going into this with the idea that I was mostly thinking about hyperscale facilities that may well be a good fit for industrial use and so would fit in the zones where you allow industrial, what I say is evaluate your industrial zone. Do you have one you should? And the reason I say this is because this is part of one of the lawsuits around data centers in the state of Michigan. Even I did read the comments before this too, and I would say the edit that I would make is that in places where there is not necessarily a single purpose zone like Ann Arbor, making sure that you have places where industrial facilities may be allowed, like that is how I would edit that for this particular context. What I also tell communities, though, is that it doesn't mean that your entire community needs to be an industrial, like allow for industrial activities. maybe the size of industrial zone that you have right now is appropriate. Like go to your comp plan to see where industrial uses fit. Where is there water and electric infrastructure? That's where this industrial use or any industrial use would wanna be. But also think about your current surrounding land uses. And many of the places that I speak of have not very much industrial activity. And so their industrial districts areas have been surrounded by subdivision development. And like that's important in part for the next one, which is consider adding quality of life regulations to all industrial uses, either the district, if that's how you're regulating industry or those kinds of uses. So thinking about sound, thinking about screening, which is not necessarily part of an industrial district zoning, and also thinking about light pollution. And that is, we do have dark skies friendly ordinances. Many cities do not, but this is particularly important in rural areas where this may be the only real light. I spend a lot of time about decommissioning, and I'm happy to share that with you. Those things that I just talked about actually are standard for large-scale renewable energy projects, so that's where this comes from. And decommissioning, similarly, standard for large-scale renewable energy projects. Decommissioning includes three components. One is the plan about what gets removed at the end of life of that facility or what infrastructure stays in place. The second is a financial instrument. So it's usually called a surety bond. It's like the insurance that a developer buys in case they don't decommission the project at the end of its life. And the third component is a decommissioning agreement that effectively says when the local government is allowed to draw upon that financial instrument. They're usually allowed to draw upon it when the project is at the end of its life. One of the ways that you show that is by having the developer tell you how much water and energy they're using, which also helps towards the transparency that many local governments are seeking on energy and water usage. Happy to talk more about it, but I would just say decommissioning is something that I have sometimes gotten pushback on. And usually I respond by saying we would have far fewer brownfields if we required this decades ago. And so thinking about this for industrial uses in the future, I think not just for data centers, but all sorts of industrial uses is relevant. I suggest that I do draw upon my planning commissioner experience and suggest that if a developer is talking about something but it's not in writing, that the local government should demand it to be in writing or that it shouldn't be talked about. So that can be the use of on-site generators outside of emergencies. It could be scheduling Genset tests. It could be talking about where construction traffic routes are. This is a special consideration of this. There's a non-insignificant history of large taxpayers sometimes arguing after their project is built that they ought not pay as many taxes as what they said they would pay during permitting. And so we have an example of a solar farm in the Upper Peninsula that offered a property tax guarantee to the local government. That is, they said, we project that we will be paying this amount of money in property taxes to you if the tax tables change in the developer's favor. the developer will honor what they said during the permitting hearings. If the tax tables change in the favor of the local government, the developer will pay the higher amount. It helps effectively avoid property tax disputes in the future. And there is, we have an example of this. So it's not something that I know how to require, but I suggest that local governments ask for it.

And finally, I encourage planning.

But usually people call me too late. They already have somebody knocking at the door. But I encourage people to think about which land uses need heat as an input. That is the waste for a data center. If you've got a greenhouse, if you've got district heating, if you have some industry that needs that, plan for those things next to each other. Do you have places where you have infrastructure to be reused? Particularly, I mean, last night I was... In parchment where there's a closed paper mill that has transmission infrastructure right there on the facility thinking about like where are those places in your community also just like. In places where there are is an energy grid that needs to be updated. That doesn't have enough as many electricity users as it imagined the same thing happens for water utilities. There are some water utilities in the state that don't have nearly as many water customers, as they were designed for and maybe this is attracting a water user is something that will help them. In their water system that may not be the case in our situation but that's something that I encourage communities to think about so. Here's my work contact information if you have more questions. And now I'm happy to stop.

Well, thank you, Dr. Mills. All right. Planning Commission, what questions do we have? Listening public, if you have questions as we are working through ours, would you please raise your hand so that we can call on you because your questions may be similar to ours and then Dr. Mills doesn't have to answer them twice. All right. We'll start with Councilmember Dish.

Thank you. So this is a great presentation and so lively. So even-handed in the way you talk about these things. There's a lot of heat around this issue. And so I really appreciate how sort of matter of fact and cheerful. presentation was so I feel like you already you implicitly answered this but I would like you to talk a little bit more as you were saying almost toward the end of your presentation that what these data centers do is they they produce or they take in electricity and they generate heat and I thought oh could you harness that heat and distribute it through your sustainable energy utility and And it kind of sounded like you were saying that if you have district heating, in other words, if you have geothermal and you have a sustainable energy utility, you could perhaps benefit your geothermal system if you had a data center located near it. Was I following you?

You were following me. I mean, I didn't actually like this is me not being. I should have thought about this. I didn't think about it for the sustainable energy utility. There's no reason not. Actually, there was an example of this. There was a data center proposed in Lansing that was planning to use the waste heat to feed into their effectively their district thermal system, their thermal district system. that the city of Lansing decided not to have this data center. All things considered, it was, my understanding, maybe 20 megawatts, so a relatively small one, a little bit bigger than what's currently built, but not kind of hyperscale. But there's a lot of heat in the other sense around data centers. But yes, I mean, they are generators of heat, and figuring out how to harness the heat is... more of a circular economy. So they could be, they could absolutely be designed the way there was a developer in the state of Michigan who was proposing to do effectively that.

Wow. Thank you. That's great. And then I just wanted to make sure, um, to, I really like, the main takeaway that I'm taking from your presentation, there were many, but the main one that I'm taking away is that if communities want to regulate data centers, the language of moratorium or ban, those are different. A moratorium is pause while we figure out what we wanna do with them, to them, whatever. That would be the first step really is a moratorium while you figure out what you wanna do. A ban is a decision about what we wanna do, which seems to go against your advice. Your advice is, you really want to check with your lawyers to find out if it's bannable in your community. Like you can clearly establish that there's not a demonstrated need or not for a facility of this size. And we need to understand that we have a picture in our mind that may not correspond to what a data center actually is, but that where we have the most power as a local government to regulate this kind of thing, is through the quality of life impacts and through decommissioning. And that seems to me like it's a lot of power, especially in a city like Ann Arbor that regulates already a ton of quality of life impacts. And so we already have the pieces in place to say, we're gonna treat a data center like we treat anything else, except it's bigger scale, so we're gonna come at it harder. But so a ban sounds like a very, very blunt instrument to me, or the language of banning sounds very, very blunt and not necessarily effective. So I don't know if you would want to take it that far, sort of, I'm being a little bit more polemical, but that was my takeaway.

So I will stop talking. Maybe Michelle's coming in to say, Sarah, don't offer legal advice. And I'm not going to offer legal advice. Like what I tell local governments is, You should get your attorney involved. I'm reading you what the Zoning Enabling Act says. And I'm, yeah.

Were you going to add in on this, Michelle? I was going to say something along those lines of talking about banning uses is not something I would encourage without an attorney. Like it's, I don't know the case law of that. I don't know the precedent of that, but I was just reading about this today in the Michigan Association of Planning has written about data centers and their take was that it would be very difficult to prove there's no demonstrated need considering that the federal government and the state government are incentivizing these types of uses. And so we would have to be like very, very careful about that. To the point where I wouldn't even, yeah, I don't know if a ban is at all possible. But moratoriums are happening all over the country, right, as people try to figure this out. And I guess along those lines, I wanted to ask you, Sarah, if like, or I'm sorry, Commissioner Mills, if you think based on the criteria you were giving us that the city of Ann Arbor is, a candidate for these hyperscale data centers?

Thank you. But actually, like, if nobody asked that question, I was going to get to that because that's the part that I wanted to, I felt like it was a bit of an editorial or too much an arborizing it. Unless we would plan to give a property tax incentive, I cannot imagine a tax-paying data center that would want to set up shop in this city of Ann Arbor. In terms of hyperscale, I do not think that we have enough land area to commissioner dishes for a hyperscale facility. Are there data centers that are vertical rather than horizontal? Yes. But also, Among the reasons that data centers are horizontal, not just because it's cheaper, but they have to have a lot of skin into the world to dissipate that heat. Because even whether it's water pulling it away or some other fluid, like if it's a closed loop system, you're pulling the heat out of the fluid, you have to expel that heat somewhere. And so you need to get outside of the data center to be able to do that. And it's just really difficult to do that. We know that when we stack floors, right, like we know this from apartment buildings, that it's more energy efficient. They're more insulating. Data centers don't want to be insulating unless they're insulating against the heat. So Again, we have data centers among us. We have small data centers among us. The hyperscale facilities, I just do not... At least with current technology, I cannot imagine here. But even apart from that, it's the taxes. If they compare our taxes to... taxes in other jurisdictions. I think that that's one of the reasons. The other thing is we know this because we've seen actually, um, proposals in the past, maybe this predated some of you, we don't have transmission lines in the city of Ann Arbor. Like we have subs, the transmission lines come into some of our substations, including on South state, including up on the kind of Nixon, maybe it's not Nixon Duvaren. Um, But inside the city of Ann Arbor, we don't have transmission lines cross-cutting. And those big data centers need to be where there's transmission. And so I don't think that the big ones are viable. And the final thing, and this is getting to what Commissioner Dish said too, we have not just a sound standard in our zoning. We have sound standards that are like a, as part of our overall city ordinances. And so- And I would just say many communities don't. Like many of the rural places that I work with have no sound standards. So the idea of applying a sound standard to industrial uses would be the first time that there's a sound standard applied in their jurisdiction.

Commissioner Weatherby.

So this is kind of half comments, half thank yous. This was super helpful and I really appreciated. So I've worked in computers now for, 30 years, something like that. And I really appreciated your discussion of how it's sort of, it's not, we're not talking about any single thing that exists today. It's impacts and it's scale and it's because the technology of today is not going to be the technology of tomorrow. And these things are going to change wildly quickly and they're going to change. When I first started like server rooms all had, you had to have really air conditioned server rooms and most organizations spent most of their money air conditioning server rooms down to 50 degrees year round because that's what the servers had to have. And then Google came along and Google search uses a lot of energy and Google had to figure out how could they do this? And they literally had server rooms where they did 52 degrees, 54 degrees, 56 degrees, 58 degrees, and studied. And it turns out that servers don't need to be quite as cool as we thought. And then they said, okay, well, now they're solid state and things aren't whirring around. And so they don't need to be as cool. And it changes dramatically. So I think it's really... super helpful to think about like the impacts rather than the current technology or the current, like we don't want this because it uses energy and water. Well, the next iteration might not use energy and water and we might still not want it, or we might want it because of the lights or there might be. And so I think it's super helpful to think about it in terms of like impact, not so much what exists now. Because what exists now is not going to be what exists in five or 10 years. Because the companies don't want to pay a lot for generative AI either. They want you to use a lot of generative AI. They don't want to pay a lot for it. So these giant facilities and stuff, the companies don't want to do that. They want to do it as inexpensively as possible. So I think this was really well stated that it's not necessary. it's kind of pushing against an amorphous blob that may or may not be good and might be good in some places and not in others. But yeah, I think it's hard and people are really freaking out about it. And I'm not sure everybody's freaking out about the right things. Because to your point, like we already have data centers here and we have military presence here in Ann Arbor and we have research and we have Like a lot of the things that I hear right now people are really panicky about are things that already exist, but just either weren't ever talked about or are at a different scale or level or just that people don't know they exist. So I think it's important to like, we're going to have a lot of people come and be really terrified of things that might happen relative to data centers. And I think some of those things may have, there may be reasons and there may not be, but I think it's really important to like keep our eye on the facts. And I think this was super great. So thank you.

Thank you, Commissioner Weatherby. Sorry, go ahead.

I was just going to say in this space, I realized when I started looking at this 11 months ago, I think I'm one of the few people who didn't have an opinion then.

And I still like about data centers or about AI.

Anyway, and one of the things that I keep on coming back to is as a land use, if we're thinking about a factory, we know as planners, we can regulate where that factory is placed. We can regulate its impacts, the amount of traffic. But what kind of goods they're producing, that's kind of out of our purview from a land use perspective. There are other folks that can regulate what's allowed to be done in that factor, like what goods are safe, right? But that's not something in our purview. And so I think actually thinking about the impacts is really important. And I would say what I tell communities is apply these impacts. I don't think that we're going to see a whole bunch of hyperscale data centers. We don't have enough power in the state of Michigan. to see a whole bunch of hyperscale data centers. I'm just going to say it. So why am I traveling the state doing this? I want local governments to prepare their zoning ordinances for the next industrial facilities and think about regulating quality of life for the next thing in line. Because I think we would have better place making if we did that. And I think that that's something that we can think about, especially because we have mixed use districts and how we think about the impact of one thing on the neighboring thing, like what kind of sound state, but we do have a sound standard, right? But are there other impacts that we want to apply so that we can allow for those light industrial uses to continue to operate, but under our terms that respect the quality of life that we demand, anticipate, that kind of thing.

Great. Other commissioners, before I asked the public to raise their hand again, we got one hand and then it was lowered. Okay, go ahead, Commissioner Hammerschmidt.

Thank you. I don't have a question. I just want to say thanks, Sarah. This was a really interesting presentation. So I'm really happy that we pulled this together and I learned a ton. So thank you.

Commissioner Bassiouni.

Get all the Sarahs tonight. I would also like to concur a very helpful, very informative presentation. I learned so much. This is great. I actually do have a few questions. So one is, so if we go back to one of the earlier slides where you were categorizing the types of data centers, you had the one that was like by size and then by whom they serve. So I was, of course, curious, how would the pending data center between the University of Michigan and Los Alamos, where does that fall? Because I think on the slide, and obviously that wasn't like an exhaustive list. I thought it was a helpful framing, but I think it was, let me scroll down. So like hyperscale was cloud factories run by big tech serving multiple external ones. Then there's an edge data center. It was like, cool. But then in terms of the like enterprise data, versus co-location. So the enterprise, how it was described here was like owned and operated by a single org to serve its own IT infrastructure versus the co-location, which was the one for rent. So I was just curious, based on what we currently know, which one could argue is somewhat limited, where would the U of M Los Alamos one fall? Or is there kind of a third amorphous category that is um, as, as not just data centers, but kind of the marriage of generative AI as an industry and data centers continues to do something, um, where would this one fall?

I don't know, in part because I don't know what the full relation, like what that relationship actually looks like. Like what is U of M? What is Los Alamos? I don't know. Um, If the facility is owned by U of M, and actually, let me, if you go in the slide deck, I won't share my screen again, but because you guys have access to it and the public has access to it too. If you go down to like slide 29, there's co-located data centers doesn't mean that the data center operator doesn't have any of their own servers there. At least as in the state's, for sales and use tax purposes, which again, this is different because these are public institutions. So like what taxes are they paying, right? But like to meet that criteria for the state sales and use tax incentive, it needs to be 75% of the space is for some other entity. So I think you can still count as co-located even if you have some of your own, but if you are effectively a space for rent for other people too. So and the reason that I bring that up, though, well, some is because like that tax incentive that that's been in Michigan for since 2015 was only for co-located data centers. But also you pay if you want to have your servers in a co-located data center. you pay to make sure that you have power all the time. In terms of the backup power redundancy, that is how you differentiate one data center to another. And so it matters in part because co-located data centers can't usually effectively say, hey, servers, we're going to Google can effectively say we're in an extreme energy load event. Right. The grid is kind of at its max. We're going to turn off our data center in Michigan and we're going to send all that processing to Texas until like in until the sun sets on this hot day in July. Right. Where if you're a co-located data center, generally speaking, your customers are paying so that you are all they're always on. And so that it changes how flexible the data center can be with uptime and how many backup generators then they need. So I, that's, that's a question. And like what the expectation is for like downtime will also depend on like, again, how often backup generators run, which would be also the case in the Los Alamos U of M thing too.

Right. That's helpful. Cause yeah, I was thinking the, the rental also, of course, um, I'm literally in research lab right now. And so I was thinking about just the, all the intricacies of like a research collaboration and whether that falls under the jurisdiction of a rent per se or not, like who knows that's for lawyers to figure out. But that's something that I was like, it, in the more I'm learning about it, the more questions I'm having. So about data centers in general. So. Okay, cool. Then another question I had was, I appreciate the distinction and the emphasis around kind of decommissioning being a potential, I think as Council Member Dish was talking about, almost like a pressure point for local jurisdictions to have. But I was curious, so decommissioning is when like the factory or the center is no longer being used. What about a pivot to another usage? So let's say the generative AI bubble bursts and there's another use for a data center still within kind of the technology sector. Would that still constitute a decommissioning per se? I'm curious kind of where those lines are, especially in planning.

So... two different things that this actually brings up. One is, are we really, is the expectation really full decommissioning or is it reclamation? And those things mean different, um, situation. So mines, for example, gravel mines are reclaimed. You're never going to fill it. They're not going to fill in that pit, but they're effectively going to be stabilized for a future reuse. But with the expectation that they didn't go back to what they were before decommissioning, at least again, in the renewable energy spaces where we see it the most is like you can farm that land again in the future. And a big question is like, Would we expect this to be farmed again? In the case of Saline Township, that was farmed. Would we expect to be farmed again? Is it full decommissioning or is it reclamation? Also, let's be honest. Some of the assets, the computer equipment, my two cents worth, this is not PCs, take your computer junk away. Don't leave that there. But some people would say, if there's life left in that building, there's embodied energy there. And so from a sustainability perspective, we want to try to reuse that. there may be sustainability consequences of requiring decommissioning for things that could be reused. And that's why you may want to have a conversation. Like maybe the expectation is not that the building gets taken down, but the shell is left. Or maybe you're like, no, you should take it down. Like nobody else is going to use that purpose-built building. A question is, do you require decommissioning for data center? The biggest data center in the state of Michigan right now is in Steelcase's old headquarters, the pyramid structure, which is south of Grand Rapids. I mean, right now it's the biggest. It won't be the biggest for long. And they didn't actually have tons of computers or they didn't have tons of servers in there. It was only, I don't know, three or four megawatts. Now they have a purpose-built building next to it that's like a 50 or 60 megawatt data center. This is a co-location facility. But like, should they be required to decommission a building that they didn't build, that they went into? Like, well, I don't, like, it's a question about circularity that I think is one where this is one of the benefits of requiring the decommissioning plan at the time of approval is that you can have that conversation about, like, what should stay and what should go. Generally, it depends on, in terms of, like, the continuation of a land use depends on, like, what the rules are. If it's done through a special exception, there may be some time that it lapses. We have that in the city of Ann Arbor. And so that it might be reused by another kind of facility, like that's something that could be kept in mind. So there's a whole bunch of different ways. Like yours, one question, like raised, I raised a whole bunch of additional ones. And like, honestly, like, I will take a little bit of pride in this. Like nobody was talking about decommissioning or about property tax guarantees. Like that's something that we added to the world.

Toot your horn. No, that's great. Cause I think it's helpful. It's not just of like thing that's directly coming, but also like what is the aftermath and the long kind of that long view. So that's great. Okay. I have a last question slash maybe a comment. No, it's like comment plus question. I was thinking because I love maps and I have found some maps of the various data centers in Michigan, because as you pointed out, we have them. I have yet to find, maybe it's out there, I just haven't seen it, a map that overlays the locations of data centers with some characteristics of the people who live in those areas. So like socioeconomic status, race, ethnicity, because I knew a lot about environmental justice, not just in the context of data centers, but more generally. And I think a lot of the concerns that a lot of people have around data center proliferation, especially in the context of generative AI is justified in some ways. And so I'm looking forward to hearing members of the public kind of voice their concerns, not just to us, but to people, because I think that is really important. One thing kind of related to that is Is there a pathway, is there precedent for jurisdictions to talk to each other in like a cohesive and non-emergent fashion around planning and zoning with data centers? Because my understanding is this, Seems like for a lot of jurisdictions, it was a bit of the, oh, oh, this is happening. And I'm really grateful that we have you and that Chair Weiss was like, hey, let's have some discussion about this before we're in an oh situation. But I'm really curious if that is something that throughout the state, if jurisdictions are having discussions communications not with data centers and developers there, but amongst themselves. Is there any collective approach or cohesive approach to various types of data centers, et cetera? Not just at the state level, like that level, but just like individually among jurisdictions. If that's something you're aware of or can share, I'd love to know more.

My very first presentation was from three neighboring townships over by Muskegon who said, We want to know for ourselves, but we want to organize something for all of the jurisdictions, all of the townships in the county, because we can like we think that a unified approach may be better. Like and let's all learn together. So actually, most of my presentations also because we have eighteen hundred and fifty six local governments in Michigan, thirteen hundred and fifty one of them zone and we One of my weird things is pulling together zoning map for the state. Most of my presentations are to groups of local officials. That's what I'm doing actually the rest of this week is talking to the Southwest Michigan. When I'm in Pawpaw, it's to the Southwest Michigan Planning Commission. Next week, it's to a group of jurisdictions kind of all around Allegan County. It's like, so this, you guys are unique that you're like one jurisdiction, but that is happening. To your first question, though, one of my colleagues in urban planning, Xiaofan Liang, petitioned the university library for us to get the data center map data set, which allows you to like actually download it, have a whole bunch of, you can put in requests for what information you want. So if you're interested, you can I can either share it for everybody. Only people at University of Michigan will have access to it. But like I can share the link to how you can find that through the library.

That's great. Please thank them for me. And I think that'd be wonderful because we have like citizen scientists who are out and doing things. And I bet a number of people would be really interested in learning how they can get that data and learn more. So thank you so much. Those are all my questions. I really appreciate this.

Great. Planner Bennett, you had your hand up, then you put it down. And then if you are good.

I was just going to say with the adaptive reuse and decommissioning that sometimes from a land use perspective, like even if a building is suitable, sometimes the building code can be a challenge for us. So like, if you remember with COVID, it was like, we don't need more offices we need. We need housing, but it was very difficult in a lot of communities to do that transfer. And I think that was a lot of like our building code is only adopted like every three years and it's perpetually behind. So that's another sort of barrier that's like outside of planning, but affects how things can change use.

Great. Thank you. I have a question, but I want to see if the public have questions for you before we do our final public comment. So let's pivot a little bit and ask our four remaining participants if you have a question. for Dr. Mills or for the Planning Commission regarding data centers, would you please raise your hand so that we can hear your question. You'll still have your official three minutes at the end, but this is just if you have questions now.

See any hands raised, but in case any of our attendees need a refresher, if you hover over the bottom of your screen, then a bar pops up and one of the icons has a hand symbol. If you click on that, it will alert us that you've raised your hand and then I can unmute you so that you can share with all of the panelists or the planning commission.

All right, going once. Going twice. All right. So here's my question, which is about the dark stores theory. So we for the listening public, the dark stores theory is something that I learned about in 2018 because big box retailers were going to tax jurisdictions and asking for their property assessments to be adjusted. Because they felt like their taxes were too high and they were in a sort of a use that was only for this case. If no one else used it, then you wouldn't have charged as much taxes. And so if a big box retailer went out of business, that property tax went down. So the ones that were still operating were saying, look, this is a special kind of thing and you're rating us at this rate and we want to be at that rate. And for some other like kicks and giggles, Briarwood Mall has been in tax debates with the city of Ann Arbor for years around its tax assessment. And you can look that up and read the paper about it. So as we think about data centers and currently their use. And this intersects a little bit with something Commissioner Weatherby said earlier in her comments as well as your comments around decommissioning. What is the nature of these data centers sort of and their potential to become dark store data? kinds of entities, which means we would have a built item in the sort of built environment, but we wouldn't be able to tax it the same way we would for another use. And so it really – Like locks land and that land that gets locks is not being taxed at the appropriate rate because of how this thing was built in its inception. So like can you just talk a little bit about that because as I look at it, that's one of the sort of hidden threats with these types of things. uses because if they take up a lot of space or they're taking land and then they don't decommission or sell but then they're looking to reduce their taxes that has a demonstrative impact on the rest of the city because that means that's a loss of tax revenue and anyone who was here when Pfizer left and then U of M took over. The thing I didn't know, and I think you spoke to, Dr. Mills, is the city assesses taxes based on the equipment that is inside the built environment. And so it wasn't just that Pfizer left and wasn't paying whatever taxes they were, but it was that all of the specialized equipment also left. And so it was a ginormous reduction in taxes. And I had no idea about that. I had no clue that that was something that was a part of this.

So because I was looking at the time and trying to stay on the 30-minute time, I did not... go into the great explanation on slide 26 that you said about dark stores. You'll see dark stores there. Everybody, what Commissioner Weitsch, what Chair Weitsch just explained for dark stores is what that means and why we suggest the property tax guarantee. Also, this is the dark stores... Not phenomenon. It's not a movement even, but like... problem was really about the real property because it was a building like it was. And that is what we are used to dealing with. Like those are the property taxes that you and I pay. And so that's like there's a there's a risk that a data center developer. Just like a Meijer store or a Menards store. like big box store, right? Can argue nobody else is gonna reuse this. Like this is special for data center. And so that's effectively what happened and what was affirmed like through dark stores. Like there were cases over this. Like it's allowed, they're allowed to argue that like nobody else is gonna buy that building. Like it can only be a Home Depot. Like, cause they're kind of built to spec. That's on the real property. The other thing though that, I mean, that comes from my renewable energy work is that on the personal property. So that is the equipment that Commissioner Weitsch was talking about. That is also what most of the value of a wind or solar farm or an energy storage facility. It's not in a building. It's in the equipment, the wind turbines, the solar panels. The assessment mechanism and the multiplier table, I showed you that depreciation. appreciation curve is set by the state tax commission for wind energy. The state tax commission changed the wind table three times in four years. And every time local governments ended up with less money than the time before. And there were lawsuits that were literally just settled, um, And I'm going to say it left a bad taste in a whole bunch of wind communities' mouths. This is not my words, but they felt like they were sold a bait and switch, that they would get all of this tax revenue from wind turbines and the tax table change. Nobody knew how or why. And I don't know how or why, but the fact is that stinks. Because that's the real reason that communities want to host large-scale energy infrastructure is for the tax revenue. And so this is exactly where this property tax guarantee idea for the solar farm came from. As far as I understand, it is only used there. Again, this is one where I floated it as an idea. I've gotten some pushback from people saying like, we're not sure about that. And I'll tell you, the Michigan Chamber of Commerce, like that is for the chambers of commerce of the whole state, asked public sector consultants to write a report about data centers and like changes, like what is the lay of the land and like also policy changes that would be in the benefit of communities, but, you know, like economic development kind of things. And one of the things that's in that report is saying, doing some sort of property tax guarantee. In part, because right now in Lansing, there's a discussion of property tax reform. And so nobody knows what will happen to personal property taxes in the future. No one knows what will happen to any of this. And so... If you've got a data center developer saying this is billion dollars of investment and your property tax revenues are going to be in the millions and that is life changing amounts of money, I say get it in writing. Like.

OK, well, thank you, Dr. Mills. Any other questions from commissioners before we hear from the public? All right. With that, this will be your last opportunity for those of you who are participating and connected in the public here to the meeting to address the Planning Commission for up to three minutes. If you'd like to, you can raise your hand. City staff will identify you by your name in Zoom or the last three digits if you are connected via phone. And this is on any issue.

I have my timer ready, but I don't see any hands up.

Neither do I. All right. Well, with that, unless there's something else that needs to be shared by the commission, I am happy to adjourn our work session. And thank you for your time. And we will see you next Tuesday for our regular meeting. All right. Good night, everyone. Thanks, Michelle.

Thanks. See you.

Bye.