The Data Center Gold Rush Hits Zoning Reality: How Towns Are Pressing Pause to Protect Power Bills
On a cold Thursday night in suburban Michigan, a local township board did something that would have sounded improbable a few years ago: it hit pause on one of the hottest asset classes in the country.
Springfield Township adopted a 180-day moratorium on new data center applications, blocking proposals from even being accepted while officials rewrite zoning standards and study impacts on public services. The township’s supervisor framed it as a way to “do it right” before any project locks in long-term consequences.
That local pause is part of a much larger national shift. Data centers are no longer being treated as just another industrial use. In more places, they’re being treated like infrastructure-scale power and water consumers — projects that can change a community’s utility bills, reliability profile, and long-term development math.
For commercial real estate owners, developers and planners, the takeaway is practical: the entitlement conversation is moving upstream into energy governance. It’s not just “can we permit the building?” It’s “who pays for the power, and what happens to everyone else’s rates?”
Michigan’s “pause button” is spreading
Springfield Township isn’t acting alone. Around the state, local governments are adopting moratoriums or drafting new standards to slow down the rush while they figure out what they’re being asked to host.
Northville approved a 12-month data center moratorium, explicitly to get ahead of the issue before a proposal lands.
Howell Township implemented a six-month moratorium amid debate over a proposed billion-dollar project, with local officials expecting developers to return when the pause ends.
Mason moved to a 90-day moratorium tied to a zoning ordinance that would regulate where data centers can locate and include limits and buffers — despite having no active proposal on the table.
What’s driving this isn’t anti-technology sentiment as much as it is governance anxiety. Town boards and planning commissions are asking: do we have the rules, staffing and utility clarity to evaluate these projects fairly — and protect existing residents and businesses if infrastructure costs spike?
The new question in hearings: Who pays for upgrades?
At the center of many of these debates is a deceptively simple issue: data centers can require major upgrades to distribution and transmission systems — substations, feeders, transformers, and sometimes entirely new lines. Those investments are typically recovered through utility rates over time. That’s why local pushback often turns into a ratepayer argument, even when the meeting is about zoning.
This is not hypothetical. Regulators in Virginia — the country’s most mature data center market — have started designing tariffs specifically to limit cost shifting.
In late 2025, the Virginia State Corporation Commission issued an order creating a new Dominion Energy rate class for very large customers (25 megawatts or more), with the new class effective in 2027. Coverage of the decision described long-term contract structures and minimum-demand obligations designed to protect other customers from being left with stranded grid costs.
For CRE, that matters because it’s a policy prototype. Once one major jurisdiction builds a “large load” class, other states can copy it — and the ripple effects show up in how utilities negotiate service, how projects are underwritten, and how quickly regions can say yes to new development.
Northern Virginia: from “by-right” to “prove it”
The other lesson from Virginia is land-use, not rates.
Loudoun County, the heart of Data Center Alley, has been updating its standards and locations policies — and in 2025 it eliminated “by-right” data center development in certain areas, increasing the number of projects that must clear public hearings and legislative review rather than moving through quietly.
That change is a signal to planners nationwide: when data centers reach a certain saturation point, communities often want more visibility and leverage — not because they’re against economic development, but because they want enforceable rules on siting, buffers, noise, building form, and infrastructure commitments.
Texas: “large-load management” becomes law
Texas offers a different lens: a fast-growing grid (ERCOT) that has been forced to confront massive load requests and interconnection backlogs. Instead of waiting for each town to reinvent rules, the state passed legislation (SB 6) aimed at managing large loads and interconnection requirements.
Legal and industry analyses of SB 6 describe new expectations for large-load customers, including fees, transmission cost-sharing, disclosure requirements and curtailment-related provisions — all designed to reduce reliability risk and improve planning as large loads connect.
To a commercial audience, the key point is that states are not simply cheering the boom anymore. They’re building frameworks to manage it — because the alternative is a patchwork of local fights and utility surprises.
Grid operators are raising the stakes: “Can you power down?”
As towns fight over zoning, grid operators are debating reliability.
The Wall Street Journal reported that grid operators are exploring rules that would require data centers to reduce load or switch to backup power during system emergencies, in an effort to prevent blackouts as demand rises. Tech firms have pushed back, citing reliability needs for critical services.
That dispute matters for CRE because it reinforces a broader trend: the market is increasingly rewarding flexibility. Projects that can bring onsite generation, storage, or controllable demand often have a better shot at navigating interconnection timelines and regulatory scrutiny — even if they never actually “power down” in practice.
This isn’t just a Michigan story
The Washington Post reported on towns nationwide moving to restrict or pause data centers, including cases where local moratoriums or denials have triggered lawsuits — pushing municipalities into negotiated consent agreements with conditions on water usage and community investments.
The point for real estate professionals is not the drama. It’s the precedent: if a community believes a project threatens affordability or quality of life, the fight can move from planning boards to courts. That risk is now part of the development landscape.
What it means for commercial real estate and large housing developments
Even if you don’t build data centers, you live downstream of the same constraints: rising load, grid buildouts, and public scrutiny of who pays.
For master-planned communities and multifamily developers, data-center politics are a warning about what’s coming for electrification more broadly. When a new community adds EV charging, heat pumps, electrified amenities and higher peak loads, the utility conversation becomes more complicated. Communities and regulators will increasingly ask large projects to show:
How they’ll manage peaks (not just add load),
What their interconnection plan is,
Whether they can contribute to local resilience rather than only consuming capacity.
For office, industrial and campus owners, the most important shift is in underwriting: power strategy is entering entitlement and tenant negotiations. That means thinking earlier about load profiles, demand charges, storage, and controls — not as “energy geekery,” but as schedule and operating-cost defense.
The simplest way to say it: the projects that win approvals and timelines will increasingly be the ones that can say, credibly, “we’ve planned for the power.”
